Section 85
1 Part 5 of FA 1987 (oil taxation) is amended as follows.
2 For section 63 substitute—
Blends of oil from two or more fields
63 (1) This section applies if, at any time before its disposal or relevant appropriation, oil won from an oil field (“the relevant field”) in a chargeable period (“the relevant period”) is mixed with oil won from one or more other oil fields.
(2) A relevant participator's share of oil won from the relevant field in the relevant period is to be taken to be the amount of the blended oil that it is just and reasonable (for the purposes of the oil taxation legislation) to allocate to the participator in respect of the relevant period.
(3) In making the allocation regard must be had (in particular) to the quantity and quality of the oil derived from each of the originating fields.
(4) If the participators in the originating fields select a method for making the allocation, that method is to be used to determine that allocation.
(5) But that is subject to Schedule 12.
(6) If the participators in the originating fields fail to select a method for making the allocation, HMRC may select a method.
(7) In a case where only some oil won from the relevant field in the relevant period is, before its disposal or relevant appropriation, mixed with oil won from one or more other fields, subsection (2) has effect for the purpose of determining the amount of the blended oil that is to be taken to be included in a relevant participator's share of oil won from the relevant field.
(8) Schedule 12 contains provision supplementing this section.
(9) In this section and Schedule 12—
“blended oil” means oil that consists of oil from two or more oil fields that has been mixed;
“foreign field” means an area which is a foreign field for the purposes of section 12 of the Oil Taxation Act 1983;
“oil” includes any substance which would be oil if the enactments mentioned in section 1(1) of the principal Act extended to a foreign field;
“oil field” includes a foreign field;
“oil taxation legislation” means Part 1 of the principal Act and any enactment construed as one with that Part;
“originating fields”, in relation to any blended oil, means the oil fields from which oil which has been mixed as mentioned in subsection (1);
“relevant participator” means a person who is a participator in the relevant field at any time in the relevant period.
3 (1) Schedule 12 (supplementary provisions as to blended oil) is amended as follows.
(2) For paragraphs 1 and 2 (and the headings before them) substitute—
Interpretation
1 (1) In this Schedule—
“HMRC” means Her Majesty's Revenue and Customs;
“method of allocation” means a method for making an allocation of blended oil for the purposes of section 63 that has been selected by the participators in the originating fields (including such a method that has been amended in accordance with this Schedule).
(2) In this Schedule a reference to a suitable method of allocation is a reference to a method which secures that allocation of blended oil is just and reasonable (for the purposes of the oil taxation legislation).
Method of allocation not suitable
2 (1) This paragraph applies if it appears to HMRC that—
(a) a method of allocation that has been used in respect of a chargeable period was not suitable, or
(b) a method of allocation that is proposed to be used in respect of a chargeable period would not be suitable.
(2) HMRC may give notice to each of the participators in the originating fields—
(a) informing the participators of what appears to HMRC to be the case, and
(b) proposing amendments to the method of allocation.
(3) If HMRC give notice, the allocation of the blended oil for the purposes of section 63 in respect of the chargeable period is to be redetermined, or determined, using the method of allocation as amended in accordance with the notice.
(4) Sub-paragraph (3) is subject to—
(a) the following provisions of this Schedule,
(b) any subsequent notice given under this paragraph, and
(c) any amendment to the method of allocation made by the participators in the originating fields.
(3) In paragraph 3(1)—
(a) for “the Board” (in each place) substitute “ HMRC ”, and
(b) for “paragraph 2(a)” substitute “ paragraph 2(2) ”.
(4) In paragraph 3(2), for “the Board” (in each place) substitute “ HMRC ”.
(5) After paragraph 3(2) insert—
(3) If the method of allocation is amended in accordance with this paragraph, the allocation of the blended oil for the purposes of section 63 in respect of the chargeable period is to be redetermined, or determined, using the method of allocation as so amended.
(4) Sub-paragraph (3) is subject to—
(a) any subsequent notice given under this paragraph, and
(b) any amendment to the method of allocation made by the participators in the originating fields.
(6) Omit paragraph 4.
4 The amendments made by this Schedule have effect in relation to chargeable periods beginning after 30 June 2009.
Section 86
Part 1 Licence swaps
1 TCGA 1992 is amended as follows.
2 In section 35(3) (assets held on 31 March 1982, including assets held on 6 April 1965)—
(a) in paragraph (c), omit the “or” at the end, and
(b) after that paragraph insert—
(ca) where, by virtue of section 195B, 195C or 195E, neither a gain nor a loss accrues to the person making the disposal, or
.
3 In section 55 (assets owned on 31 March 1982 or acquired on a no gain/no loss disposal), after subsection (5) insert—
(5A) For the purposes of subsection (5), a disposal is also a no gain/no loss disposal if it is one on which, by virtue of section 195B, 195C or 195E, neither a gain nor a loss accrues to the person making the disposal; but, in such a case, subsection (6)(b) below does not apply.
4 In section 175(2C)(b) (replacement of business assets by members of a group), after “applies” insert “ or is one where, by virtue of section 195B, 195C or 195E, neither a gain nor a loss accrues to the person making the disposal ”.
5 After section 195 insert—
Oil licence swaps
195A (1) Sections 195B to 195E apply for the purposes of corporation tax on chargeable gains.
(2) In those sections—
“licence-consideration swap” means a case where conditions A, B, C and D are met;
“mixed-consideration swap” means a case where conditions A, B, C and E are met.
(3) Condition A is that a company (“company A”) disposes of one or more UK licences to another company (“company B”), by way of a bargain at arm's length (“disposal A”).
(4) Condition B is that company B disposes of one or more UK licences to company A, by way of a bargain at arm's length (“disposal B”).
(5) Condition C is that either or both of the following paragraphs applies—
(a) the licence, or at least one of the licences, comprised in disposal A relates to a developed area;
(b) the licence, or at least one of the licences, comprised in disposal B relates to a developed area.
(6) Condition D is that both—
(a) disposal A is the only consideration given for disposal B, and
(b) disposal B is the only consideration given for disposal A.
(7) Condition E is that either—
(a) disposal A is the only consideration given for disposal B, or
(b) disposal B is the only consideration given for disposal A,
(and accordingly one of the disposals is part of the consideration given for the other disposal).
(8) In this section and sections 195B to 196 a reference to disposal of a UK licence includes—
(a) a disposal of an interest in a UK licence, and
(b) a disposal of a UK licence, or an interest in a UK licence, only so far as the licence relates to part of the licensed area.
Licence-consideration swap
195B (1) This section applies to a licence-consideration swap.
(2) Each company participating in the swap is to be treated as follows.
(3) As regards the licence, or each licence, which the company disposes of, the company is to be treated as if it had disposed of that licence for a consideration of such amount as to secure that on the disposal neither a gain nor a loss accrues to the company.
(4) In a case where the company acquires only one licence, the company is to be treated as if it had acquired the licence for a consideration of the same amount as the deemed disposal consideration.
(5) In a case where the company acquires two or more licences, as regards each licence acquired, the company is to be treated as if it had acquired that licence for a consideration of—
DDC
×
A
TA
where—
DDC is the deemed disposal consideration,
A is the value of the licence acquired, and
TA is total value of all the licences acquired.
(6) In this section “deemed disposal consideration”, in relation to a company participating in the swap, means—
(a) the amount of the consideration for which the company is, under subsection (3), treated as having disposed of its licence (if the company disposes of only one licence), or
(b) the aggregate of all such amounts (if the company disposes of two or more licences).
Company that receives mixed consideration: N exceeds C
195C (1) This section applies to a mixed-consideration swap if—
(a) the no gain/no loss loss amount (“N”) of the company that receives the mixed consideration (“company R”), exceeds
(b) the amount of non-licence consideration (“C”) which company R receives.
(2) In a case where company R acquires only one licence, company R is to be treated as if it had acquired the licence for a consideration of—
N
-
C
(3) In a case where company R acquires two or more licences, as regards each licence acquired, company R is to be treated as if it had acquired the licence for a consideration of—
(
N
-
C
)
×
A
TA
where—
A is the value of the licence acquired, and
TA is total value of all the licences acquired.
(4) The disposal by company R of a licence under the swap is to be taken to be one on which neither a gain nor a loss accrues.
(5) But (despite subsection (4)), the disposal by company R is not a no gain/no loss disposal for the purposes of section 56.
(6) For the purposes of the application of sections 53 and 54, any enactment is to be disregarded insofar as it provides that, if the other company which acquires a licence under the swap (“company G”) subsequently disposes of the licence, company R's acquisition of the licence is to be treated as company G's acquisition of it.
(7) In this section the reference to the no gain/no loss amount of company R is a reference to—
(a) in a case where company R disposes of only one licence, company R's no gain/no loss amount in relation to that disposal, or
(b) in a case where company R disposes of two or more licences, the aggregate of company R's no gain/no loss amounts in relation to all of those disposals.
Company that receives mixed consideration: N does not exceed C
195D (1) This section applies to a mixed-consideration swap if—
(a) the no gain/no loss amount (“N”) of the company that receives the mixed consideration (“company R”) does not exceed
(b) the amount of non-licence consideration (“C”) which company R receives.
(2) As regards the licence, or each licence, which company R acquires, company R is to be treated as if it had acquired the licence for nil consideration.
(3) In a case where company R disposes of only one licence, company R is to be treated as if, on the disposal of the licence, there had arisen a gain of—
C
-
N
(4) In a case where company R disposes of two or more licences, as regards each licence disposed of, company R is to be treated as if, on the disposal of the licence, there had arisen a gain of—
(
C
-
N
)
×
D
TD
where—
D is the value of the licence disposed of, and
TD is total value of all the licences disposed of.
Company that gives mixed consideration
195E (1) This section applies to a mixed-consideration swap—
(a) whatever the no gain/no loss amount (“N”) of the company that gives the mixed consideration (“company G”), and
(b) whatever the amount of the non-licence consideration (“C”) which company G gives.
(2) In a case where company G acquires only one licence, company G is to be treated as if it had acquired the licence for a consideration of—
N
+
C
(3) In a case where company G acquires two or more licences, as regards each licence acquired, company G is to be treated as if it had acquired the licence for a consideration of—
(
N
+
C
)
×
A
TA
where—
A is the value of the licence acquired, and
TA is total value of all the licences acquired.
(4) The disposal by company G of a licence under the swap is to be taken to be one on which neither a gain nor a loss accrues.
(5) But (despite subsection (4)), the disposal by company G is not a no gain/no loss disposal for the purposes of section 56.
(6) For the purposes of the application of sections 53 and 54, any enactment is to be disregarded insofar as it provides that, if the other company which acquires a licence under the swap (“company R”) subsequently disposes of the licence, company G's acquisition of the licence is to be treated as company R's acquisition of it.
(7) In this section the reference to the no gain/no loss amount of company G is a reference to—
(a) in a case where company G disposes of only one licence, company G's no gain/no loss amount in relation to that disposal, or
(b) in a case where company G disposes of two or more licences, the aggregate of company G's no gain/no loss amounts in relation to all of those disposals.
6 (1) Section 196 (interpretation of sections 194 and 195) is amended as follows.
(2) In the heading, for “and 195” substitute “ to 195E ”.
(3) In subsection (1), after “section 194” insert “ and this section ”.
(4) After subsection (1A) insert—
(1B) In sections 195A to 195E, a reference to a UK licence that relates to a developed area is a reference to any UK licence apart from one that relates to an undeveloped area.
(5) In subsection (2), for “and (1A)” substitute “ to (1B) ”.
(6) In subsection (3), after “(1)” insert “ or (1B) ”.
(7) In subsection (5)—
(a) for “and 195” substitute “ to 195E ”,
(b) after the definition of “licence” insert—
“licence-consideration swap” has the meaning given in section 195A(2);
, and
(c) after the definition of “licensee” insert—
“mixed consideration” means consideration that consists partly of disposal of a UK licence;
“mixed-consideration swap” has the meaning given in section 195A(2);
“no gain/no loss amount”, in relation to a company that disposes of a UK licence, means the amount that would be taken to be the consideration for the disposal if section 56(2) applied to the disposal;
“non-licence consideration” means consideration that does not consist of disposal of a UK licence, as determined at the time the swap arrangements are entered into;
“swap arrangements”, in relation to a licence-consideration swap or a mixed-consideration swap, means the arrangements under which the swap takes place;
.
(8) After subsection (5A) insert—
(5B) In any of sections 195B to 195E, a reference to the value of a licence comprised in disposal A or disposal B (see section 195A) is a reference to the value of the licence as determined under the swap arrangements at the time the swap arrangements are entered into.
7 In Schedule 3 (assets held on 31 March 1982), in paragraph 1(2) (meaning of no gain/no loss disposal), after “provisions” insert “ or any of sections 195B, 195C or 195E ”.
8 The amendments made by this Part have effect in relation to disposals made on or after 22 April 2009.
Part 2 Reinvestment of ring fence assets
Amendment of TCGA 1992
9 TCGA 1992 is amended as follows.
Roll-over relief
10 In section 198 (replacement of business assets used in connection with oil fields), for subsection (3) substitute—
(3) Where—
(a) section 152 or 153 applies in relation to any of the consideration on a material disposal, and
(b) the asset which constitutes the new assets for the purposes of that section is a depreciating asset,
section 154(2)(b) is to have effect as if the reference to a trade carried on by the claimant were a reference solely to the claimant's ring fence trade.
Alternative to roll-over relief
11 In section 198 (replacement of business assets used in connection with oil fields), after subsection (2) insert—
(2A) But subsection (1) is subject to section 198A(3)(a).
12 After that section insert—
Ring fence reinvestment: whole consideration reinvested
198A (1) This section applies if a person (“P”) makes a disposal and acquisition which—
(a) is a ring fence reinvestment, and
(b) qualifies for roll-over relief.
(2) P may make a claim under this section in relation to the disposal and acquisition.
(3) If P makes a claim under this section—
(a) section 152 does not apply to any of the disposal consideration, and
(b) any gain accruing to P on the disposal is not a chargeable gain.
(4) In this section “disposal consideration” means the whole of the consideration obtained on the disposal made by P.
Ring fence reinvestment: part of consideration reinvested
198B (1) This section applies if a person (“P”) makes a disposal and acquisition which—
(a) is a ring fence reinvestment, and
(b) qualifies for section 153 relief.
(2) P may make a claim under this section in relation to the disposal and acquisition.
(3) If P makes a claim under this section—
(a) section 153(1)(a) applies in relation to P and the disposal, but
(b) section 153(1)(b) does not apply to P and the acquisition.
Provisional application of sections 198A and 198B
198C (1) This section applies where a person (“P”) carrying on a ring fence trade who for a consideration disposes of, or of an interest in, any assets (“the old assets”) declares, in P's return for the chargeable period in which the disposal takes place—
(a) that the whole or any specified part of the consideration will be applied in the acquisition of, or of an interest in, other assets (“the new assets”),
(b) that the acquisition will take place as mentioned in section 152(3),
(c) that the disposal and acquisition will be a ring fence reinvestment,
(d) that P intends to make a claim under section 198A or 198B in relation to the disposal and acquisition, and
(e) that P has not made, and will not make, a declaration under section 153A in relation to the disposal and acquisition.
(2) Until the declaration ceases to have effect, section 198A or 198B applies as if the acquisition had taken place and the person had made a claim under that section.
(3) The declaration ceases to have effect as follows—
(a) if and to the extent that it is withdrawn before the relevant day, or is superseded before that day by a valid claim made under section 198A or 198B, on the day on which it is so withdrawn or superseded, and
(b) if and to the extent that it is not so withdrawn or superseded, on the relevant day.
(4) On the declaration ceasing to have effect in whole or in part, all necessary adjustments—
(a) are to be made by making or amending assessments or by repayment or discharge of tax, and
(b) are to be so made despite any limitation on the time within which assessments or amendments may be made.
(5) If—
(a) P makes a declaration under this section, and
(b) the disposal and acquisition is not a ring fence reinvestment, but qualifies for roll-over relief or section 153 relief,
on P making a claim, the declaration is to have effect as also a declaration under section 153A.
(6) In this section “the relevant day” means—
(a) in relation to capital gains tax, the third anniversary of the 31st January next following the year of assessment in which the disposal of, or of the interest in, the old assets took place, and
(b) in relation to corporation tax, the fourth anniversary of the last day of the accounting period in which that disposal took place.
(7) Section 152(6), (10) and (11) apply for the purposes of this section as they apply for the purposes of section 152.
No double claims
198D (1) If P makes a claim under section 198A or 198B, no other relevant claim may be made in respect of the relevant acquisition.
(2) P may make a claim under section 198A or 198B (“the new claim”), if P has previously made a claim under section 152 or 153 (“the previous claim”) in respect of the relevant acquisition.
(3) But P may make the new claim only if the previous claim is withdrawn at or before the time the new claim is made.
(4) If the new claim is made in accordance with subsections (2) and (3), all necessary adjustments—
(a) are to be made by making or amending assessments or by repayment or discharge of tax, and
(b) are to be so made despite any limitation on the time within which assessments or amendments may be made.
(5) In this section—
“relevant acquisition” means the acquisition of the new assets that is comprised in the disposal and acquisition to which a claim under section 198A or 198B or declaration under section 198C relates;
“relevant claim” means a claim under section 152, 153, 198A or 198B.
Ring fence reinvestments and disposal consideration
198E (1) This section applies for the purposes of sections 198A to 198G.
(2) A disposal and acquisition is a ring fence reinvestment if—
(a) the disposal was—
(i) a material disposal, or
(ii) a disposal of a UK licence which relates to an undeveloped area,
(b) the old assets were used only for the purposes of P's ring fence trade,
(c) the new assets are taken into use, and used only, for the purposes of one or more of the following trades—
(i) P's ring fence trade;
(ii) if P is a member of a group of companies (within the meaning given in section 170), a ring fence trade of another member of that group, and
(d) the new assets are oil assets.
(3) If the disposal consists of—
(a) disposal of a licence to which section 195D(3) applies, or
(b) disposal of two or more licences to which section 195D(4) applies,
the consideration for the disposal is to be taken to be the whole of the non-licence consideration obtained on the disposal (which is referred to as “C” in section 195D).
(4) Accordingly, in sections 198A to 198G (including section 198A(4)), any reference to the consideration obtained on the disposal has effect subject to subsection (3).
(5) Each of the following is an “oil asset” for the purposes of this section—
(a) an interest in oil to be won from an oil field,
(b) an asset used in connection with an oil field,
(c) a structure which is to be placed on the seabed of the United Kingdom continental shelf,
(d) an asset used wholly in the winning of oil, or in the measuring of oil won, in the United Kingdom otherwise than from an oil field,
(e) an asset used for the initial treatment or storage of oil in the United Kingdom,
(f) an asset used for the transportation of oil from an oil field to the United Kingdom, and
(g) a UK licence which relates to an undeveloped area.
(6) Section 12 of the Oil Taxation Act 1975 (interpretation of Part 1 of that Act) applies for the interpretation of subsection (5)(a) to (f).
(7) Expressions used in this section and in section 152 have the same meanings in this section as in section 152.
(8) In this section a reference to a UK licence which relates to an undeveloped area has the same meaning as in section 194 (see section 196).
(9) In this section—
“material disposal” has the meaning given in section 197;
“ring fence trade” has the meaning given in section 198.
Qualification for roll-over relief
198F (1) This section applies for the purposes of sections 198A and 198B and section 198G.
(2) A disposal and acquisition qualifies for roll-over relief if—
(a) the consideration for the disposal is applied in an acquisition as mentioned in section 152(1), and
(b) section 152(1)(a) and (b) would apply to the disposal and acquisition if the appropriate claim were made.
(3) Subsections (4) to (6) apply in deciding whether a disposal and acquisition is one that qualifies for roll-over relief.
(4) Section 152(8) is to be disregarded.
(5) Section 198A is to be disregarded.
(6) Subject to subsections (4) to (5), all the circumstances are to be taken into account, including section 153(1) and section 198(1) and (2).
Qualification for section 153 relief
198G (1) This section applies for the purposes of sections 198B and 198C.
(2) A disposal and acquisition qualifies for section 153 relief if—
(a) section 153(1) applies to part of the amount or value of the consideration for the disposal,
(b) section 153(1)(a) and (b) would apply to the disposal and acquisition if the appropriate claim were made, and
(c) the disposal and acquisition would qualify for roll-over relief but for the disapplication of section 152(1) by section 153(1).
(3) Subsections (4) to (6) apply in deciding whether a disposal and acquisition is one that qualifies for section 153 relief.
(4) Section 153(2) has effect subject to section 198F(4) and (5).
(5) Section 198B is to be disregarded.
(6) Subject to subsections (4) and (5), all the circumstances are to be taken into account, including section 198(1).
13 The amendments made by this Part have effect in relation to disposals made on or after 22 April 2009 (whether the acquisition in which the consideration is reinvested takes place before, on or after that date).
Section 87
Part 1 Petroleum revenue tax
Allowance of decommissioning and restoration expenditure
1 (1) Section 3 of OTA 1975 (allowance of expenditure) is amended as follows.
(2) In subsection (1C)(b), for “in connection with the field” substitute “ for a qualifying purpose ”.
(3) In subsection (1D), for “in connection with the field” substitute “ for a qualifying purpose ”.
(4) After that subsection insert—
(1DA) In subsections (1C) and (1D) a reference to use for a qualifying purpose is a reference to—
(a) use in connection with the taxable field mentioned in subsection (1C), and
(b) other use in—
(i) the United Kingdom,
(ii) the territorial sea of the United Kingdom, or
(iii) a designated area,
except use wholly or partly for an ineligible oil purpose.
(1DB) In subsection (1DA)(b) the reference to use for an ineligible oil purpose is a reference to—
(a) use in connection with an oil field other than the taxable field mentioned in subsection (1C), and
(b) use for any other purpose (apart from a purpose falling within section 3(1)(b)) of a separate trade consisting of activities falling within section 492(1) of the Income and Corporation Taxes Act 1988.
(1DC) In subsections (1DA) and (1DB) a reference to use in connection with a taxable field or other oil field includes use giving rise to receipts which, for the purposes of the Oil Taxation Act 1983, are tariff receipts.
Amounts which are not chargeable tariff receipts
2 (1) Section 6 of OTA 1983 (amounts which are not chargeable tariff receipts) is amended as follows.
(2) In subsection (4)—
(a) in paragraph (b), insert at the end “or”, and
(b) after that paragraph insert—
(c) is referable to other use of an asset, except use wholly or partly for an oil purpose,
.
(3) After that subsection insert—
(4A) In this section the reference to use of an asset for an oil purpose is a reference to—
(a) use in connection with an oil field, and
(b) use for any other purpose (apart from a purpose falling within section 3(1)(b) of the principal Act) of a separate trade consisting of activities falling within section 492(1) of the Income and Corporation Taxes Act 1988.
(4B) In subsection (4A) the reference to use in connection with an oil field includes use giving rise to receipts which, for the purposes of this Act, are tariff receipts.
No reduction of allowable expenditure
3 (1) Paragraph 8 of Schedule 1 to OTA 1983 (allowable expenditure: use of new asset otherwise than in connection with taxable field) is amended as follows.
(2) In sub-paragraph (1)(a) and (b), for “in connection with a taxable field” substitute “ for a qualifying purpose ”.
(3) After sub-paragraph (2) insert—
(2A) In sub-paragraph (1) a reference to use for a qualifying purpose is a reference to—
(a) use in connection with a taxable field, and
(b) other use in—
(i) the United Kingdom,
(ii) the territorial sea of the United Kingdom, or
(iii) a designated area,
except use wholly or partly for an ineligible oil purpose.
(2B) In this Act a reference to use of an asset for an ineligible oil purpose is a reference to—
(a) use in connection with an oil field that is not a taxable field, and
(b) use for any other purpose (apart from a purpose falling within section 3(1)(b) of the principal Act) of a separate trade consisting of activities falling within section 492(1) of the Income and Corporation Taxes Act 1988.
(2C) In sub-paragraphs (2A) and (2B) a reference to use in connection with a taxable field or other oil field includes use giving rise to receipts which, for the purposes of this Act, are tariff receipts.
Commencement
4 The amendments made by this Part have effect in relation to chargeable periods beginning after 30 June 2009.
Part 2 Capital allowances
General decommissioning expenditure
5 (1) Section 163 of CAA 2001 (meaning of “general decommissioning expenditure”) is amended as follows.
(2) In subsection (3)(a), after “use” insert “ wholly or partly ”.
(3) In subsection (4ZA), for paragraphs (a) and (b) substitute—
(a) was not brought into use wholly for qualifying purposes, or
(b) has, at any time since it was brought into use, not been used wholly for qualifying purposes.
(4) In subsection (4ZC), for “the purposes of the ring fence trade” substitute “ qualifying purposes ”.
(5) After subsection (4C) insert—
(4D) In this section a reference to use for qualifying purposes is a reference to—
(a) use for the purposes of any ring fence trade of any person, or
(b) other use in—
(i) the United Kingdom,
(ii) the territorial sea of the United Kingdom, or
(iii) an area designated under section 1(7) of the Continental Shelf Act 1964,
except use wholly or partly in connection with an oil field (within the meaning given by section 12(2) of the Oil Taxation Act 1975).
6 In section 165(4A) of CAA 2001 (general decommissioning expenditure after ceasing ring fence trade), for “abandonment expenditure” substitute “ general decommissioning expenditure ”.
Commencement
7 (1) The amendments made by paragraph 5 have effect in relation to expenditure incurred on or after 22 April 2009.
(2) The amendment made by paragraph 6 has effect in relation to ring fence trades that cease to be carried on or after 12 March 2008.
SCHEDULE 42 PRT: former licensees and former oil fields
Section 88
Part 1 Persons who cease to be licensees because of cessation events
1 OTA 1975 is amended as follows.
2 (1) Section 12 (interpretation of Part 1) is amended as follows.
(2) In subsection (1), in the definition of “participator”—
(a) for “any”, in the first place, substitute “ a ”,
(b) after paragraph (a) insert—
(aa) a person who is no longer a licensee in respect of any licensed area wholly or partly included in the field, but who—
(i) was such a licensee at any time in any chargeable period preceding the relevant chargeable period, and
(ii) ceased to be such a licensee because of a cessation event; and
,
(c) in paragraph (b), after “field” insert “ (and who does not fall within paragraph (aa) of this definition) ”,
(d) in paragraph (c), after “paragraph” insert “ (aa) or ”, and
(e) omit the words after paragraph (g).
(3) After that subsection insert—
(1A) In the definition of “participator” in subsection (1)—
(a) “cessation event”, in relation to an oil field to which a licence relates, means any of the following—
(i) determination of the licence by the licensee,
(ii) revocation of the licence by the Secretary of State or a Northern Ireland Department,
(iii) expiry of the licence at the end of its term,
(iv) the licensed area ceasing to include any relevant area whatsoever, by reason of the licensee surrendering the licence so far as it relates to the whole of the relevant area, and
(v) the licence ceasing to apply to the oil field by reason of the operation of the licence;
and for the purposes of sub-paragraph (iv) “relevant area” means an area which is, or combination of areas each of which is, included in the oil field (whether or not such an area falls partly outside the oil field);
(b) “current participator”, “former participator” and “default payment” have the same meanings as in paragraph 2A of Schedule 5.
3 In Schedule 5 (allowance of expenditure other than abortive exploration expenditure), in paragraph 2C(2)—
(a) in the definition of “current participator”, after “paragraph (a),” insert “ (aa), ”, and
(b) in paragraph (b) of the definition of “former participator”, after “paragraph (a),” insert “ (aa), ”.
4 The amendments made by this Part have effect in relation to persons who cease to be licensees because of cessation events occurring in chargeable periods that begin after 30 June 2009.
Part 2 Areas treated as continuing to be oil fields
5 OTA 1975 is amended as follows.
6 In section 12(1) (interpretation of Part 1), in the definition of “oil field”, after “this Act” insert “ (which also includes provision about areas that are to be treated as continuing to be oil fields) ”.
7 (1) Schedule 1 (determination of oil fields) is amended as follows.
(2) Before paragraph 1 insert— “ Areas that are oil fields ”
(3) After paragraph 5 insert—
Areas treated as continuing to be oil fields
6 (1) This paragraph applies if an area has ceased to be—
(a) an oil field within the meaning of paragraph 1(1), or
(b) part of such an oil field.
(2) The area is to be treated as continuing to be—
(a) the oil field, or
(b) the part of the oil field,
that it actually was.
(3) Accordingly, whilst the area is treated in accordance with sub-paragraph (2), any reference to an oil field is to include a reference to the area.
(4) Sub-paragraph (2) ceases to apply to the area—
(a) in accordance with sub-paragraph (5), and
(b) if or to the extent that it has not ceased to apply in accordance with sub-paragraph (5), in accordance with sub-paragraph (6).
(5) Sub-paragraph (2) ceases to apply to the area if, or to the extent that, it again becomes—
(a) an oil field within the meaning of paragraph 1(1), or
(b) part of such an oil field.
(6) Sub-paragraph (2) ceases to apply to the area at the end of the second chargeable period that falls after the chargeable period in which the area is decommissioned.
7 (1) A relevant area is decommissioned for the purposes of paragraph 6 if all qualifying assets of the relevant area are decommissioned.
(2) If, and to the extent that, a UK offshore decommissioning regime applies to qualifying assets of the relevant area, those assets are decommissioned if—
(a) the Secretary of State has approved one or more abandonment programmes under the regime in relation to those assets, and
(b) those programmes have been carried out to the satisfaction of the Secretary of State.
(3) If, and to the extent that, a UK offshore decommissioning regime does not apply to qualifying assets of the relevant area, those assets are decommissioned if the Board are satisfied that they have been decommissioned.
(4) For the purposes of sub-paragraph (3) the Board must have regard to any obligations to decommission the qualifying assets which arise under the law applicable to the relevant area (whether the law of any part of the United Kingdom or of any other state or territory), including any obligations imposed by an authority having functions under that law in respect of such decommissioning.
(5) If sub-paragraph (3) applies (to any extent) to any qualifying assets, the Board must give the responsible person notice of any decision the Board make under that sub-paragraph.
(6) The responsible person may appeal against such a decision by notice in writing given to the Board within three months of the responsible person receiving the notice under sub-paragraph (5).
(7) An appeal under sub-paragraph (6) may, before it is notified to the tribunal, be abandoned by notice in writing given to the Board by the responsible person.
(8) The provisions of paragraphs 14A to 14I of Schedule 2 apply to appeals under sub-paragraph (6) subject to any necessary modifications.
(9) In this paragraph—
“qualifying assets” means assets that are qualifying assets within the meaning of OTA 1983;
“relevant area” means an area that is treated as being an oil field, or part of an oil field, under paragraph 6;
“UK offshore decommissioning regime” means—
Part 4 of the Petroleum Act 1998, and
Part 1 of the Petroleum Act 1987.
8 The amendments made by this Part have effect in relation to areas that cease to be oil fields, or parts of oil fields, in chargeable periods that begin after 30 June 2009.
SCHEDULE 43 PRT: abolition of provisional expenditure allowance
Section 89
Interpretation
1 In this Schedule—
“future chargeable period” means a chargeable period beginning after 30 June 2009;
“provisional expenditure allowance” means an amount calculated under section 2(9)(a) of OTA 1975.
Abolition of allowance
2 No provisional expenditure allowance is to be calculated in respect of a future chargeable period.
Amendments consequential on abolition
3 (1) Section 2 of OTA 1975 (assessable profits and allowable losses) is amended as follows.
(2) For subsection (8) substitute—
(8) The amount (if any) to be debited or credited to the participator for the period in respect of expenditure is the sum of the amounts mentioned in subsection (9) below.
(3) Omit subsections (9)(a), (10) and (11).
(4) In Schedule 17 to FA 1980 (transfers of interests in oil fields), omit paragraph 11 (and the heading before it).
(5) This paragraph has effect in relation to future chargeable periods.
(6) But this paragraph is subject to paragraph 4.
Savings
4 (1) This paragraph applies if provisional expenditure allowance has been calculated in respect of a pre-abolition chargeable period (“the relevant allowance”).
(2) The saved provisions continue to have effect in future chargeable periods in relation to the relevant allowance and the relevant participator as if those provisions had not been amended by paragraph 3.
(3) In this paragraph—
“pre-abolition chargeable period” means a chargeable period that begins before 30 June 2009;
“relevant participator” means the participator in respect of which the relevant allowance has been calculated;
“the saved provisions” means—
section 2(8) and (10) of OTA 1975, and
paragraph 11 of Schedule 17 to FA 1980.
Section 91
OTA 1975
1 (1) OTA 1975 is amended as follows.
(2) Omit paragraphs 9 and 10 of Schedule 3 (election to have amounts mentioned in section 2(9)(b) and (c) spread).
(3) In consequence of the omission of paragraph 9 of Schedule 3, omit section 9(4).
(4) Omit paragraph 3 of Schedule 4 (allowable expenditure incurred before 13 November 1974).
(5) The repeals made by this paragraph have effect in relation to chargeable periods beginning after 30 June 2009.
OTA 1983
2 (1) OTA 1983 is amended as follows.
(2) Omit section 9(3) and paragraph 3 of Schedule 3 (receipts from contracts made before 8 May 1982).
(3) In consequence of the omission of subsection (3) of section 9—
(a) in subsection (2) of that section, for “subsections (3) and (4)” substitute “ subsection (4) ”, and
(b) in subsection (4)(b) of that section, for “subsections (1) to (3)” substitute “ subsections (1) and (2) ”.
(4) Omit sections 13 and 14 and Schedule 5 (transitional provision for expenditure incurred on or before 31 December 1983).
FA 1993
3 (1) Schedule 20A to FA 1993 (as inserted by Part 1 of Schedule 33 to FA 2008) is renumbered as Schedule 20B to that Act.
(2) In the following provisions, for “Schedule 20A” substitute “ Schedule 20B ”
(a) section 6(1A) of OTA 1975,
(b) paragraph 15(9A) of Schedule 17 to FA 1980, and
(c) section 185(1ZA)(b) of FA 1993.
ICTA
4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SCHEDULE 46 Duties of senior accounting officers of qualifying companies
Section 93
Main duty of senior accounting officer
1 (1) The senior accounting officer of a qualifying company must take reasonable steps to ensure that the company establishes and maintains appropriate tax accounting arrangements.
(2) The senior accounting officer of a qualifying company must, in particular, take reasonable steps—
(a) to monitor the accounting arrangements of the company, and
(b) to identify any respects in which those arrangements are not appropriate tax accounting arrangements.
Certificate for Commissioners
2 (1) The senior accounting officer of a qualifying company must provide the Commissioners with a certificate for each financial year of the company.
(2) The certificate must—
(a) state whether the company had appropriate tax accounting arrangements throughout the financial year, and
(b) if it did not, give an explanation of the respects in which the accounting arrangements of the company were not appropriate tax accounting arrangements.
(3) The certificate must be provided—
(a) by such means and in such form as is reasonably specified by an officer of Revenue and Customs, and
(b) not later than the end of the period for filing the company's accounts for the financial year (or such later time as an officer of Revenue and Customs may have allowed).
(4) A certificate may relate to more than one qualifying company.
Notifying Commissioners of name of senior accounting officer
3 (1) For each financial year a qualifying company must ensure that the Commissioners are notified of the name of each person who was its senior accounting officer at any time during the year.
(2) The notification must be given—
(a) by such means and in such form as is reasonably specified by an officer of Revenue and Customs, and
(b) not later than the end of the period for filing the company's accounts for the financial year (or such later time as an officer of Revenue and Customs may have allowed for providing the certificate for the financial year under paragraph 2).
(3) A notification may relate to more than one qualifying company.
Penalty for failure to comply with main duty
4 (1) This paragraph applies if a senior accounting officer fails to comply with paragraph 1 at any time in a financial year.
(2) The senior accounting officer is liable to a penalty of £5,000.
(3) A person is not liable to more than one penalty under this paragraph in respect of the same company and the same financial year.
Penalties for failure to provide certificate etc
5 (1) This paragraph applies if a senior accounting officer—
(a) fails to provide a certificate in accordance with paragraph 2, or
(b) provides a certificate in accordance with that paragraph that contains a careless or deliberate inaccuracy.
(2) The senior accounting officer is liable to a penalty of £5,000.
(3) For the purposes of this Schedule, an inaccuracy is careless if the inaccuracy is due to a failure by the senior accounting officer to take reasonable care.
(4) An inaccuracy in a certificate that was neither careless nor deliberate when the certificate was given is to be treated as careless if the senior accounting officer—
(a) discovered the inaccuracy some time later, and
(b) did not take reasonable steps to inform HMRC.
More than one senior accounting officer
6 (1) This paragraph applies if the identity of the senior accounting officer of a company changes.
(2) If (but for this sub-paragraph) more than one person would be liable to a penalty under paragraph 4 in respect of a financial year of the company, only the one who became the senior accounting officer latest in the year is liable to such a penalty.
(3) If a person who is or has been the senior accounting officer of the company complies, or purports to comply, with paragraph 2 in respect of a financial year, no other person is liable to a penalty under paragraph 5 in respect of that company and that financial year.
(4) A person who is replaced as the senior accounting officer of the company before the last day for compliance with paragraph 2 in respect of a financial year is not liable to a penalty under paragraph 5(1)(a) for failing to comply with that paragraph in respect of that company and that financial year.
Penalty for failure to notify Commissioners of name of senior accounting officer
7 A qualifying company is liable to a penalty of £5,000 if, for a financial year, the Commissioners are not notified of the name or names of its senior accounting officer or officers in accordance with paragraph 3.
Reasonable excuse
8 (1) Liability to a penalty for a failure to comply with this Schedule does not arise if the senior accounting officer or qualifying company satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that there is a reasonable excuse for the failure.
(2) For the purposes of this paragraph—
(a) an insufficiency of funds is not a reasonable excuse unless attributable to events outside the person's control,
(b) where the person relies on any other person to do anything, that is not a reasonable excuse unless the first person took reasonable care to avoid the failure, and
(c) where the person had a reasonable excuse for the failure but the excuse has ceased, the person is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.
Assessment of penalties
9 (1) Where a senior accounting officer or a qualifying company becomes liable for a penalty under this Schedule—
(a) HMRC may assess the penalty, and
(b) if they do so, they must notify the officer or company liable for the penalty.
(2) An assessment of a penalty under this Schedule for a failure in respect of a financial year, or an inaccuracy in a certificate for a financial year, may not be made—
(a) more than 6 months after the failure or inaccuracy first comes to the attention of an officer of Revenue and Customs, or
(b) more than 6 years after the end of the period for filing the company's accounts for the financial year.
(3) HMRC may not assess a person who is the senior accounting officer of a company (“C”) as liable to a penalty under paragraph 4 or 5 for a financial year (“the relevant financial year”) if—
(a) at any time in the relevant financial year the person was the senior accounting officer of another company that was a member of the same group as C, and
(b) HMRC has assessed the person as liable, as the senior accounting officer of the other company, to a penalty under that paragraph for a financial year that ends on a day in the relevant financial year.
(4) HMRC may not assess a company (“C”) as liable to a penalty under paragraph 7 for a financial year (“the relevant financial year”) if—
(a) C was a member of a group at the end of that year, and
(b) HMRC has assessed another company that was a member of the same group as C at that time as liable to a penalty under that paragraph—
(i) for its financial year ending on the same day as the relevant financial year, or
(ii) if its financial year does not end on that day, for its financial year ending last before that day.
Appeal
10 (1) A person may appeal against a decision of HMRC that a penalty is payable by that person.
(2) Notice of an appeal must be given—
(a) in writing,
(b) before the end of the period of 30 days beginning with the date on which the notification under paragraph 9 was issued, and
(c) to HMRC.
(3) Notice of an appeal must state the grounds of appeal.
(4) On an appeal that is notified to the tribunal, the tribunal may confirm or cancel the decision.
(5) Subject to this paragraph and paragraph 11, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation to appeals under this Schedule as they have effect in relation to an appeal against an assessment to income tax.
Enforcement of penalties
11 (1) A penalty under this Schedule must be paid—
(a) before the end of the period of 30 days beginning with the date on which the notification under paragraph 9 was issued, or
(b) if a notice of appeal against the penalty is given, before the end of the period of 30 days beginning with the date on which the appeal is determined or withdrawn.
(2) A penalty under this Schedule may be enforced as if it were income tax charged in an assessment and due and payable.
Power to change amount of penalties
12 (1) If it appears to the Treasury that there has been a change in the value of money since the last relevant date, they may by regulations substitute for the sums for the time being specified in paragraphs 4, 5 and 7 such other sums as appear to them to be justified by the change.
(2) In sub-paragraph (1), in relation to a specified sum, “relevant date” means—
(a) the date on which this Act is passed, and
(b) in relation to that sum, each date on which the power conferred by that sub-paragraph has been exercised.
(3) Regulations under this paragraph do not apply to—
(a) a failure that occurs in respect of a financial year of a company that begins before the date on which they come into force, or
(b) an inaccuracy in a certificate that was provided to HMRC in respect of such a financial year.
Application of provisions of TMA 1970
13 Subject to the provisions of this Schedule, the following provisions of TMA 1970 apply for the purposes of this Schedule as they apply for the purposes of the Taxes Acts—
(a) section 108 (responsibility of company officers),
(b) section 114 (want of form), and
(c) section 115 (delivery and service of documents).
Meaning of “appropriate tax accounting arrangements”
14 (1) “Appropriate tax accounting arrangements” means accounting arrangements that enable the company's relevant liabilities to be calculated accurately in all material respects.
(2) “Accounting arrangements” includes arrangements for keeping accounting records.
(3) “Relevant liabilities”, in relation to a company, means liabilities in respect of—
(a) corporation tax (including any amount assessable or chargeable as if it were corporation tax),
(b) value added tax,
(c) amounts for which the company is accountable under PAYE regulations,
(d) insurance premium tax,
(e) stamp duty land tax,
(f) stamp duty reserve tax,
(g) petroleum revenue tax,
(h) customs duties, and
(i) excise duties.
Meaning of “qualifying company”
15 (1) A company is a qualifying company in relation to a financial year if the qualification test was satisfied in the previous financial year (subject to any regulations under sub-paragraph (8)).
(2) The qualification test is that the company satisfied either or both of the following requirements—
1. Relevant turnover | More than £200 million
2. Relevant balance sheet total | More than £2 billion.
(3) If the company was not a member of a group at the end of the previous financial year—
(a) “relevant turnover” means the company's turnover, and
(b) “relevant balance sheet total” means the company's balance sheet total.
(4) If the company was a member of a group at the end of the previous financial year—
(a) “relevant turnover” means the aggregate turnover of the company (“C”) and any other company that was a member of the same group as C at the end of C's previous financial year, and
(b) “relevant balance sheet total” means the aggregate balance sheet totals of C and any such company.
(5) If the financial year of a company that was a member of the same group as C does not end on the same day as C's previous financial year, the figures for that company that are to be included in the aggregate figures are the figures for that company's financial year ending last before the end of C's previous financial year.
(6) “Turnover”, in relation to a company, has the same meaning as in Part 15 of the Companies Act 2006 (see section 474 of that Act).
(7) “Balance sheet total”, in relation to a company and a financial year, means the aggregate of the amounts shown as assets in the company's balance sheet as at the end of the financial year.
(8) The Treasury may by regulations provide that a company of a description specified in the regulations is not a qualifying company for the purposes of this Schedule.
Meaning of “senior accounting officer”
16 (1) “Senior accounting officer”, in relation to a company that is not a member of a group, means the director or officer who, in the company's reasonable opinion, has overall responsibility for the company's financial accounting arrangements.
(2) “Senior accounting officer”, in relation to a company that is a member of a group, means the group director or officer who, in the company's reasonable opinion, has overall responsibility for the company's financial accounting arrangements.
(3) “Group director or officer”, in relation to a company, means a director or officer of the company or of a relevant body that is a member of the same group as the company.
(4) A person may be the senior accounting officer of more than one company.
Regulations
17 (1) Regulations under this Schedule are to be made by statutory instrument.
(2) A statutory instrument containing regulations under this Schedule is subject to annulment in pursuance of a resolution of the House of Commons.
Other definitions
18 (1) In this Schedule—
“the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;
“company” has the same meaning as in the Companies Acts (see section 1(1) of the Companies Act 2006) but does not include a company that is an open-ended investment company (within the meaning of section 613 of CTA 2010) or an investment trust (within the meaning of section 1158 of CTA 2010);
“financial year”, in relation to a company, has the same meaning as in the Companies Act 2006 (see section 390 of that Act);
“HMRC” means Her Majesty's Revenue and Customs;
“period for filing”, in relation to accounts, has the same meaning as in the Companies Acts (see section 442 of the Companies Act 2006);
“relevant body” means a company or other body corporate but does not include a limited liability partnership;
“tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal.
(2) For the purposes of this Schedule—
(a) a relevant body is a member of a group if—
(i) another relevant body is its 51 per cent subsidiary, or
(ii) it is a 51 per cent subsidiary of another relevant body, and
(b) two relevant bodies are members of the same group if—
(i) one is a 51 per cent subsidiary of the other, or
(ii) both are 51 per cent subsidiaries of a third relevant body.
(3) Chapter 3 of Part 24 of CTA 2010 (meaning of “51 per cent subsidiary”) applies for the purposes of this Schedule as it applies for the purposes of the Corporation Tax Acts (subject to the modification in sub-paragraph (4)).
(4) It applies as if references in that Chapter to a body corporate were to a relevant body.
SCHEDULE 47 Amendment of information and inspection powers
Section 95
1 Schedule 36 to FA 2008 (information and inspection powers) is amended as follows.
2 (1) Paragraph 3 (approval etc of taxpayer notices and third party notices) is amended as follows.
(2) After sub-paragraph (2) insert—
(2A) An application for approval under this paragraph may be made without notice (except as required under sub-paragraph (3)).
(3) In sub-paragraph (3)(c), after “is” insert “ to be ”.
3 (1) Paragraph 5 (power to obtain information and documents about persons whose identity is not known) is amended as follows.
(2) After sub-paragraph (3) insert—
(3A) An application for approval under this paragraph may be made without notice.
(3) In sub-paragraph (4), for “give its approval for the purpose of” substitute “ approve the giving of a notice under ”.
4 In paragraph 6 (notices), insert at the end—
(4) A decision of the tribunal under paragraph 3, 4 or 5 is final (despite the provisions of sections 11 and 13 of the Tribunals, Courts and Enforcement Act 2007).
5 (1) Paragraph 10 (power to inspect business premises etc) is amended as follows.
(2) In sub-paragraph (3), in the definition of “business assets”, for “, excluding documents” substitute “ (but see sub-paragraph (4)) ”.
(3) After that sub-paragraph insert—
(4) For the purposes of this Schedule, “business assets” does not include documents, other than—
(a) documents that are trading stock for the purposes of Chapter 11A of Part 2 of ITTOIA 2005 (see section 172A of that Act), and
(b) documents that are plant for the purposes of Part 2 of CAA 2001.
6 (1) Paragraph 11 (power to inspect premises used in connection with taxable supplies etc) is amended as follows.
(2) In sub-paragraph (1)—
(a) in paragraph (a), after “supplied” insert “ or documents relating to such goods ”,
(b) in paragraph (b), after “acquired” insert “ or documents relating to such goods ”, and
(c) in paragraph (c), after “as” insert “ or in connection with ”.
(3) In sub-paragraph (2)(c), for “such goods” substitute “ the supply of goods under taxable supplies, the acquisition of goods from other member States under taxable acquisitions or fiscal warehousing ”.
(4) In sub-paragraph (4)—
(a) for “sub-paragraph (1)” substitute “ this paragraph ”, and
(b) for “in that sub-paragraph” substitute “ here ”.
7 In paragraph 12(5) (carrying out inspections)—
(a) for “with the approval of” substitute “ in respect of an inspection approved by ”, and
(b) for “it is given with that approval” substitute “ the inspection has been so approved ”.
8 (1) Paragraph 13 (approval of inspections) is amended as follows.
(2) After sub-paragraph (1) insert—
(1A) An application for approval under this paragraph may be made without notice.
(3) Insert at the end—
(3) A decision of the tribunal under this paragraph is final (despite the provisions of sections 11 and 13 of the Tribunals, Courts and Enforcement Act 2007).
9 (1) Paragraph 21 (taxpayer notices) is amended as follows.
(2) In sub-paragraph (6), after “that” (in the first place) insert “ , as regards the person, ”.
(3) In sub-paragraph (7), for “that” (in the third place) substitute “ the ”.
(4) In sub-paragraph (8)—
(a) after “repayments” insert “ of tax or withholding of income ”, and
(b) after “64(2)” insert “ or (2A) ”.
(5) After sub-paragraph (8) insert—
(9) In this paragraph references to the person who made the return are only to that person in the capacity in which the return was made.
10 (1) Paragraph 35 (special cases: groups of undertakings) is amended as follows.
(2) In sub-paragraph (2)—
(a) for “paragraph 2” substitute
—
(a) paragraph 2(2)
, and
(b) insert at the end
, and
(b) the references in paragraph 3(5) to naming the taxpayer are to making that statement and naming the parent undertaking.
(3) For sub-paragraph (4) substitute—
(4) Where a third party notice is given to the parent undertaking for the purpose of checking the tax position of more than one subsidiary undertaking—
(a) paragraph 2(2) only requires the notice to state this, and
(b) the references in paragraph 3(5) to naming the taxpayer are to making that statement.
(4A) In relation to such a notice—
(a) in paragraph 3 (approval etc of notices), sub-paragraphs (1) and (3)(e) do not apply,
(b) paragraph 4(1) (copying third party notices to taxpayer) does not apply,
(c) paragraph 21 (restrictions on giving taxpayer notice where taxpayer has made return) applies as if the notice was a taxpayer notice or taxpayer notices given to each subsidiary undertaking (or, if the notice names the subsidiary undertakings to which it relates, to each of those undertakings),
(d) paragraph 30(1) (appeal) has effect as if it permitted an appeal on any grounds, and
(e) in paragraph 30(2) (no appeal in relation to taxpayer's statutory records), the reference to the taxpayer has effect as if it were a reference to the parent undertaking or any of its subsidiary undertakings.
(4) In sub-paragraph (5), for the words after “the notice” substitute
—
(a) sub-paragraphs (3) and (4) of that paragraph (approval of tribunal) have effect as if they permitted, but did not require, the officer to obtain the approval of the tribunal, and
(b) paragraph 31 (appeal) has effect as if it permitted an appeal on any grounds, but the parent undertaking may not appeal against a requirement in the notice to produce any document that forms part of the statutory records of the parent undertaking or any of its subsidiary undertakings.
(5) Omit sub-paragraph (6).
11 (1) Paragraph 37 (special cases: partnerships) is amended as follows.
(2) For sub-paragraph (2) substitute—
(2) Where, in respect of a chargeable period, any of the partners has—
(a) made a tax return under section 12AA of TMA 1970 (partnership returns), or
(b) made a claim or election in accordance with section 42(6)(b) of TMA 1970 (partnership claims and elections),
paragraph 21 (restrictions where taxpayer has made tax return) has effect as if that return, claim or election had been made by each of the partners.
(3) In sub-paragraph (3)—
(a) omit “to any person (other than one of the partners)”,
(b) for “paragraph 2” substitute
—
(a) paragraph 2(2)
, and
(c) insert at the end
, and
(b) the references in paragraph 3(5) to naming the taxpayer are to making that statement and naming the partnership.
(4) In sub-paragraph (4)—
(a) after “notice” insert “ given to a person other than one of the partners ”, and
(b) in paragraph (b), for “each of the partners” substitute “ any of the partners in the partnership ”.
(5) For sub-paragraph (5) substitute—
(5) In relation to a third party notice given to one of the partners for the purpose of checking the tax position of one or more of the other partners (in their capacity as such)—
(a) in paragraph 3 (approval etc of notices), sub-paragraphs (1) and (3)(e) do not apply,
(b) paragraph 4(1) (copying third party notices to taxpayer) does not apply,
(c) paragraph 30(1) (appeal) has effect as if it permitted an appeal on any grounds, and
(d) in paragraph 30(2) (no appeal in relation to taxpayer's statutory records), the reference to the taxpayer has effect as if it were a reference to any of the partners in the partnership.
(6) In sub-paragraph (6), for the words after “the notice” substitute
—
(a) sub-paragraphs (3) and (4) of that paragraph (approval of tribunal) have effect as if they permitted, but did not require, the officer to obtain the approval of the tribunal, and
(b) paragraph 31 (appeal) has effect as if it permitted an appeal on any grounds, but the partner to whom the notice is given may not appeal against a requirement in the notice to produce any document that forms part of that partner's statutory records.
(7) Omit sub-paragraph (7).
12 After paragraph 37 insert—
Information in connection with herd basis election
37A (1) This paragraph applies to a taxpayer notice given to a person carrying on a trade in relation to which a herd basis election is made if the notice refers only to information or documents that relate to—
(a) the animals kept for the purposes of the trade, or
(b) the products of those animals.
(2) Paragraph 21 (restrictions on giving taxpayer notice where taxpayer has made tax return) does not apply in relation to the notice.
(3) “Herd basis election” means an election under Chapter 8 of Part 2 of ITTOIA 2005 or Chapter 8 of Part 3 of CTA 2009.
Information from persons liable to counteraction of tax advantage
37B (1) This paragraph applies to a taxpayer notice given to a person if—
(a) it appears to an officer of Revenue and Customs that a counteraction provision may apply to the person by reason of one or more transactions, and
(b) the notice refers only to information or documents relating to the transaction (or, if there are two or more transactions, any of them).
(2) Paragraph 21 (restrictions on giving taxpayer notice where taxpayer has made tax return) does not apply in relation to the notice.
(3) “Counteraction provision” means—
(a) section 703 of ICTA (company liable to counteraction of corporation tax advantage), or
(b) section 684 of ITA 2007 (person liable to counteraction of income tax advantage).
13 (1) Paragraph 39 (standard penalties) is amended as follows.
(2) In sub-paragraph (2), for “A person to whom this paragraph applies” substitute “ The person ”.
(3) In the heading—
(a) omit “Standard”, and
(b) insert at the end “for failure to comply or obstruction”.
14 In the heading before paragraph 40 (daily default penalties), insert at the end “ ;for failure to comply or obstruction ”
15 After that paragraph insert—
Penalties for inaccurate information and documents
40A (1) This paragraph applies if—
(a) in complying with an information notice, a person provides inaccurate information or produces a document that contains an inaccuracy, and
(b) condition A or B is met.
(2) Condition A is that the inaccuracy is careless or deliberate.
(3) An inaccuracy is careless if it is due to a failure by the person to take reasonable care.
(4) Condition B is that the person—
(a) discovers the inaccuracy some time later, and
(b) fails to take reasonable steps to inform HMRC.
(5) The person is liable to a penalty not exceeding £3,000.
(6) Where the information or document contains more than one inaccuracy, a penalty is payable for each inaccuracy.
16 (1) Paragraph 41 (power to change amount of penalties) is amended as follows.
(2) In sub-paragraph (1), for “and 40(2)” substitute “ , 40(2) and 40A(5) ”.
(3) In sub-paragraph (2)—
(a) after “(1)” insert “ , in relation to a specified sum, ”, and
(b) in paragraph (b), insert at the end “in relation to that sum”.
(4) In sub-paragraph (3)—
(a) after “to” insert
—
(a)
, and
(b) insert at the end
, or
(b) an inaccuracy in any information or document provided to HMRC before that date.
(5) Accordingly, in the heading omit “standard and daily default”.
17 (1) Paragraph 46 (assessment of penalty) is amended as follows.
(2) In sub-paragraph (1)—
(a) for “or 40” substitute “ , 40 or 40A ”,
(b) omit “HMRC may”,
(c) at the beginning of paragraph (a), insert “ HMRC may ”, and
(d) at the beginning of paragraph (b), insert “ if they do so, they must ”.
(3) In sub-paragraph (2), for “within 12 months of the relevant date” substitute “ within the period of 12 months beginning with the date on which the person became liable to the penalty, subject to sub-paragraph (3) ”.
(4) For sub-paragraph (3) substitute—
(3) In a case involving an information notice against which a person may appeal, an assessment of a penalty under paragraph 39 or 40 must be made within the period of 12 months beginning with the latest of the following—
(a) the date on which the person became liable to the penalty,
(b) the end of the period in which notice of an appeal against the information notice could have been given, and
(c) if notice of such an appeal is given, the date on which the appeal is determined or withdrawn.
(4) An assessment of a penalty under paragraph 40A must be made—
(a) within the period of 12 months beginning with the date on which the inaccuracy first came to the attention of an officer of Revenue and Customs, and
(b) within the period of 6 years beginning with the date on which the person became liable to the penalty.
(5) Accordingly, in the heading omit “standard penalty or daily default”.
18 (1) Paragraph 47 (right to appeal) is amended as follows.
(2) In paragraph (a), for “or 40” substitute “ , 40 or 40A ”.
(3) Accordingly, in the heading, omit “standard penalty or daily default”.
19 In the heading before paragraph 48 (procedure on appeal), omit “standard penalty or daily default”.
20 (1) Paragraph 49 (enforcement) is amended as follows.
(2) In sub-paragraph (1), for “or 40” substitute “ , 40 or 40A ”.
(3) In sub-paragraph (2), for “or 40” substitute “ , 40 or 40A ”.
(4) Accordingly, in the heading, omit “standard penalty or daily default”.
21 (1) Paragraph 63 (tax) is amended as follows.
(2) In sub-paragraph (3)—
(a) omit the “and” at the end of paragraph (a), and
(b) for the words following paragraph (b) substitute
, and
(c) amounts listed in sub-paragraph (3A).
(3) After that sub-paragraph insert—
(3A) Those amounts are—
(a) any amount that is recoverable under paragraph 5(2) of Schedule 11 to VATA 1994 (amounts shown on invoices as VAT), and
(b) any amount that is treated as VAT by virtue of regulations under section 54 of VATA 1994 (farmers etc).
22 (1) Paragraph 64 (tax position) is amended as follows.
(2) In sub-paragraph (1)(c), after “with” insert “ the person's liability to pay ”.
(3) After sub-paragraph (2) insert—
(2A) References in this Schedule to a person's tax position also include, where appropriate, a reference to the person's position as regards the withholding by the person of another person's PAYE income (as defined in section 683 of ITEPA 2003).
SCHEDULE 48 Extension of information and inspection powers
Section 96
1 Schedule 36 to FA 2008 (information and inspection powers) is amended as follows.
2 In paragraph 5(4)(b) (power to obtain information and documents about persons whose identity is not known), for the words from “, VATA 1994” to the end substitute “ or any other enactment relating to UK tax ”.
3 After paragraph 10 insert—
Power to inspect business premises etc of involved third parties
10A (1) An officer of Revenue and Customs may enter business premises of an involved third party (see paragraph 61A) and inspect—
(a) the premises,
(b) business assets that are on the premises, and
(c) relevant documents that are on the premises,
if the inspection is reasonably required by the officer for the purpose of checking the position of any person or class of persons as regards a relevant tax.
(2) The powers under this paragraph may be exercised whether or not the identity of that person is, or the individual identities of those persons are, known to the officer.
(3) The powers under this paragraph do not include power to enter or inspect any part of the premises that is used solely as a dwelling.
(4) In relation to an involved third party, “relevant documents” and “relevant tax” are defined in paragraph 61A.
4 (1) Paragraph 12 (carrying out inspections) is amended as follows.
(2) In sub-paragraph (1), for “this Part of this Schedule” substitute “ paragraph 10, 10A or 11 ”.
(3) Accordingly, in the heading, insert at the end “under paragraph 10, 10A or 11”.
5 After that paragraph insert—
Powers to inspect property for valuation etc
12A (1) An officer of Revenue and Customs may enter and inspect premises for the purpose of valuing the premises if the valuation is reasonably required for the purpose of checking any person's position as regards income tax or corporation tax.
(2) An officer of Revenue and Customs may enter premises and inspect—
(a) the premises, and
(b) any other property on the premises,
for the purpose of valuing, measuring or determining the character of the premises or property.
(3) Sub-paragraph (2) only applies if the valuation, measurement or determination is reasonably required for the purpose of checking any person's position as regards—
(a) capital gains tax,
(b) corporation tax in respect of chargeable gains,
(c) inheritance tax,
(d) stamp duty land tax, or
(e) stamp duty reserve tax.
(4) A person who the officer considers is needed to assist with the valuation, measurement or determination may enter and inspect the premises or property with the officer.
Carrying out inspections under paragraph 12A
12B (1) An inspection under paragraph 12A may be carried out only if condition A or B is satisfied.
(2) Condition A is that—
(a) the inspection is carried out at a time agreed to by a relevant person, and
(b) the relevant person has been given notice in writing of the agreed time of the inspection.
(3) “Relevant person” means—
(a) the occupier of the premises, or
(b) if the occupier cannot be identified or the premises are vacant, a person who controls the premises.
(4) Condition B is that—
(a) the inspection has been approved by the tribunal, and
(b) any relevant person specified by the tribunal has been given at least 7 days' notice in writing of the time of the inspection.
(5) A notice under sub-paragraph (4)(b) must state the possible consequences of obstructing the officer in the exercise of the power.
(6) If a notice is given under this paragraph in respect of an inspection approved by the tribunal (see paragraph 13), it must state that the inspection has been so approved.
(7) An officer of Revenue and Customs seeking to carry out an inspection under paragraph 12A must produce evidence of authority to carry out the inspection if asked to do so by—
(a) the occupier of the premises, or
(b) any other person who appears to the officer to be in charge of the premises or property.
6 (1) Paragraph 13 (approval of tribunal) is amended as follows.
(2) In sub-paragraph (1), insert at the end “(and for the effect of obtaining such approval see paragraph 39 (penalties))”.
(3) In sub-paragraph (1A) (inserted by Schedule 47), insert at the end “ (except as required under sub-paragraph (2A)) ”.
(4) In sub-paragraph (2), after “an inspection” insert “ under paragraph 10, 10A or 11 ”.
(5) After that sub-paragraph insert—
(2A) The tribunal may not approve an inspection under paragraph 12A unless—
(a) an application for approval is made by, or with the agreement of, an authorised officer of Revenue and Customs,
(b) the person whose tax position is the subject of the proposed inspection has been given a reasonable opportunity to make representations to the officer of Revenue and Customs about that inspection,
(c) the occupier of the premises has been given a reasonable opportunity to make such representations,
(d) the tribunal has been given a summary of any representations made, and
(e) the tribunal is satisfied that, in the circumstances, the inspection is justified.
(2B) Paragraph (c) of sub-paragraph (2A) does not apply if the tribunal is satisfied that the occupier of the premises cannot be identified.
7 In paragraph 17(b) (power to record information), after “premises,” insert “ property, goods, ”.
8 (1) Paragraph 21 (restrictions on giving taxpayer notices) is amended as follows.
(2) In sub-paragraph (7), for “VAT position” substitute “ position as regards any tax other than income tax, capital gains tax or corporation tax ”.
(3) In the heading, insert at the end “following tax return”.
9 After that paragraph insert—
Taxpayer notices following land transaction return
21A (1) Where a person has delivered a land transaction return under section 76 of FA 2003 (returns for purposes of stamp duty land tax) in respect of a transaction, a taxpayer notice may not be given for the purpose of checking that person's stamp duty land tax position in relation to that transaction.
(2) Sub-paragraph (1) does not apply where, or to the extent that, any of conditions A to C is met.
(3) Condition A is that a notice of enquiry has been given in respect of—
(a) the return, or
(b) a claim (or an amendment of a claim) made by the person in connection with the transaction,
and the enquiry has not been completed.
(4) In sub-paragraph (3) “notice of enquiry” means a notice under paragraph 12 of Schedule 10, or paragraph 7 of Schedule 11A, to FA 2003.
(5) Condition B is that, as regards the person, an officer of Revenue and Customs has reason to suspect that—
(a) an amount that ought to have been assessed to stamp duty land tax in respect of the transaction may not have been assessed,
(b) an assessment to stamp duty land tax in respect of the transaction may be or have become insufficient, or
(c) relief from stamp duty land tax in respect of the transaction may be or have become excessive.
(6) Condition C is that the notice is given for the purpose of obtaining any information or document that is also required for the purpose of checking that person's position as regards a tax other than stamp duty land tax.
10 In paragraph 28 (restrictions on inspection of business documents), and in the heading before that paragraph, omit “business”.
11 After paragraph 34 insert—
Involved third parties
34A (1) This paragraph applies to a third party notice or a notice under paragraph 5 if—
(a) it is given to an involved third party (see paragraph 61A),
(b) it is given for the purpose of checking the position of a person, or a class of persons, as regards the relevant tax, and
(c) it refers only to relevant information or relevant documents.
(2) In relation to such a third party notice—
(a) paragraph 3(1) (approval etc of third party notices) does not apply,
(b) paragraph 4(1) (copying third party notices to taxpayer) does not apply, and
(c) paragraph 30(1) (appeal) has effect as if it permitted an appeal on any grounds.
(3) In relation to such a notice under paragraph 5—
(a) sub-paragraphs (3) and (4) of that paragraph (approval of tribunal) have effect as if they permitted, but did not require, an authorised officer of Revenue and Customs to obtain the approval of the tribunal, and
(b) paragraph 31 (appeal) has effect as if it permitted an appeal on any grounds.
(4) The involved third party may not appeal against a requirement in the notice to provide any information, or produce any document, that forms part of the involved third party's statutory records.
(5) In relation to an involved third party, “relevant documents”, “relevant information” and “relevant tax” are defined in paragraph 61A.
Registered pension schemes etc
34B (1) This paragraph applies to a third party notice or a notice under paragraph 5 if it refers only to information or documents that relate to any pensions matter.
(2) “Pensions matter” means any matter relating to—
(a) a registered pension scheme,
(b) an annuity purchased with sums or assets held for the purposes of a registered pension scheme or a pre-2006 pension scheme, or
(c) an employer-financed retirement benefits scheme.
(3) In relation to such a third party notice—
(a) paragraph 3(1) (approval etc of third party notices) does not apply,
(b) paragraph 4(1) (copying third party notices to taxpayer) does not apply, and
(c) paragraph 30(1) (appeal) has effect as if it permitted an appeal on any grounds.
(4) In relation to such a notice under paragraph 5—
(a) sub-paragraphs (3) and (4) of that paragraph (approval of tribunal) have effect as if they permitted, but did not require, an authorised officer of Revenue and Customs to obtain the approval of the tribunal, and
(b) paragraph 31 (appeal) has effect as if it permitted an appeal on any grounds.
(5) A person may not appeal against a requirement in the notice to provide any information, or produce any document, that forms part of any person's statutory records.
(6) Where the notice relates to a matter within sub-paragraph (2)(a) or (b), the officer of Revenue and Customs who gives the notice must give a copy of the notice to the scheme administrator in relation to the pension scheme.
(7) Where the notice relates to a matter within sub-paragraph (2)(c), the officer of Revenue and Customs who gives the notice must give a copy of the notice to the responsible person in relation to the employer-financed retirement benefits scheme.
(8) Sub-paragraphs (6) and (7) do not apply if the notice is given to a person who, in relation to the scheme or annuity to which the notice relates, is a prescribed description of person.
Registered pension schemes etc: interpretation
34C In paragraph 34B—
“employer-financed retirement benefits scheme” has the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see sections 393A and 393B of that Act);
“pension scheme” has the same meaning as in Part 4 of FA 2004;
“pre-2006 pension scheme” means a scheme that, at or in respect of any time before 6 April 2006, was—
a retirement benefits scheme approved for the purposes of Chapter 1 of Part 14 of ICTA,
a former approved superannuation fund (as defined in paragraph 1(3) of Schedule 36 to FA 2004),
a relevant statutory scheme (as defined in section 611A of ICTA) or a pension scheme treated as if it were such a scheme, or
a personal pension scheme approved under Chapter 4 of Part 14 of ICTA;
“prescribed” means prescribed by regulations made by the Commissioners;
“registered pension scheme” means a pension scheme that is or has been a registered pension scheme within the meaning of Part 4 of FA 2004 or in relation to which an application for registration under that Part of that Act has been made;
“responsible person”, in relation to an employer-financed retirement benefits scheme, has the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see section 399A of that Act);
“scheme administrator”, in relation to a pension scheme, has the same meaning as in Part 4 of FA 2004 (see section 270 of that Act).
12 In paragraph 35 (special cases: groups of undertakings), in sub-paragraph (4A)(c) (inserted by Schedule 47)—
(a) for “paragraph 21” substitute “ paragraphs 21 and 21A ”, and
(b) for “applies” substitute “ apply ”.
13 In paragraph 37 (special cases: partnerships), after sub-paragraph (2) insert—
(2A) Where, in respect of a transaction entered into as purchaser by or on behalf of the members of the partnership, any of the partners has—
(a) delivered a land transaction return under Part 4 of FA 2003 (stamp duty land tax), or
(b) made a claim under that Part of that Act,
paragraph 21A (restrictions where taxpayer has delivered land transaction return) has effect as if that return had been delivered, or that claim had been made, by each of the partners.
14 After paragraph 61 insert—
Involved third parties
61A (1) In this Schedule “involved third party” means a person described in the first column of the Table below.
(2) In this Schedule, in relation to an involved third party, “relevant information”, “relevant document” and “relevant tax” have the meaning given in the corresponding entries in that Table.
Involved third party | Relevant information and relevant documents | Relevant tax
1. | A body approved by an officer of Revenue and Customs for the purpose of paying donations within the meaning of Part 12 of ITEPA 2003 (donations to charity: payroll giving) (see section 714 of that Act) | Information and documents relating to the donations | Income tax
2. | A plan manager (see section 696 of ITTOIA 2005 (managers of individual investment plans)) | Information and documents relating to the plan, including investments which are or have been held under the plan | Income tax
3. | An account provider in relation to a child trust fund (as defined in section 3 of the Child Trust Funds Act 2004) | Information and documents relating to the fund, including investments which are or have been held under the fund | Income tax
4. | A person who is or has been registered as a managing agent at Lloyd's in relation to a syndicate of underwriting members of Lloyd's | Information and documents relating to, and to the activities of, the syndicate | Income tax Capital gains tax Corporation tax
5. | A person involved (in any capacity) in an insurance business (as defined for the purposes of Part 3 of FA 1994) | Information and documents relating to contracts of insurance entered into in the course of the business | Insurance premium tax
6. | A person who makes arrangements for persons to enter into contracts of insurance | Information and documents relating to the contracts | Insurance premium tax
7. | A person who— is concerned in a business that is not an insurance business (as defined for the purposes of Part 3 of FA 1994), and has been involved in the entry into a contract of insurance providing cover for any matter associated with that business | Information and documents relating to the contracts | Insurance premium tax
8. | A person who, in relation to a charge to stamp duty reserve tax on an agreement, transfer, issue, appropriation or surrender, is an accountable person (as defined in regulation 2 of the Stamp Duty Reserve Tax Regulations S.I. 1986/1711 (as amended from time to time)) | Information and documents relating to the agreement, transfer, issue, appropriation or surrender | Stamp duty reserve tax
9. | A responsible person in relation to an oil field (as defined for the purposes of Part 1 of OTA 1975) | Information and documents relating to the oil field | Petroleum revenue tax
10. | A person involved (in any capacity) in subjecting aggregate to exploitation in the United Kingdom (as defined for the purposes of Part 2 of FA 2001) or in connected activities | Information and documents relating to matters in which the person is or has been involved | Aggregates levy
11. | A person involved (in any capacity) in making or receiving taxable commodities (as defined for the purposes of Schedule 6 to FA 2000) or in connected activities | Information and documents relating to matters in which the person is or has been involved | Climate change levy
12. | A person involved (in any capacity) with any landfill disposal (as defined for the purposes of Part 3 of FA 1996) | Information and documents relating to the disposal | Landfill tax
.
15 (1) Paragraph 62 (meaning of “statutory records”) is amended as follows.
(2) In sub-paragraph (1), for paragraph (b) substitute—
(b) any other enactment relating to a tax,
.
(3) In sub-paragraph (2)(b), for “VATA 1994 or any other enactment relating to value added tax” substitute “ any other enactment relating to a tax ”.
SCHEDULE 49 Powers to obtain contact details for debtors
Section 97
Requirement for contact details for debtor
1 (1) This Schedule applies where—
(a) a sum is payable by a person (“the debtor”) to the Commissioners under or by virtue of an enactment or under a contract settlement,
(b) an officer of Revenue and Customs reasonably requires contact details for the debtor for the purpose of collecting that sum,
(c) the officer has reasonable grounds to believe that a person (“the third party”) has any such details, and
(d) the condition in sub-paragraph (2) is met.
(2) That condition is that—
(a) the third party is a company, a local authority or a local authority association, or
(b) the officer has reasonable grounds to believe that the third party obtained the details in the course of carrying on a business.
(3) This Schedule does not apply if—
(a) the third party is a charity and obtained the details in the course of providing services free of charge, or
(b) the third party is not a charity but obtained the details in the course of providing services on behalf of a charity that are free of charge to the recipient of the service.
Power to obtain details
2 (1) An officer of Revenue and Customs may by notice in writing require the third party to provide the details.
(2) The notice must name the debtor.
Complying with notices
3 If a notice is given to the third party under this Schedule, the third party must provide the details—
(a) within such period, and
(b) at such time, by such means and in such form (if any),
as is reasonably specified or described in the notice.
Right to appeal
4 (1) The third party may appeal against the notice or any requirement in the notice on the ground that it would be unduly onerous to comply with the notice or requirement.
(2) Paragraph 32 of Schedule 36 to FA 2008 (procedure on appeal to tribunal) applies to an appeal under this paragraph as it applies to an appeal relating to a notice under that Schedule.
Penalty
5 (1) This paragraph applies if the third party fails to comply with the notice.
(2) The third party is liable to a penalty of £300.
(3) Paragraphs 44 to 49 and 52 of Schedule 36 to FA 2008 (assessment and enforcement of penalties etc) apply in relation to a penalty under this paragraph as they apply in relation to a penalty under paragraph 39(1)(a) of that Schedule (and references in those provisions to an information notice include a notice under this Schedule).
Power to change amount of penalty
6 (1) If it appears to the Treasury that there has been a change in the value of money since the last relevant date, they may by regulations substitute for the sum for the time being specified in paragraph 5 such other sum as appears to them to be justified by the change.
(2) In sub-paragraph (1) “relevant date” means—
(a) the date on which this Act is passed, and
(b) each date on which the power conferred by that sub-paragraph has been exercised.
(3) Regulations under this paragraph do not apply to any failure which began before the date on which they come into force.
(4) Regulations made by the Treasury under this paragraph are to be made by statutory instrument.
(5) A statutory instrument containing regulations under this paragraph is subject to annulment in pursuance of a resolution of the House of Commons.
Application of provisions of TMA 1970
7 Subject to the provisions of this Schedule, the following provisions of TMA 1970 apply for the purposes of this Schedule as they apply for the purposes of the Taxes Acts—
(a) section 108 (responsibility of company officers),
(b) section 114 (want of form), and
(c) section 115 (delivery and service of documents).
General interpretation
8 In this Schedule—
“business” includes—
a profession, and
a property business;
...
“the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;
“contact details”, in relation to a person, means the person's address and any other information about how the person may be contacted;
“contract settlement” means an agreement made in connection with any person's liability to make a payment to the Commissioners under or by virtue of an enactment;
“enactment” includes subordinate legislation (within the meaning of the Interpretation Act 1978);
“local authority” has the meaning given in section 999 of ITA 2007;
“local authority association” has the meaning given in section 1000 of that Act;
“property business” has the same meaning as in ITTOIA 2005 (see section 263(6) of that Act).
Section 98
Insurance premium tax
1 (1) Paragraph 1 of Schedule 7 to FA 1994 (insurance premium tax: records) is amended as follows.
(2) In sub-paragraph (3)—
(a) after “may” insert
—
(a)
, and
(b) insert at the end—
(b) authorise the Commissioners to direct that any such records need only be preserved for a shorter period than that specified in the regulations, and
(c) authorise a direction to be made so as to apply generally or in such cases as the Commissioners may stipulate.
(3) For sub-paragraphs (4) to (6) substitute—
(4) A duty under the regulations 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.
2 In consequence of the amendment made by paragraph 1(3), in the Criminal Procedure (Consequential Provisions) (Scotland) Act 1995, in Schedule 4, omit paragraph 89(4)(a).
Stamp duty land tax
3 Part 4 of FA 2003 (stamp duty land tax) is amended as follows.
4 Schedule 10 (stamp duty land tax: returns, enquiries, assessments and appeals) is amended in accordance with paragraphs 5 to 7.
5 (1) Paragraph 9 (duty to keep and preserve records) is amended as follows.
(2) In sub-paragraph (2), for “for six years after the effective date of the transaction and until any later” substitute “ until the end of the later of the relevant day and the ”.
(3) After that sub-paragraph insert—
(2A) “The relevant day” means—
(a) the sixth anniversary of the effective date of the transaction, or
(b) such earlier day as may be specified in writing by the Commissioners for Her Majesty's Revenue and Customs (and different days may be specified for different cases).
(4) After sub-paragraph (3) insert—
(4) The Commissioners for Her Majesty's Revenue and Customs may by regulations—
(a) provide that the records required to be kept and preserved under this paragraph include, or do not include, records specified in the regulations, and
(b) provide that those records include supporting documents so specified.
(5) Regulations under this paragraph may make provision by reference to things specified in a notice published by the Commissioners for Her Majesty's Revenue and Customs in accordance with the regulations (and not withdrawn by a subsequent notice).
(6) “Supporting documents” includes accounts, books, deeds, contracts, vouchers and receipts.
6 For paragraph 10 (preservation of information instead of original records) substitute—
10 The duty under paragraph 9 to preserve records may be satisfied—
(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 for Her Majesty's Revenue and Customs.
7 Accordingly, in the heading before paragraph 10, for “instead of original records” substitute “ etc ”.
8 Schedule 11 (record-keeping where transaction is not notifiable) is amended in accordance with paragraphs 9 to 11.
9 (1) Paragraph 4 (duty to keep and preserve records) is amended as follows.
(2) In sub-paragraph (2), for “for six years after the effective date of the transaction” substitute
until the end of—
(a) the sixth anniversary of the effective date of the transaction, or
(b) such earlier day as may be specified in writing by the Commissioners for Her Majesty's Revenue and Customs (and different days may be specified for different cases).
(3) After sub-paragraph (3) insert—
(4) The Commissioners for Her Majesty's Revenue and Customs may by regulations—
(a) provide that the records required to be kept and preserved under this paragraph include, or do not include, records specified in the regulations, and
(b) provide that those records include supporting documents so specified.
(5) Regulations under this paragraph may make provision by reference to things specified in a notice published by the Commissioners for Her Majesty's Revenue and Customs in accordance with the regulations (and not withdrawn by a subsequent notice).
(6) “Supporting documents” includes accounts, books, deeds, contracts, vouchers and receipts.
10 For paragraph 5 (preservation of information instead of original records) substitute—
5 The duty under paragraph 4 to preserve records may be satisfied—
(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 for Her Majesty's Revenue and Customs.
11 Accordingly, in the heading before paragraph 5, for “instead of original records” substitute “ etc ”.
12 Schedule 11A (claims not included in returns) is amended in accordance with paragraphs 13 and 14.
13 (1) Paragraph 3 (duty to keep and preserve records) is amended as follows.
(2) Omit sub-paragraphs (3) and (4).
(3) After sub-paragraph (4) insert—
(4A) The Commissioners for Her Majesty's Revenue and Customs may by regulations—
(a) provide that the records required to be kept and preserved under this paragraph include, or do not include, records specified in the regulations, and
(b) provide that those records include supporting documents so specified.
(4B) Regulations under this paragraph may make provision by reference to things specified in a notice published by the Commissioners for Her Majesty's Revenue and Customs in accordance with the regulations (and not withdrawn by a subsequent notice).
(4C) “Supporting documents” includes accounts, books, deeds, contracts, vouchers and receipts.
14 After that paragraph insert—
Preservation of information etc
3A The duty under paragraph 3 to preserve records may be satisfied—
(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 for Her Majesty's Revenue and Customs.
Aggregates levy
15 Schedule 7 to FA 2001 (aggregates levy: information and evidence etc) is amended as follows.
16 (1) Paragraph 2 (records) is amended as follows.
(2) For sub-paragraphs (4) and (5) substitute—
(4) A duty under regulations under this paragraph 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.
(3) In sub-paragraph (9), omit “approval or” and “given or”.
17 Omit paragraph 3 (evidence of records that are required to be preserved).
Climate change levy
18 Schedule 6 to FA 2000 (climate change levy) is amended as follows.
19 (1) Paragraph 125 (records) is amended as follows.
(2) For sub-paragraphs (4) and (5) substitute—
(4) A duty under regulations under this paragraph 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.
(3) In sub-paragraph (9), omit “approval or” and “given or”.
20 Omit paragraph 126 (evidence of records that are required to be preserved).
Landfill tax
21 In paragraph 2 of Schedule 5 to FA 1996 (landfill tax: records), for sub-paragraphs (4) to (7) substitute—
(4) A duty under regulations under this paragraph 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.
SCHEDULE 51 Time limits for assessments, claims etc
Section 99
Insurance premium tax
1 Schedule 7 to FA 1994 (insurance premium tax) is amended as follows.
2 In paragraph 8(4) (recovery of overpaid tax), for “three years” substitute “ 4 years ”.
3 In paragraph 22(9) (interest payable by Commissioners), for “three years” substitute “ 4 years ”.
4 (1) Paragraph 26 (assessments: time limits) is amended as follows.
(2) In sub-paragraph (1), for the words from “three years after”, in the first place, to the end substitute “ 4 years after the relevant event ”.
(3) After that sub-paragraph insert—
(1A) In this paragraph “the relevant event”, in relation to an assessment, means—
(a) the end of the accounting period concerned, or
(b) in the case of an assessment under paragraph 25 of an amount due by way of a penalty other than a penalty referred to in paragraph 25(2), the event giving rise to the penalty.
(4) In sub-paragraph (3), for “sub-paragraph (1)” substitute “ sub-paragraph (1A) ”.
(5) For sub-paragraph (4) substitute—
(4) An assessment of an amount due from a person in a case involving a loss of tax—
(a) brought about deliberately by the person (or by another person acting on that person's behalf), or
(b) attributable to a failure by the person to comply with an obligation under section 53(1) or (2) or 53AA(1) or (3),
may be made at any time not more than 20 years after the relevant event.
(5) In sub-paragraph (4)(a) the reference to a loss brought about deliberately by the person includes a loss brought about as a result of a deliberate inaccuracy in a document given to Her Majesty's Revenue and Customs by or on behalf of that person.
Inheritance tax
5 IHTA 1984 is amended as follows.
6 In section 131 (transfers within 7 years before death: the relief), after subsection (2) insert—
(2ZA) A claim under subsection (2)(b) must be made not more than 4 years after the transferor's death.
7 In section 146(2)(a) (Inheritance (Provision for Family and Dependants) Act 1975), after “claim for the purpose” insert “ not more than 4 years after the date on which the order is made ”.
8 In section 150 (voidable transfers), insert at the end—
(3) A claim under this section must be made not more than 4 years after the claimant knew, or ought reasonably to have known, that the relevant transfer has been set aside.
9 In section 179 (sale of shares etc from deceased's estate: the relief), after subsection (2) insert—
(2A) A claim under this Chapter must be made not more than 4 years after the end of the period mentioned in subsection (1)(a).
10 In section 191 (sale of land from deceased's estate: the relief), after subsection (1) insert—
(1A) A claim under this Chapter must be made not more than 4 years after the end of the period mentioned in subsection (1)(a).
11 (1) Section 240 (underpayments) is amended as follows.
(2) In subsection (2), for “six years” substitute “ 4 years ”.
(3) For subsection (3) substitute—
(3) Subsection (2) has effect subject to subsections (4) and (5).
(4) Proceedings in a case involving a loss of tax brought about carelessly by a person liable for the tax (or a person acting on behalf of such a person) may be brought at any time not more than 6 years after the later of the dates in subsection (2)(a) and (b).
(5) Proceedings in a case involving a loss of tax brought about deliberately by a person liable for the tax (or a person acting on behalf of such a person) may be brought at any time not more than 20 years after the later of those dates.
(6) Subsection (7) applies to any case not falling within subsection (2) where too little tax has been paid in respect of a chargeable transfer, provided that the case does not involve a loss of tax brought about deliberately by a person liable for the tax (or a person acting on behalf of such a person).
(7) Where this subsection applies—
(a) no proceedings are to be brought for the recovery of the tax after the end of the period of 20 years beginning with the date on which the chargeable transfer was made, and
(b). at the end of that period any liability for the tax and any Inland Revenue charge for that tax is extinguished.
(8) In relation to cases of tax chargeable under Chapter 3 of Part 3 of this Act (apart from section 79), the references in subsections (4), (5) and (6) to a person liable for the tax are to be treated as including references to a person who is the settlor in relation to the settlement.
12 After that section insert—
Underpayments: supplementary
240A (1) This section applies for the purposes of section 240.
(2) A loss of tax is brought about carelessly by a person if the person fails to take reasonable care to avoid bringing about that loss.
(3) Where—
(a) information is provided to Her Majesty's Revenue and Customs,
(b) the person who provided the information, or the person on whose behalf the information was provided, discovers some time later that the information was inaccurate, and
(c) that person fails to take reasonable steps to inform Her Majesty's Revenue and Customs,
any loss of tax brought about by the inaccuracy is to be treated as having been brought about carelessly by that person.
(4) References to a loss of tax brought about deliberately by a person include a loss of tax brought about as a result of a deliberate inaccuracy in a document given to Her Majesty's Revenue and Customs by or on behalf of that person.
13 In section 241(1) (overpayments), for “six years” substitute “ 4 years ”.
Stamp duty land tax
14 Part 4 of FA 2003 (stamp duty land tax) is amended as follows.
15 (1) Schedule 10 (returns, enquiries, assessments and appeals) is amended as follows.
(2) In paragraph 25(3) (determination of tax chargeable if no return delivered), for “six years” substitute “ 4 years ”.
(3) In paragraph 27(2)(a) (determination superseded by actual self-assessment), for “six years” substitute “ 4 years ”.
(4) Paragraph 31 (time limit for assessment) is amended in accordance with sub-paragraphs (5) to (8).
(5) In sub-paragraph (1), for “six years” substitute “ 4 years ”.
(6) For sub-paragraph (2) substitute—
(2) An assessment of a person to tax in a case involving a loss of tax brought about carelessly by the purchaser or a related person may be made at any time not more than 6 years after the effective date of the transaction to which it relates (subject to sub-paragraph (2A)).
(2A) An assessment of a person to tax in a case involving a loss of tax—
(a) brought about deliberately by the purchaser or a related person,
(b) attributable to a failure by the person to comply with an obligation under section 76(1) or paragraph 3(3)(a), 4(3)(a) or 8(3)(a) of Schedule 17A, or
(c) attributable to arrangements in respect of which the person has failed to comply with an obligation under section 309, 310 or 313 of the Finance Act 2004 (obligation of parties to tax avoidance schemes to provide information to Her Majesty's Revenue and Customs),
may be made at any time not more than 20 years after the effective date of the transaction to which it relates.
(7) In sub-paragraph (4)(a), for “three years” substitute “ 4 years ”.
(8) After sub-paragraph (5) insert—
(6) In this paragraph “related person”, in relation to a purchaser, means—
(a) a person acting on behalf of the purchaser, or
(b) a person who was a partner of the purchaser at the relevant time.
(9) After paragraph 31 insert—
Losses brought about carelessly or deliberately
31A (1) This paragraph applies for the purposes of paragraph 31.
(2) A loss of tax is brought about carelessly by a person if the person fails to take reasonable care to avoid bringing about that loss.
(3) Where—
(a) information is provided to Her Majesty's Revenue and Customs,
(b) the person who provided the information, or the person on whose behalf the information was provided, discovers some time later that the information was inaccurate, and
(c) that person fails to take reasonable steps to inform Her Majesty's Revenue and Customs,
any loss of tax brought about by the inaccuracy is to be treated as having been brought about carelessly by that person.
(4) References to a loss of tax brought about deliberately by a person include a loss of tax brought about as a result of a deliberate inaccuracy in a document given to Her Majesty's Revenue and Customs by or on behalf of that person.
(10) In paragraph 34(2) (relief in case of mistake in return), for “six years” substitute “ 4 years ”.
16 (1) Paragraph 8 of Schedule 14 (time limit for determination of penalties) is amended as follows.
(2) In sub-paragraph (2)—
(a) for “six years” substitute “ 4 years ”, and
(b) after “began to be incurred” insert “ (“the relevant date”) ”.
(3) In sub-paragraph (3), insert at the end “(subject to any of the following provisions of this paragraph allowing a longer period)”.
(4) After sub-paragraph (4) insert—
(4A) Where a person is liable to a penalty in a case involving a loss of tax brought about carelessly by the person (or by another person acting on that person's behalf), the penalty may be determined, or the proceedings may be brought, at any time not more than 6 years after the relevant date (subject to sub-paragraphs (4B) and (5)).
(4B) Where a person is liable to a penalty in a case involving a loss of tax—
(a) brought about deliberately by the person (or by another person acting on that person's behalf),
(b) attributable to a failure by the person to comply with an obligation under section 76(1) or paragraph 3(3)(a), 4(3)(a) or 8(3)(a) of Schedule 17A, or
(c) attributable to arrangements in respect of which the person has failed to comply with an obligation under section 309, 310 or 313 of the Finance Act 2004 (obligation of parties to tax avoidance schemes to provide information to Her Majesty's Revenue and Customs),
the penalty may be determined, or the proceedings may be brought, at any time not more than 20 years after the relevant date.
(4C) Paragraph 31A of Schedule 10 (losses brought about carelessly or deliberately) applies for the purpose of this paragraph.
Petroleum revenue tax
17 OTA 1975 is amended as follows.
18 (1) The Table in paragraph 1(1) of Schedule 2 (applying provisions of TMA 1970 in relation to management and collection of petroleum revenue tax) is amended as follows.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) Omit the entries relating to sections 34 and 36 of TMA 1970.
19 In paragraph 10 of Schedule 2 (assessments to tax and determinations of loss etc), after sub-paragraph (1) insert—
(1A) An assessment under sub-paragraph (1) may be made at any time not more than 4 years after the end of the chargeable period to which it relates (subject to paragraphs 12A and 12B).
20 (1) Paragraph 12 of Schedule 2 (further assessments and determinations) is amended as follows.
(2) After sub-paragraph (1) insert—
(1A) An assessment (or an amendment of an assessment) under sub-paragraph (1) may be made at any time not more than 4 years after the end of the chargeable period to which the assessment relates (subject to sub-paragraph (1B) and paragraphs 12A and 12B).
(1B) The time limits in sub-paragraph (1A) and paragraphs 12A and 12B do not apply to an amendment of an assessment where the amendment is made in consequence (directly or indirectly) of—
(a) the granting of relief under section 7(2) or (3) to any participator for allowable losses accruing in any chargeable period, or
(b) a notice of variation served under paragraph 9 of Schedule 5 on any responsible person in respect of a claim for any claim period.
(3) In sub-paragraph (2)—
(a) omit “(notwithstanding anything in section 34 of the Taxes Management Act 1970 (ordinary time limit for assessment))”,
(b) for “six years” substitute “ 4 years ”, and
(c) insert at the end “(subject to paragraphs 12A and 12B)”.
21 In paragraph 12A(1) of Schedule 2 (time limit for assessment following extension of time for delivery of return), for “five years” substitute “ 4 years ”.
22 In that Schedule, after paragraph 12A insert—
12B (1) In a case involving a relevant situation brought about carelessly by a participator (or a person acting on behalf of a participator), an assessment (or an amendment of an assessment) under this Schedule on the participator may be made at any time not more than 6 years after the end of the relevant chargeable period (subject to sub-paragraph (2)).
(2) In a case involving a relevant situation brought about deliberately by a participator (or a person acting on behalf of a participator), an assessment (or an amendment of an assessment) on the participator may be made at any time not more than 20 years after the end of the relevant chargeable period.
(3) “Relevant situation” means a situation in which—
(a) there is a loss of tax,
(b) the assessable profit charged to tax by or stated in an assessment for a chargeable period ought to be or to have been larger,
(c) the allowable loss stated in an assessment or a determination of loss for a chargeable period ought to be or to have been smaller, or
(d) an assessment to tax should have been made for a chargeable period but was not made.
(4) “Relevant chargeable period” means—
(a) in the case of a further assessment under paragraph 12(2), the chargeable period in which the excessive allowable loss accrued, and
(b) in any other case, the chargeable period to which the assessment relates.
(5) Where the participator carried on a trade or business with one or more other persons at any time in the chargeable period for which the assessment under sub-paragraph (1) or (2) is made, an assessment to tax in respect of the profits of that trade or business may also be made on any of the participator's partners.
(6) In determining the amount of the tax to be charged on a person for a chargeable period in an assessment in a case mentioned in sub-paragraph (1) or (2) (including an assessment under sub-paragraph (5)), effect must be given to any relief or allowance to which that person would have been entitled for that period if a valid claim or application had been made.
(7) Sub-paragraph (6) only applies if the person on whom the assessment is made so requires.
(8) Subsections (5) to (7) of section 118 of the Taxes Management Act 1970 (losses and situations brought about carelessly or deliberately) apply for the purposes of this paragraph as they apply for the purposes of that Act.
(9) In subsection (6)(b) of that section (as it applies for the purposes of this paragraph), the reference to the person who provides the information has effect as if it included any person who becomes the responsible person for the oil field after the information is provided.
23 (1) Paragraph 2 of Schedule 5 (allowance of expenditure other than abortive exploration expenditure: claim period) is amended as follows.
(2) In sub-paragraph (1), for “six years” substitute “ 4 years ”.
(3) In sub-paragraph (7)—
(a) in paragraph (c), for “four years” substitute “ 2 years ”, and
(b) in the words after that paragraph, for “six years” substitute “ 4 years ”.
24 (1) Paragraph 9 of Schedule 5 (allowance of expenditure other than abortive exploration expenditure: notice of variation) is amended as follows.
(2) In sub-paragraph (1)—
(a) omit the words from “, within” to “field,”,
(b) for “in the notice” substitute “ in a notice of a decision under paragraph 3 above given to the responsible person for an oil field ”, and
(c) for “that period” substitute “ the permitted period ”.
(3) Omit sub-paragraphs (1A) to (1C) and (2A).
(4) After sub-paragraph (2A) insert—
(2B) In this paragraph “permitted period” means the period of 4 years beginning with the date on which the notice of the decision under paragraph 3 was given (but see sub-paragraph (2C)).
(2C) Where the relevant amount was overstated in the notice of decision as a result of an inaccuracy in a statement or declaration made by the responsible person (or a person acting on behalf of the responsible person) in connection with the claim—
(a) if the inaccuracy was careless, the permitted period is extended to 6 years, and
(b) if the inaccuracy was deliberate, the permitted period is extended to 20 years.
(5) Omit sub-paragraph (11).
(6) Insert at the end—
(12) For the purposes of this section, an inaccuracy in a statement or declaration made by the responsible person (or a person acting on behalf of the responsible person) is careless if it is due to a failure by the person to take reasonable care.
(13) An inaccuracy in a statement or declaration made by the responsible person (or a person acting on behalf of the responsible person) is to be treated as careless if—
(a) the responsible person, the person who acted on behalf of the responsible person or any person who becomes the responsible person for the oil field after the statement or declaration is made discovers the inaccuracy some time after it is made, and
(b) that person fails to take reasonable steps to inform Her Majesty's Revenue and Customs.
25 (1) Schedule 6 (allowance of expenditure (other than abortive exploration expenditure) on claim by participator) is amended as follows.
(2) In paragraph 1(2) (claim period), for “six years” substitute “ 4 years ”.
(3) In paragraph 2 (applying provisions of Schedule 5), in the Table, in the entry relating to paragraph 9 of Schedule 5, omit the words in the second column.
26 In paragraph 1(3) of Schedule 7 (allowance of abortive exploration expenditure), in the Table, in the entry relating to paragraph 9 of Schedule 5, in the second column omit—
(a) the words “In sub-paragraph (1C) omit paragraph (c)” and “omit sub-paragraph (2A)”, and
(b) the words from “and in sub-paragraph (11)” to the end.
Aggregates levy
27 Part 2 of FA 2001 (aggregates levy) is amended as follows.
28 In section 32(1) (repayments of overpaid aggregates levy), for “three years” substitute “ 4 years ”.
29 (1) Paragraph 4 of Schedule 5 (time limits for assessments) is amended as follows.
(2) In sub-paragraph (1)(b), for “three years” substitute “ 4 years ”.
(3) For sub-paragraph (3) substitute—
(3) An assessment of an amount due from a person in a case involving a loss of aggregates levy—
(a) brought about deliberately by the person (or by another person acting on that person's behalf), or
(b) attributable to a failure by the person to comply with an obligation under section 24(2) or paragraph 1 of Schedule 4,
may be made at any time not more than 20 years after the end of the accounting period to which it relates (subject to sub-paragraph (4)).
(3A) In sub-paragraph (3)(a) the reference to a loss brought about deliberately by the person includes a loss brought about as a result of a deliberate inaccuracy in a document given to Her Majesty's Revenue and Customs by or on behalf of that person.
(4) In sub-paragraph (4)—
(a) in paragraph (a), for “three years” substitute “ 4 years ”, and
(b) omit paragraph (b) (and the “and” before it).
30 In paragraph 2(10) of Schedule 8 (interest payable by Commissioners), for “three years” substitute “ 4 years ”.
31 (1) Paragraph 4 of Schedule 10 (time limits on penalty assessments) is amended as follows.
(2) In sub-paragraph (1), for “three years” substitute “ 4 years ”.
(3) For sub-paragraph (2) substitute—
(2) An assessment of a person to a civil penalty in a case involving a loss of aggregates levy—
(a) brought about deliberately by the person (or by another person acting on that person's behalf), or
(b) attributable to a failure by the person to comply with an obligation under section 24(2) or paragraph 1 of Schedule 4,
may be made at any time not more than 20 years after the conduct to which the penalty relates (subject to sub-paragraph (3)).
(2A) In sub-paragraph (2)(a) the reference to a loss brought about deliberately by the person includes a loss brought about as a result of a deliberate inaccuracy in a document given to Her Majesty's Revenue and Customs by or on behalf of that person.
(4) In sub-paragraph (3)—
(a) in paragraph (a), for “three years” substitute “ 4 years ”, and
(b) omit paragraph (b) (and the “and” before it).
Climate change levy
32 Schedule 6 to FA 2000 (climate change levy) is amended as follows.
33 In paragraph 64(1) (repayments of overpaid climate change levy), for “three years” substitute “ 4 years ”.
34 In paragraph 66(10) (interest payable by the Commissioners), for “three years” substitute “ 4 years ”.
35 (1) Paragraph 80 (time limits for assessments) is amended as follows.
(2) In sub-paragraph (1)(b), for “three years” substitute “ 4 years ”.
(3) For sub-paragraph (3) substitute—
(3) An assessment of an amount due from a person in a case involving a loss of levy—
(a) brought about deliberately by the person (or by another person acting on that person's behalf), or
(b) attributable to a failure by the person to comply with an obligation under paragraph 53 or 55,
may be made at any time not more than 20 years after the end of the accounting period to which it relates (subject to sub-paragraph (4)).
(3A) In sub-paragraph (3)(a) the reference to a loss brought about deliberately by the person includes a loss brought about as a result of a deliberate inaccuracy in a document given to Her Majesty's Revenue and Customs by or on behalf of that person.
(4) In sub-paragraph (4)—
(a) in paragraph (a), for “three years” substitute “ 4 years ”, and
(b) omit paragraph (b) (and the “and” before it).
36 (1) Paragraph 108 (time limits on penalty assessments) is amended as follows.
(2) In sub-paragraph (1), for “three years” substitute “ 4 years ”.
(3) For sub-paragraph (2) substitute—
(2) An assessment of a person to a penalty in a case involving a loss of levy—
(a) brought about deliberately by the person (or by another person acting on that person's behalf), or
(b) attributable to a failure by the person to comply with an obligation under paragraph 53 or 55,
may be made at any time not more than 20 years after the conduct to which the penalty relates (subject to sub-paragraph (3)).
(2A) In sub-paragraph (2)(a) the reference to a loss brought about deliberately by the person includes a loss brought about as a result of a deliberate inaccuracy in a document given to Her Majesty's Revenue and Customs by or on behalf of that person.
(4) In sub-paragraph (3)—
(a) in paragraph (a), for “three years” substitute “ 4 years ”, and
(b) omit paragraph (b) (and the “and” before it).
Landfill tax
37 Schedule 5 to FA 1996 (landfill tax) is amended as follows.
38 In paragraph 14(4) (recovery of overpaid tax), for “three years” substitute “ 4 years ”.
39 In paragraph 29(8) (interest payable by Commissioners), for “three years” substitute “ 4 years ”.
40 (1) Paragraph 33 (assessments: time limits) is amended as follows.
(2) In sub-paragraph (1)—
(a) for “three years” (in the first place) substitute “ 4 years ”, and
(b) for the words from “the end of” to the end substitute “ the relevant event ”.
(3) After that sub-paragraph insert—
(1A) In this paragraph “the relevant event”, in relation to an assessment, means—
(a) the end of the accounting period concerned, or
(b) in the case of an assessment under paragraph 32 of an amount due by way of a penalty other than a penalty referred to in paragraph 32(2), the event giving rise to the penalty.
(4) In sub-paragraph (3), for “sub-paragraph (1)” substitute “ sub-paragraph (1A) ”.
(5) For sub-paragraph (4) substitute—
(4) An assessment of an amount due from a person in a case involving a loss of tax—
(a) brought about deliberately by the person (or by another person acting on that person's behalf), or
(b) attributable to a failure by the person to comply with an obligation under section 47(2) or (3),
may be made at any time not more than 20 years after the relevant event (subject to sub-paragraph (5)).
(4A) In sub-paragraph (4)(a) the reference to a loss brought about deliberately by the person includes a loss brought about as a result of a deliberate inaccuracy in a document given to Her Majesty's Revenue and Customs by or on behalf of that person.
(6) In sub-paragraph (5)—
(a) in paragraph (a), for “three years” substitute “ 4 years ”, and
(b) omit paragraph (b) (and the “and” before it).
Minor and consequential provision
41 In section 36 of TMA 1970 (loss of tax brought about carelessly or deliberately etc), in subsections (2) and (3), for “for the purpose” substitute “ in a case ”.
42 In Schedule 39 to FA 2008, omit paragraph 66 (saving for provisions of TMA 1970 as applied by OTA 1975).
43 In consequence of the amendments made by this Schedule, omit—
(a) in FA 1990, section 122, and
(b) in FA 1997, in Schedule 5, paragraph 6(2)(b) and (c).
Section 100
Part 1 Income tax and capital gains tax
Claims for recovery of overpaid tax etc
1 In TMA 1970, for sections 33 and 33A substitute—
Recovery of overpaid tax etc
33 Schedule 1AB contains provision for and in connection with claims for the recovery of overpaid income tax and capital gains tax.
2 After Schedule 1AA to that Act insert—
SCHEDULE 1AB
Recovery of overpaid tax etc
Section 33
Claim for relief for overpaid tax etc
1 (1) This paragraph applies where—
(a) a person has paid an amount by way of income tax or capital gains tax but the person believes that the tax was not due, or
(b) a person has been assessed as liable to pay an amount by way of income tax or capital gains tax, or there has been a determination or direction to that effect, but the person believes that the tax is not due.
(2) The person may make a claim to the Commissioners for repayment or discharge of the amount.
(3) Paragraph 2 makes provision about cases in which the Commissioners are not liable to give effect to a claim under this Schedule.
(4) Paragraphs 3 to 7 (and sections 42 to 43C and Schedule 1A) make further provision about making and giving effect to claims under this Schedule.
(5) Paragraph 8 makes provision about the application of this Schedule to amounts paid under contract settlements.
(6) The Commissioners 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 1A (following a claim under this paragraph), or
(b) by or under another provision of the Income Tax Acts or an enactment relating to the taxation of capital gains.
(7) For the purposes of this Schedule 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 claim
2 (1) The Commissioners are not liable to give effect to a claim under this Schedule if or to the extent that the claim falls within a case described in this paragraph (see also paragraph 4(5)).
(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,
(b) a mistake consisting of making or giving, or failing to make or give, a claim, election or notice,
(c) a mistake in allocating expenditure to a pool for the purposes of the Capital Allowances Act or a mistake consisting of making, or failing to make, such an allocation, or
(d) a mistake in bringing a disposal value into account for the purposes of that Act or a mistake consisting of bringing, or failing to bring, such a value into account.
(3) Case B is where the claimant is or will be able to seek relief by taking other steps under the Income Tax Acts or an enactment relating to the taxation of capital gains.
(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 section 54 (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 income tax or capital gains tax (other than a mistake in a PAYE assessment or PAYE calculation), and
(b) liability was calculated in accordance with the practice generally prevailing at the time.
(9) Case H is where—
(a) the amount paid, or liable to be paid, is excessive by reason of a mistake in a PAYE assessment or PAYE calculation, and
(b) the assessment or calculation was made in accordance with the practice generally prevailing at the end of the period of 12 months following the tax year for which the assessment or calculation was made.
(10) For the purposes of Cases G and H—
(a) “PAYE assessment” means an assessment on the claimant made in accordance with section 709 of ITEPA 2003 (assessment in connection with PAYE deductions), and
(b) “PAYE calculation” means a calculation of the amount of a deduction or repayment made or to be made under PAYE regulations in respect of tax estimated to be payable by the claimant.
Making a claim
3 (1) A claim under this Schedule may not be made more than 4 years after the end of the relevant tax year.
(2) In relation to a claim made in reliance on paragraph 1(1)(a), the relevant tax year is—
(a) where the amount paid, or liable to be paid, is excessive by reason of a mistake in a return or returns under section 8, 8A or 12AA of this Act, the tax year to which the return (or, if more than one, the first return) relates, and
(b) otherwise, the tax year in respect of which the payment was made.
(3) In relation to a claim made in reliance on paragraph 1(1)(b), the relevant tax year is the tax year to which the assessment, determination or direction relates.
(4) A claim under this Schedule may not be made by being included in a return under section 8, 8A or 12AA of this Act.
The claimant: one person accountable for amounts payable by another etc
4 (1) Sub-paragraph (2) applies where, under a relevant enactment, a person (“P”) is accountable to the Commissioners for—
(a) an amount representing income tax or capital gains tax that is or is estimated to be payable by another person (“T”), or
(b) any other amount that, under a relevant enactment, has been or is to be set off against a liability of T.
(2) A claim under this Schedule in respect of the amount may be made only by T.
(3) Sub-paragraph (4) applies where—
(a) a person (“P”) has paid an amount described in sub-paragraph (1)(a) or (b) in the belief that P was accountable to the Commissioners for the amount under a relevant enactment, but
(b) P was not so accountable.
(4) A claim under this Schedule in respect of the amount may be made only by P.
(5) The Commissioners are not liable to give effect to a claim under sub-paragraph (4) if or to the extent that the amount has been repaid to T or set against amounts payable to the Commissioners by T.
(6) “Relevant enactment” means—
(a) PAYE regulations,
(b) Chapter 3 of Part 3 of the Finance Act 2004 or regulations under that Chapter (construction industry scheme), or
(c) any other provision of or made under the Taxes Acts.
The claimant: partnerships
5 (1) This paragraph applies where—
(a) a trade, profession or business is carried on by two or more persons in partnership,
(b) an amount is paid, or liable to be paid, by one or more of those persons in accordance with a self-assessment, and
(c) the amount is excessive by reason of a mistake in a partnership return.
(2) A claim under this Schedule in respect of the amount—
(a) may be made by the relevant partner nominated to make the claim by all of the relevant partners, and
(b) may not be made by any other person.
(3) In relation to such a claim, references in this Schedule to the claimant are to any of the relevant partners.
(4) “Relevant partner” means—
(a) a person who was a partner in the partnership at any time during the period in respect of which the partnership return was made, or
(b) the personal representative of such a person.
Assessment of claimant in connection with claim
6 (1) This paragraph applies where—
(a) a claim is made under this Schedule,
(b) the grounds for giving effect to the claim also provide grounds for a discovery assessment or determination on the claimant in respect of any chargeable period, and
(c) such an assessment or determination could be made but for a relevant restriction.
(2) “Discovery assessment or determination” means—
(a) an assessment under section 29(1), or
(b) a discovery assessment or discovery determination under Schedule 18 to the Finance Act 1998 (company tax return etc).
(3) The following are relevant restrictions—
(a) the conditions in section 29(3) to (5),
(b) the restrictions in paragraphs 42 to 45 of Schedule 18 to the Finance Act 1998, and
(c) the expiry of a time limit for making a discovery assessment or determination.
(4) Where this paragraph applies—
(a) the relevant restrictions are to be disregarded, and
(b) the discovery assessment or determination is not out of time if it is made before the final determination of the claim.
Amendment of partnership return etc in connection with claim
7 (1) This paragraph applies where—
(a) a claim is made under this Schedule,
(b) the claimant is one of two or more persons carrying on a trade, profession or business in partnership,
(c) the grounds for giving effect to the claim also provide grounds for amending, under section 30B(1) (discovery of loss of tax from partnership), a return made by the partnership or any of the partners in respect of any period, and
(d) such an amendment could be made but for a relevant restriction.
(2) The following are relevant restrictions—
(a) the conditions in section 30B(4) to (6), and
(b) the expiry of a time limit for making an assessment under that section.
(3) Where this paragraph applies—
(a) the relevant conditions are to be disregarded, and
(b) the amendment is not out of time if it is made before the final determination of the claim.
Contract settlements
8 (1) In paragraph 1(1)(a) the reference to an amount paid by way of income tax or capital gains tax includes an amount paid under a contract settlement in connection with income tax or capital gains tax believed to be due from any person.
(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 this Schedule in respect of that amount—
(a) the references to the claimant in paragraph 2(5) to (7) (Cases D, E and F) have effect as if they included the taxpayer,
(b) the references to the claimant in paragraph 2(8) and (10) (Cases G and H) have effect as if they were references to the taxpayer,
(c) the references to the claimant in paragraphs 6(1)(b) and 7(1)(b) have effect as if they were references to the taxpayer, and
(d) references to tax in Schedule 1A (as it applies to a claim under this Schedule) 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 or determination on the taxpayer in respect of any chargeable period.
(5) The Commissioners 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 or determination.
(6) The obligations of the Commissioners and the taxpayer are discharged to the extent of any set-off under sub-paragraph (5).
(7) In this paragraph—
“contract settlement” means an agreement made in connection with any person's liability to make a payment to the Commissioners under or by virtue of an enactment;
“discovery assessment or determination” has the same meaning as in paragraph 6.
Interpretation
9 (1) In this Schedule “the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs.
(2) For the purposes of this Schedule 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).
Consequential amendments
3 TMA 1970 is amended as follows.
4 For the heading before section 32 substitute “Overpaid tax, excessive assessments etc”.
5 (1) Section 43A (further assessments etc) is amended as follows.
(2) After subsection (2A) insert—
(2B) For the purposes of this section and section 43B below, a claim under Schedule 1AB is relevant in relation to an assessment for a year of assessment if it relates to that year of assessment.
(3) In subsection (3), for “a claim” substitute “ any other claim ”.
6 (1) In paragraph 1 of Schedule 1A (claims etc not included in returns), in the definition of “partnership claim”, after “46(2)(b) of” insert “ , or paragraph 5 of Schedule 1AB to, ”.
7 (1) Paragraph 4 of that Schedule (giving effect to claims and amendments) is amended as follows.
(2) In sub-paragraph (1)—
(a) for “and (4)” substitute “ to (5) ”, and
(b) omit “and to any other provision in the Taxes Acts which otherwise provides”.
(3) In sub-paragraph (2), for “and (4)” substitute “ to (5) ”.
(4) Insert at the end—
(5) This paragraph has effect subject to any provision in the Taxes Acts that—
(a) requires or allows effect to be given to a claim by other means, or
(b) provides that an amount is not to be discharged or repaid.
8 In Schedule 3ZA (date by which payment to be made after amendment or correction of self-assessment), omit paragraph 10 (amendment following claim for error or mistake relief).
9 (1) Section 70H of CAA 2001 (lessee: requirement for tax return treating lease as long funding lease) is amended as follows.
(2) In subsection (2), for “for relief under the error or mistake provisions in respect of” substitute “ under the recovery provisions for relief in respect of an amount paid or liable to be paid that is excessive by reason of ”.
(3) In subsection (3)—
(a) for “ “the error or mistake provisions”” substitute “ ;the recovery provisions ”, and
(b) for “section 33 of” substitute “ Schedule 1AB to ”.
Transitional provision
10 (1) In relation to a relevant claim, paragraph 3(1) of Schedule 1AB to TMA 1970 (inserted by this Part of this Schedule) has effect as if for “more than 4 years after” there were substituted “ more than 5 years after the 31st January next following ”.
(2) “Relevant claim” means a claim within paragraph 3(2)(a) of Schedule 1AB to TMA 1970 that—
(a) is made before 1 April 2012 by a person other than a company, and
(b) satisfies sub-paragraph (3).
(3) A claim satisfies this sub-paragraph if notice requiring the return (or, if more than one, the first return) mentioned in paragraph 3(2)(a) of Schedule 1AB to TMA 1970 was not given within one year of the end of the tax year to which the return relates.
Saving for petroleum revenue tax
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Part 2 Corporation tax
Claims for recovery of overpaid tax etc
12 Schedule 18 to FA 1998 (company tax returns, assessments and related matters) is amended as follows.
13 For paragraph 51 (and the heading before that paragraph) substitute—
Claim for relief for overpaid tax etc
51 (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 or direction 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 51A 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 51B to 51F and Part 7 of this Schedule, and
(b) Schedule 1A to the Taxes Management Act 1970 (which is applied by that Part).
(5) Paragraph 51G makes provision about the application of this paragraph and paragraphs 51A to 51F 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 1A to the Taxes Management Act 1970 (following a claim under this paragraph), or
(b) by or under another provision of the Corporation Tax Acts.
(7) For the purposes of this paragraph and paragraphs 51A to 51G, 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
51A (1) The Commissioners for Her Majesty's Revenue and Customs are not liable to give effect to a claim under paragraph 51 if or to the extent that the claim falls within a case described in this paragraph (see also paragraph 51C(5)).
(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 a notice,
(b) a mistake consisting of making or giving, or failing to make or give, a claim, election or notice,
(c) a mistake in allocating expenditure to a pool for the purposes of the Capital Allowances Act or a mistake consisting of making, or failing to make, such an allocation, or
(d) a mistake in bringing a disposal value into account for the purposes of that Act or a mistake consisting of bringing, or failing to bring, such a value into account.
(3) Case B is where the claimant is or will be able to seek relief by taking other steps under the Corporation Tax Acts.
(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 section 54 of the Taxes Management Act 1970 (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 corporation tax, and
(b) liability was calculated in accordance with the practice generally prevailing at the time.
Making a claim
51B (1) A claim under paragraph 51 may not be made more than 4 years after the end of the relevant accounting period.
(2) In relation to a claim made in reliance on paragraph 51(1)(a), the relevant accounting period is—
(a) where the amount paid, or liable to be paid, is excessive by reason of a mistake in a company tax return or returns, the accounting period to which the return (or, if more than one, the first return) relates, and
(b) otherwise, the accounting period in respect of which the amount was paid.
(3) In relation to a claim made in reliance on paragraph 51(1)(b), the relevant accounting period is the accounting period to which the assessment, determination or direction relates.
(4) A claim under paragraph 51 may not be made by being included in a company tax return.
The claimant: one person accountable for amounts payable by another
51C (1) Sub-paragraph (2) applies where a person (“P”) is accountable to the Commissioners for Her Majesty's Revenue and Customs under a relevant enactment for an amount that has been or is to be set off against a liability of another person (“T”) under a relevant enactment.
(2) A claim under paragraph 51 in respect of the amount may be made only by T.
(3) Sub-paragraph (4) applies where—
(a) a person (“P”) has paid an amount described in sub-paragraph (1) in the belief that P was accountable to the Commissioners for the amount under a relevant enactment, but
(b) P was not so accountable.
(4) A claim under paragraph 51 in respect of the amount may be made only by P.
(5) The Commissioners for Her Majesty's Revenue and Customs are not liable to give effect to a claim under sub-paragraph (4) if or to the extent that the amount has been repaid to T or set against amounts payable to the Commissioners by T.
(6) “Relevant enactment” means—
(a) Chapter 3 of Part 3 of the Finance Act 2004 or regulations under that Chapter (construction industry scheme), or
(b) any other provision of or made under the Taxes Acts.
The claimant: partnerships
51D (1) This paragraph applies where—
(a) a trade, profession or business is carried on by two or more persons in partnership,
(b) an amount is paid, or liable to be paid, by one or more of those persons in accordance with a self-assessment, and
(c) the amount is excessive by reason of a mistake in a partnership return.
(2) A claim under paragraph 51 in respect of the amount—
(a) may be made by the relevant partner nominated to make the claim by all of the relevant partners, and
(b) may not be made by any other person.
(3) In relation to such a claim, references in paragraphs 51A to 51F to the claimant are to any of the relevant partners.
(4) “Relevant partner” means—
(a) a person who was a partner in the partnership at any time during the period in respect of which the partnership return was made, or
(b) the personal representative of such a person.
Assessment of claimant in connection with claim
51E (1) This paragraph applies where—
(a) a claim is made under paragraph 51,
(b) the grounds for giving effect to the claim also provide grounds for a discovery assessment or discovery determination on the claimant in respect of any accounting period, and
(c) such an assessment or determination could be made but for a relevant restriction.
(2) The following are relevant restrictions—
(a) the restrictions in paragraphs 42 to 45, and
(b) the expiry of a time limit for making a discovery assessment or discovery determination.
(3) Where this paragraph applies—
(a) the relevant restrictions are to be disregarded, and
(b) the discovery assessment or discovery determination is not out of time if it is made before the final determination of the claim.
(4) 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).
Amendment of partnership return etc in connection with claim
51F (1) This paragraph applies where—
(a) a claim is made under paragraph 51,
(b) the claimant is one of two or more persons carrying on a trade, profession or business in partnership,
(c) the grounds for giving effect to the claim also provide grounds for amending, under section 30B(1) of the Taxes Management Act 1970 (discovery of loss of tax from partnership), a return made by the partnership or any of the partners in respect of any period, and
(d) such an amendment could be made but for a relevant restriction.
(2) The following are relevant restrictions—
(a) the conditions in section 30B(4) to (6) of the Taxes Management Act 1970, and
(b) the expiry of a time limit for making an assessment under that section.
(3) Where this paragraph applies—
(a) the relevant conditions are to be disregarded, and
(b) the amendment is not out of time if it is made before the final determination of the claim.
(4) 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
51G (1) In paragraph 51(1)(a) the reference to an amount paid by a company 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 51 in respect of that amount—
(a) the references to the claimant in paragraph 51A(5) to (7) (Cases D, E and F) have effect as if they included the taxpayer,
(b) the reference to the claimant in paragraph 51A(8) (Case G) has effect as if it were a reference to the taxpayer,
(c) the references to the claimant in paragraphs 51E(1)(b) and 51F(1)(b) have effect as if they were references to the taxpayer, and
(d) references to tax in Schedule 1A to the Taxes Management Act 1970 (as it applies to a claim under this Part of this Schedule) 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 or discovery determination on the taxpayer in respect of any chargeable period.
(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 or determination.
(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.
14 Accordingly, in the heading of Part 6, at the beginning insert “Overpaid tax,”.
15 (1) Paragraph 62 (consequential claims etc that may be made) is amended as follows.
(2) After sub-paragraph (1) insert—
(1A) This paragraph applies to a claim under paragraph 51 relating to the accounting period in respect of which the amendment or assessment is made.
(3) In sub-paragraph (2), for “a claim” substitute “ any other claim ”.
16 In paragraph 88 (conclusiveness of amounts stated in return), insert at the end—
(8) Nothing in this paragraph affects a power of the company making the return to make a claim under paragraph 51 (claim for relief for overpaid tax).
Consequential amendment
17 In Schedule 1A to TMA 1970 (claims etc not included in returns), in paragraph 1, in the definition of “partnership claim”, after “Act” insert “ or paragraph 51D of Schedule 18 to the Finance Act 1998 (claims for overpaid corporation tax) ”.
Section 101
Part 1 Special provision: amount carrying late payment interest
Payments on account and balancing payment
1 (1) This paragraph applies where as regards a tax year—
(a) payments on account are payable by a person (“P”),
(b) P makes a claim under section 59A(3) or (4) of TMA 1970 (reduction of payments on account) in respect of those amounts, and
(c) a balancing payment becomes payable by P.
(2) Late payment interest is to be calculated as if each of the payments on account had been equal to the lesser of the following amounts—
(a) the aggregate of that payment on account and 50% of the balancing payment, and
(b) the amount which would have been payable as a payment on account if the claim under section 59A(3) or (4) had not been made.
(3) In determining for the purposes of this paragraph what amount (if any) is payable by P as a balancing payment—
(a) it is to be assumed that both of the payments on account have been paid,
(b) no account is to be taken of any amount which has been paid on account otherwise than under section 59A(2) of TMA 1970, and
(c) no account is to be taken of any amount which is payable by way of capital gains tax.
(4) In this paragraph—
“balancing payment” means an amount payable—
in accordance with section 59B(3), (4) or (5) of TMA 1970, or
in accordance with section 59B(6) of that Act in respect of income tax assessed under section 29 of that Act;
“payment on account” means an amount payable in accordance with section 59A(2) of TMA 1970.
Payments on account and overpayment
2 (1) This paragraph applies where as regards any person (“P”) and a tax year—
(a) payments on account become payable by P, and
(b) an overpayment becomes repayable to P.
(2) Late payment interest is payable only on the amount by which each of the payments on account exceeds 50% of the overpayment.
(3) In determining for the purposes of this paragraph what amount (if any) is repayable to P as an overpayment—
(a) no account is to be taken of any amount which has been paid on account otherwise than under section 59A(2) of TMA 1970, and
(b) no account is to be taken of any amount which is payable by way of capital gains tax.
(4) In this paragraph—
“overpayment” means an amount repayable in accordance with section 59B(3), (4) or (5) of TMA 1970;
“payment on account” means an amount payable in accordance with section 59A(2) of that Act.
Part 2 Special provision: late payment interest start date
Amendments and discovery assessments etc
3 (1) This paragraph applies to any amount which is due and payable as a result of—
(a) an amendment or correction to an assessment or self-assessment (“assessment A”),
(b) an assessment made by HMRC in place of or in addition to an assessment (“assessment A”) which was made by a taxpayer, or
(c) an assessment made by HMRC in place of an assessment (“assessment A”) which ought to have been made by a taxpayer.
(2) The late payment interest start date in respect of that amount is the date which would have been the late payment interest start date if—
(a) assessment A had been complete and accurate and had been made on the date (if any) by which it was required to be made, and
(b) accordingly, the amount had been due and payable as a result of assessment A.
(3) In the case of a person (“P”) who failed to give notice in accordance with a requirement under section 7 of TMA 1970 (notice of liability to tax) that arose by virtue of subsection (1A) of that section, the reference in sub-paragraph (1)(c) to an assessment which ought to have been made by P is a reference to the assessment which P would have been required to make if an officer of Revenue and Customs had given notice under section 8 of that Act.
(4) In this paragraph “assessment” means any assessment or determination (however described) of any amount due and payable to HMRC.
Amounts postponed pending appeal under TMA 1970
4 (1) This paragraph applies to any amount if payment of the amount is postponed under section 55 of TMA 1970 pending the determination of an appeal against an assessment of income tax or capital gains tax.
(2) The late payment interest start date in respect of that amount is the date which would have been the late payment interest start date if there had been no appeal.
Overpayment of tax
5 (1) This paragraph applies to any amount of income tax or capital gains tax which is assessed and recoverable by virtue of an assessment under section 30 of TMA 1970 (recovery of overpayment of tax etc).
(2) The late payment interest start date in respect of that amount is 31 January next following the tax year in respect of which the assessment under section 30 is made.
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6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inheritance tax payable by instalments
7 (1) The late payment interest start date for each instalment of an amount to which this paragraph applies is the date on which that instalment is to be paid.
(2) This paragraph applies to any amount of inheritance tax which is payable by instalments under section 229 of IHTA 1984.
(3) This paragraph also applies to any amount of inheritance tax which is payable by instalments under section 227 of IHTA 1984 if the value on which the amount is payable is attributable to—
(a) the value of qualifying property within subsection (2)(b) or (c) of that section (shares or securities, or business or interest in a business), or
(b) value treated as reduced under Chapter 2 of Part 5 of that Act.
(4) But this paragraph does not apply to an amount by virtue of sub-paragraph (3)(a) if the qualifying property is shares or securities of a company which—
(a) falls within sub-paragraph (5), but
(b) does not fall within sub-paragraph (6) or (7).
(5) A company falls within this sub-paragraph if its business consists wholly or mainly of one or more of the following—
(a) dealing in securities, stocks or shares, land or buildings, or
(b) making or holding investments.
(6) A company falls within this sub-paragraph if its business consists wholly or mainly in being a holding company (as defined in section 1159 of the Companies Act 2006) of one or more companies not falling within sub-paragraph (5).
(7) A company falls within this sub-paragraph if its business is carried on in the United Kingdom and is—
(a) wholly that of a market maker, or
(b) that of a discount house.
(8) A company is a market maker if—
(a) it holds itself out at all normal times in compliance with the rules of The Stock Exchange as willing to buy and sell securities, stocks or shares at a price specified by it, and
(b) it is recognised as doing so by the Council of The Stock Exchange.
Certain other amounts of inheritance tax
8 An amount of inheritance tax which is underpaid in consequence of any of the following provisions—
(a) section 146(1) of IHTA 1984,
(b) section 19 of the Inheritance (Provision for Family and Dependants) Act 1975, or
(c) Article 21 of the Inheritance (Provision for Family and Dependants) (Northern Ireland) Order 1979,
does not carry late payment interest before the order mentioned in that provision is made.
9 In the case of an amount which is payable under section 147(4) of IHTA 1984, the late payment interest start date is the day after the end of the period of 6 months beginning with the date of the testator's death.
VAT due from persons not registered as required
10 (1) This paragraph applies where an amount of value added tax is due from a person (“P”) in respect of a period during which P was liable to be registered under VATA 1994 but was not registered.
(2) The late payment interest start date in respect of the amount is the date which would have been the late payment interest date in respect of that amount if P had become registered when P had first become liable to be so.
Unauthorised VAT invoices
11 (1) This paragraph applies where an unauthorised person issues an invoice showing an amount as being value added tax or as including an amount attributable to value added tax.
(2) The late payment interest start date in respect of the amount which is shown as being value added tax, or which is to be taken as representing value added tax, is the date of the invoice.
(3) In this paragraph “unauthorised person” has the meaning given in paragraph 2 of Schedule 41 to FA 2008.
VAT due after excess payment or credit from HMRC
11ZA (1) This paragraph applies to any amount of value added tax which is due and recoverable from a person by virtue of—
(a) section 73(9) of VATA 1994, in relation to an amount assessed and notified to the person under subsection (2) of that section, or
(b) section 80C(1) of that Act.
(2) The late payment interest start date in respect of that amount is the date on which HMRC paid or credited that amount to the person.
Soft drinks industry levy due from unregistered persons
11C (1) This paragraph applies where an amount of soft drinks industry levy is due from a person (P) in respect of a period during which P meets the liability condition (as defined for the purposes of section 46(2) of FA 2017) but was not registered.
(2) The late payment interest start date in respect of the amount is the date which would have been the late payment interest date in respect of that amount if P had been registered when P had first become liable to be registered.
Plastic packaging tax due from unregistered persons
11D (1) This paragraph applies where an amount of plastic packaging tax is due from a person (P) in respect of a period during which P meets the liability condition but was not registered.
(2) The late payment interest start date in respect of the amount is the date which would have been the late payment interest date in respect of that amount if P had been registered when P first became liable to be registered.
(3) For the purposes of this paragraph P meets the “liability condition” at a particular time if—
(a) at the end of the preceding month, the condition in section 55(2)(b) of FA 2021 (liability to register) is met in relation to P, or
(b) at that time, the condition in section 55(2)(a) of that Act is met in relation to P.
Death of taxpayer
12 (1) This paragraph applies if—
(a) a person chargeable to an amount of revenue dies before the amount becomes due and payable, and
(b) the executor or administrator is unable to pay the amount before obtaining probate or letters of administration or (in Scotland) the executor is unable to pay the amount before obtaining confirmation.
(2) The late payment interest start date in respect of that amount is the later of the following—
(a) the date which would be the late payment interest start date apart from this paragraph, and
(b) the day after the end of the period of 30 days beginning with the grant of probate or letters of administration or (in Scotland) the grant of confirmation.
Part 3 Special provision: date to which late payment interest runs
Deduction of income tax at source
13 (1) This paragraph applies to any income tax which—
(a) was payable under Chapter 15 of Part 15 of ITA 2007 (collection: deposit-takers, building societies and certain companies) in respect of payments within section 946 of that Act made in a return period,
(b) was not paid on the date when it was due under section 951 of that Act, and
(c) has subsequently been discharged or repaid under section 953 of that Act because the person who made the payments received payments on which it suffered income tax by deduction in a later return period.
(2) The income tax carries late payment interest until the earliest of—
(a) the date when the income tax was paid,
(b) the date when the person delivered a return for the later return period, and
(c) the end of the period of 14 days beginning with the end of the later return period,
but section 101 does not otherwise apply to the income tax.
(3) In this paragraph “return period” means a period for which a return is required to be made under Chapter 15 of Part 15 of ITA 2007.
Property accepted in lieu of inheritance tax
14 If, in the case of any amount of inheritance tax—
(a) HMRC agree under section 230 of IHTA 1984 to accept property in satisfaction of the amount, and
(b) under terms of that acceptance the value to be attributed to the property for the purposes of the acceptance is determined as at a date earlier than that on which the property is actually accepted,
the terms may provide that the amount of tax which is satisfied by the acceptance of the property does not carry late payment interest after that date.
Part 4 Effect of interest on reliefs
15 (1) Where conditions A and B are met—
(a) the appropriate adjustment is to be made of the amount of late payment interest payable, and
(b) accordingly, the appropriate repayment (if any) is to be made of any late payment interest previously paid.
(2) Condition A is that any amount of late payment interest is payable on—
(a) any amount on account of income tax which is due and payable in accordance with section 59A(2) of TMA 1970, or
(b) any amount of income tax or capital gains tax which becomes due and payable in accordance with section 55 or 59B of TMA 1970.
(3) Condition B is that relief from the tax is given by a discharge of any of that amount of tax.
Paragraph 16 makes provision about the circumstances in which P is entitled to have a relief treated as being given by discharge.
(4) In this paragraph—
“the appropriate adjustment” is such adjustment as is necessary to secure that the total amount of late payment interest, if any, paid or payable on the amount of tax in question is the same as it would have been if the tax discharged had never been charged;
“the appropriate repayment” is such repayment as is necessary to give effect to the appropriate adjustment.
16 (1) Where—
(a) income tax or capital gains tax has been paid for a chargeable period (“period A”), and
(b) relief from any amount of that tax is given to a person (“P”) by repayment,
P is entitled to require that the amount repaid be treated for the purposes of paragraph 15(3), so far as it will go, as if it were a discharge of a qualifying charge to tax.
(2) A qualifying charge to tax is any amount of tax charged on P (whether alone or together with other persons) by or by virtue of any assessment for or relating to period A.
(3) But sub-paragraph (1) does not permit an amount to be applied—
(a) to any assessment made after the relief was given, or
(b) to more than one assessment so as to reduce, without extinguishing, the amount of tax charged.
Section 102
Part 1 Repayment interest start date: general rule
Introductory
1 (1) This Part sets out the general rule for determining the repayment interest start date.
(2) The general rule is subject to the special provision made by Part 2.
Repayment of amounts paid to HMRC
2 In the case of an amount which has been paid to HMRC, the repayment interest start date is the later of date A and (where applicable) date B.
3 Date A is the date on which the amount was paid to HMRC.
4 Date B is, in the case of an amount which—
(a) has been paid in connection with a liability to make a payment to HMRC, and
(b) is to be repaid by them,
the date on which the payment became due and payable to HMRC.
Payment of amounts on return or claim
5 (1) In the case of an amount which—
(a) has not been paid to HMRC, and
(b) is payable by virtue of a return having been filed or a claim having been made,
the repayment interest start date is the later of the dates mentioned in sub-paragraph (2).
(2) The dates are—
(a) the date (if any) on which the return was required to be filed or the claim was required to be made, and
(b) the date on which the return was in fact filed or the claim was in fact made.
Part 2 Special provision as to repayment interest start date
Income tax deducted at source
6 In the case of a repayment of income tax deducted at source for a tax year, the repayment interest start date is 31 January next following that year.
Carry back of losses and averaging
7 In the case of any amount which is to be repaid as a result of a claim for relief under—
(a) paragraph 2 of Schedule 1B to TMA 1970 (carry back of loss relief from later year to earlier year), or
(b) Chapter 16 of Part 2 of ITTOIA 2005 (claim for averaging of profits of farmers etc over two consecutive years),
the repayment interest start date is 31 January next following the year that is the later year in relation to the claim.
MIRAS
8 In the case of any payment under regulations under section 375(8) of ICTA (MIRAS: payments equivalent to deductions which could have been made), the repayment interest start date is 31 January next following the tax year in which the interest payment mentioned in section 375(8)(c) was made.
Income accumulated under certain trusts
9 In the case of a repayment made in consequence of a claim under section 228 of the Income Tax Act 1952 (relief in respect of income accumulated under trusts), the repayment is to be treated as if it were a repayment of income tax paid by the claimant for the tax year in which the contingency mentioned in that section happened.
Tax on payments out of discretionary trust taxable as employment income
9A. In the case of a repayment made in consequence of a claim under section 496B of ITA 2007 (relief for payments by discretionary trust taxable as employment income) the repayment interest start date is 31 January next following the end of the tax year to which the claim relates.
Payments in connection with life assurance premium relief
9D. In the case of a payment made under paragraph 6(1) of Schedule 14 to ICTA (payment where entitlement to life assurance premium relief has not been given by deduction), the repayment interest start date is 31 January next following the end of the tax year in which the entitlement to relief arose.
Certain amounts of inheritance tax
10 An amount of inheritance tax which is overpaid in consequence of any of the following provisions—
(a) section 146(1) of IHTA 1984,
(b) section 19 of the Inheritance (Provision for Family and Dependants) Act 1975, or
(c) Article 21 of the Inheritance (Provision for Family and Dependants) (Northern Ireland) Order 1979,
does not carry repayment interest before the order mentioned in that provision is made.
11 In the case of an amount which is repayable on a claim under section 146(2) or 150 of IHTA 1984, the repayment interest start date is the date on which the claim is made.
12 In the case of an amount which is repayable under section 147(2) of IHTA 1984, the repayment interest start date is the date on which the tax was paid.
VAT payments on account
12C (1) This paragraph applies in the case of a repayment of the amount by which—
(a) the total amount of payments on account made in respect of a prescribed accounting period, exceeds
(b) the amount of VAT payable in respect of that accounting period.
(2) The repayment interest start date is the date on which the VAT return for the prescribed accounting period is due.
(3) In this paragraph—
“payment on account” means a payment on account required under section 28 of VATA 1994;
“prescribed accounting period” has the same meaning as in VATA 1994;
“VAT return” means a return required to be made by regulations under VATA 1994.
PART 2A VAT: special provision as to period for which amount carries interest
12D In this Part of this Schedule—
“prescribed accounting period” has the same meaning as in VATA 1994;
“relevant VAT return” means the VAT return for the prescribed accounting period to which the VAT credit relates;
“VAT credit” has the same meaning as in VATA 1994;
“VAT return” means a return required to be made by regulations under VATA 1994.
12E (1) An amount of VAT credit does not carry interest for any period during which—
(a) a VAT return required to be made on or before the date on which the relevant VAT return is made has not been made, or
(b) there is a failure to comply with a requirement imposed under paragraph 4(1A) of Schedule 11 to VATA 1994 ... giving of security).
(2) The period referred to in sub-paragraph (1)(b)—
(a) begins on the date when written notice requiring ... the giving of security is given by HMRC, and
(b) ends on the date when HMRC receive ... the required security.
Part 3 Supplementary
Attribution of repayments
13 (1) This paragraph applies for the purpose of determining, for the purposes of this Schedule, how a repayment to a person (“P”) in respect of income tax for a tax year is to be attributed to payments made in respect of that tax.
(2) Such a repayment is to be attributed to payments in the following order—
(a) first, to so much of any payment made by P under section 59B of TMA 1970 as is a payment in respect of income tax for that year,
(b) second, in two equal parts to each of the payments (if any) made by P under section 59A of that Act on account of income tax for that year, and
(c) third, to income tax deducted at source for that year.
(3) In so far as it is attributable to a payment made in instalments, a repayment is to be attributed to a later instalment before being attributed to an earlier one.
Interpretation
14 In this Schedule any reference to income tax deducted at source for a tax year is a reference to—
(a) income tax deducted (or treated as deducted) from any income, or treated as paid on any income, in respect of that year, ...
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
but does not include a reference to amounts which, in that year, are deducted at source under PAYE regulations in respect of previous years.
Schedule 54A Further provision as to late payment interest and repayment interest
Section 103A
PART 1 CORPORATION TAX
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.
PART 2 Value added tax
Interpretation
5 In this Part of this Schedule—
“assessment” has the same meaning as in paragraph 3 of Schedule 53;
“prescribed accounting period” has the same meaning as in VATA 1994;
...
Certain amounts of repayment interest recoverable as late payment interest
6 Where each of conditions A to C is met, an amount of repayment interest that—
(a) has been paid to a person, but
(b) ought not to have been paid (see condition C),
may be recovered from the person as if it were late payment interest.
7 (1) Condition A is that repayment interest has been paid to the person in respect of an amount that is, or relates to, value added tax for a prescribed accounting period.
(2) Condition B is that (whether or not a previous assessment has been made), an assessment or amendment of an assessment is made of the amount of value added tax payable by the person for that prescribed accounting period.
(3) Condition C is that as a result of the assessment or amendment of an assessment, it appears to HMRC that some or all of the repayment interest ought not to have been paid.
Common period rules for value added tax
8 (1) This paragraph applies where there is a common period in relation to a person (see sub-paragraph (2)).
(2) A common period in relation to a person is any period during which—
(a) an amount (“the overdue payment”) that is, or relates to, value added tax—
(i) is due and payable by the person, and
(ii) carries late payment interest, and
(b) an amount (“the relevant amount”) that is, or relates to, value added tax—
(i) is payable to the person, and
(ii) carries repayment interest.
(3) In respect of the common period—
(a) the overdue payment is to be treated as carrying late payment interest only on the amount (if any) by which the overdue payment exceeds the relevant amount, and
(b) the relevant amount is to be treated as carrying repayment interest only on the amount (if any) by which the relevant amount exceeds the overdue payment.
(4) An amount of repayment interest that—
(a) has been paid to a person, but
(b) as a result of sub-paragraph (3)(b), ought not to have been paid,
may be recovered from the person as if it were late payment interest.
SCHEDULE 55 Penalty for failure to make returns etc
Section 106
Penalty for failure to make returns etc
1 (1) A penalty is payable by a person (“P”) where P fails to make or deliver a return, or to deliver any other document, specified in the Table below on or before the filing date.
(2) Paragraphs 2 to 1313J set out—
(a) the circumstances in which a penalty is payable, and
(b) subject to paragraphs 14 to 17, the amount of the penalty.
(3) If P's failure falls within more than one paragraph of this Schedule, P is liable to a penalty under each of those paragraphs (but this is subject to paragraph 17(3)).
(4) In this Schedule—
“filing date”, in relation to a return or other document, means the date by which it is required to be made or delivered to HMRC ...;
“penalty date”, in relation to a return or other document falling within any of items 1 to 3 2A and 5 to 13B in the Table, means the date on which a penalty is first payable for failing to make or deliver it (that is to say, the day after the filing date).
(4A) The Treasury may by order make such amendments to item 4 in the Table as they think fit in consequence of any amendment, revocation or re-enactment of the regulations mentioned in that item.
(5) In the provisions of this Schedule which follow the Table—
(a) any reference to a return includes a reference to any other document specified in the Table, and
(b) any reference to making a return includes a reference to delivering a return or to delivering any such document.
Tax to which return etc relates | Return or other document
1 | Income tax or capital gains tax | (a) Return under section 8(1)(a) of TMA 1970 (b) Accounts, statement or document required under section 8(1)(b) of TMA 1970
2 | Income tax or capital gains tax | (a) Return under section 8A(1)(a) of TMA 1970 (b) Accounts, statement or document required under section 8A(1)(b) of TMA 1970
2A | Capital gains tax | Return under Schedule 2 to FA 2019 (other than one made under paragraph 9 or 15 of that Schedule)
3 | Income tax or corporation tax | (a) Return under section 12AA(2)(a) or (3)(a) of TMA 1970 (b) Accounts, statement or document required under section 12AA(2)(b) or (3)(b) of TMA 1970
4 | Income tax | Return under any of the following provisions of the Income Tax (PAYE) Regulations 2003 (S.I. 2003/2682)— regulation 67B (real time returns) regulation 67D (exceptions to regulation 67B)
4A | Apprenticeship levy | Return under regulations under section 105 of FA 2016
5 | Income tax | Return under section 254 of FA 2004 (pension schemes)
6 | Deductions on account of tax under Chapter 3 of Part 3 of FA 2004 (construction industry scheme) | Return under regulations under section 70 of FA 2004
7 | Corporation tax | Company tax return under paragraph 3 of Schedule 18 to FA 1998
7A | Value added tax | Return under regulations under paragraph 2 of Schedule 11 to VATA 1994
7AA | . . . | . . .
7AB | . . . | . . .
7B | Insurance premium tax | Return under regulations under section 54 of FA 1994
8 | Inheritance tax | Account under section 216 or 217 of IHTA 1984
9 | Stamp duty land tax | Land transaction return under section 76 of FA 2003 or further return under section 81 of that Act
10 | Stamp duty land tax | Return under paragraph 3, 4 or 8 of Schedule 17A to FA 2003
11 | Stamp duty reserve tax | Notice of charge to tax under regulations under section 98 of FA 1986
11A | Annual tax on enveloped dwellings | Annual tax on enveloped dwellings return under section 159 of FA 2013
11B | Annual tax on enveloped dwellings | Return of adjusted chargeable amount under section 160 of FA 2013
12 | Petroleum revenue tax | Return under paragraph 2 of Schedule 2 to OTA 1975
13 | Petroleum revenue tax | Statement under section 1(1)(a) of PRTA 1980
13A | Soft drinks industry levy | Return under regulations under section 52 of FA 2017
13B | Plastic packaging tax | Return under regulations under section 61 of FA 2021
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 | Alcohol duty | Return under regulations under section 88 of F(No.2)A 2023
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
20A | Excise duties | Return under regulations under section 60A of the Customs and Excise Management Act 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
29 | Machine games duty | Return under regulations under paragraph 18 of Schedule 24 to FA 2012
Amount of penalty: occasional returns and annual returnsAmount of penalty: occasional returns and returns for periods of 6 months or more
2 Paragraphs 3 to 6 apply in the case of a return falling within any of items 1 to 3, 5 and 7 to 13 in the Table.
(1) Paragraphs 3 to 6 apply in the case of—
(a) a return falling within any of items 1 to 5 2A, 4, 4A, 5, 7 and 8 to 13 in the Table,
(b) a return falling within any of items 7A, 7B and 14 to 28 29 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.
3 P is liable to a penalty under this paragraph of £100.
4 (1) P is liable to a penalty under this paragraph if (and only if)—
(a) P's failure continues after the end of the period of 3 months beginning with the penalty date,
(b) HMRC decide that such a penalty should be payable, and
(c) HMRC give notice to P specifying the date from which the penalty is payable.
(2) The penalty under this paragraph is £10 for each day that the failure continues during the period of 90 days beginning with the date specified in the notice given under sub-paragraph (1)(c).
(3) The date specified in the notice under sub-paragraph (1)(c)—
(a) may be earlier than the date on which the notice is given, but
(b) may not be earlier than the end of the period mentioned in sub-paragraph (1)(a).
5 (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.
6 (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.
(3A) For the purposes of sub-paragraph (3)(a), the relevant percentage is—
(a) for the withholding of category 1 information, the relevant percentage,
(b) for the withholding of category 2 information, 150%, and
(c) for the withholding of category 3 information, 200%.
(4) If the withholding of the information is deliberate but not concealed, the penalty is the greater of—
(a) the relevant percentage of any liability to tax which would have been shown in the return in question, and
(b) £300.
(4A) For the purposes of sub-paragraph (4)(a), the relevant percentage is—
(a) for the withholding of category 1 information, 70%,
(b) for the withholding of category 2 information, 105%, and
(c) for the withholding of category 3 information, 140%.
(5) In any other caseany 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.
(6) Paragraph 6A explains the 3 categories of information.
6A (A1) Information is category 0 information if—
(a) it involves a domestic matter,
(b) it involves an offshore matter or an offshore transfer, the territory in question is a category 0 territory and it is information which would enable or assist HMRC to assess P's liability to income tax, capital gains tax or inheritance tax, or
(c) it involves an offshore matter and it is information which would enable or assist HMRC to assess P's liability to a tax other than income tax, capital gains tax or inheritance tax.
(1) Information is category 1 information if—
(a) it involves an offshore matter or an offshore transfer,
(b) the territory in question is a category 1 territory, and
(c) it is information which would enable or assist HMRC to assess P's liability to income tax, capital gains tax or inheritance tax.
(2) Information is category 2 information if—
(a) it involves an offshore matter or an offshore transfer,
(b) the territory in question is a category 2 territory, and
(c) it is information which would enable or assist HMRC to assess P's liability to income tax, capital gains tax or inheritance tax.
(3) Information is category 3 information if—
(a) it involves an offshore matter or an offshore transfer,
(b) the territory in question is a category 3 territory, and
(c) it is information which would enable or assist HMRC to assess P's liability to income tax, capital gains tax or inheritance tax.
(4) Information “involves an offshore matter” if the liability to tax which would have been shown in the return includes a liability to tax charged on or by reference to—
(a) income arising from a source in a territory outside the UK,
(b) assets situated or held in a territory outside the UK,
(c) activities carried on wholly or mainly in a territory outside the UK, or
(d) anything having effect as if it were income, assets or activities of a kind described above.
(4A) If the liability to tax which would have been shown in the return is a liability to inheritance tax, assets are treated for the purposes of sub-paragraph (4) as situated or held in a territory outside the UK if they are so situated or held immediately after the transfer of value by reason of which inheritance tax becomes chargeable.
(4B) Information “involves an offshore transfer” if—
(a) it does not involve an offshore matter,
(b) it is information which would enable or assist HMRC to assess P's liability to income tax, capital gains tax or inheritance tax,
(c) by failing to make the return, P deliberately withholds the information (whether or not the withholding of the information is also concealed), and
(d) the applicable condition in paragraph 6AA is satisfied.
(5) Information “involves a domestic matter” if it does not involve an offshore matter or an offshore transfer.
(6) If the information which P withholds falls into more than one category—
(a) P's failure to make the return is to be treated for the purposes of this Schedule as if it were separate failures, one for each category of information according to the matters or transfers which the information involves, and
(b) for each separate failure, the liability to tax which would have been shown in the return in question is taken to be such share of the liability to tax which would have been shown in the return mentioned in paragraph (a) as is just and reasonable.
(7) For the purposes of this Schedule—
(a) paragraph 21A of Schedule 24 to FA 2007 (classification of territories) has effect, but
(b) an order under that paragraph does not apply to a failure if the filing date is before the date on which the order comes into force.
(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9) In this paragraph and paragraph 6AA—
“assets” has the meaning given in section 21(1) of TCGA 1992, but also includes sterling;
“UK” means the United Kingdom, including the territorial sea of the United Kingdom.
6AA (1) This paragraph makes provision in relation to offshore transfers.
(2) Where the liability to tax which would have been shown in the return is a liability to income tax, the applicable condition is satisfied if the income on or by reference to which the tax is charged, or any part of the income—
(a) is received in a territory outside the UK, or
(b) is transferred before the relevant date to a territory outside the UK.
(3) Where the liability to tax which would have been shown in the return is a liability to capital gains tax, the applicable condition is satisfied if the proceeds of the disposal on or by reference to which the tax is charged, or any part of the proceeds—
(a) are received in a territory outside the UK, or
(b) are transferred before the relevant date to a territory outside the UK.
(4) Where the liability to tax which would have been shown in the return is a liability to inheritance tax, the applicable condition is satisfied if—
(a) the disposition that gives rise to the transfer of value by reason of which the tax becomes chargeable involves a transfer of assets, and
(b) after that disposition but before the relevant date the assets, or any part of the assets, are transferred to a territory outside the UK.
(5) In the case of a transfer falling within sub-paragraph (2)(b), (3)(b) or (4)(b), references to the income, proceeds or assets transferred are to be read as including references to any assets derived from or representing the income, proceeds or assets.
(6) In relation to an offshore transfer, the territory in question for the purposes of paragraph 6A is the highest category of territory by virtue of which the information involves an offshore transfer.
(7) “Relevant date” means the date on which P becomes liable to a penalty under paragraph 6.
6AB Regulations under paragraph 21B of Schedule 24 to FA 2007 (location of assets etc) apply for the purposes of paragraphs 6A and 6AA of this Schedule as they apply for the purposes of paragraphs 4A and 4AA of that Schedule.
Amount of penalty: real time information for PAYE and apprenticeship levy
6B Paragraphs 6C and 6D apply in the case of a return falling within item 4 or 4A in the Table.
6C (1) If P fails during a tax month to make a return on or before the filing date, P is liable to a penalty under this paragraph in respect of that month.
(2) But this is subject to sub-paragraphs (3) and (4).
(3) P is not liable to a penalty under this paragraph in respect of a tax month as a result of any failure to make a return on or before the filing date which occurs during the initial period.
(4) P is not liable to a penalty under this paragraph in respect of a tax month falling in a tax year if the month is the first tax month in that tax year during which P fails to make a return on or before the filing date (disregarding for this purpose any failure which occurs during the initial period).
(5) In sub-paragraphs (3) and (4) “the initial period” means the period which—
(a) begins with the day in the first tax year on which P is first required to make a return, and
(b) is of such duration as is specified in regulations made by the Commissioners,
and for this purpose “the first tax year” means the first tax year in which P is required to make returns.
(6) P may be liable under this paragraph to no more than one penalty in respect of each tax month.
(7) The penalty under this paragraph is to be calculated in accordance with regulations made by the Commissioners.
(8) Regulations under sub-paragraph (7) may provide for a penalty under this paragraph in respect of a tax month to be calculated by reference to either or both of the following matters—
(a) the number of persons employed by P, or treated as employed by P for the purposes of PAYE regulations;
(b) the number of previous penalties incurred by P under this paragraph in the same tax year.
(9) The Commissioners may by regulations disapply sub-paragraph (3) or (4) in such circumstances as are specified in the regulations.
(10) If P has elected under PAYE regulations to be treated as different employers in relation to different groups of employees, this paragraph applies to P as if—
(a) in respect of each group P were a different person, and
(b) each group constituted all of P's employees.
(11) Regulations made by the Commissioners under this paragraph may—
(a) make different provision for different cases, and
(b) include incidental, consequential and supplementary provision.
6D (1) P may be liable to one or more penalties under this paragraph in respect of extended failures.
(2) In this paragraph an “extended failure” means a failure to make a return on or before the filing date which continues after the end of the period of 3 months beginning with the day after the filing date.
(3) P is liable to a penalty or penalties under this paragraph if (and only if)—
(a) HMRC decide at any time that such a penalty or penalties should be payable in accordance with sub-paragraph (4) or (6), and
(b) HMRC give notice to P specifying the date from which the penalty, or each penalty, is payable.
(4) HMRC may decide under sub-paragraph (3)(a) that a separate penalty should be payable in respect of each unpenalised extended failure in the tax year to date.
(5) In that case the amount of the penalty in respect of each failure is 5% of any liability to make payments which would have been shown in the return in question.
(6) HMRC may decide under sub-paragraph (3)(a) that a single penalty should be payable in respect of all the unpenalised extended failures in the tax year to date.
(7) In that case the amount of the penalty in respect of those failures is 5% of the sum of the liabilities to make payments which would have been shown in each of the returns in question.
(8) For the purposes of this paragraph, an extended failure is unpenalised if a penalty has not already been imposed in respect of it under this paragraph (whether in accordance with sub-paragraph (4) or (6)).
(9) The date specified in the notice under sub-paragraph (3)(b) in relation to a penalty—
(a) may be earlier than the date on which the notice is given, but
(b) may not be earlier than the end of the period mentioned in sub-paragraph (2) in relation to the relevant extended failure.
(10) In sub-paragraph (9)(b) “the relevant extended failure” means—
(a) the extended failure in respect of which the penalty is payable, or
(b) if the penalty is payable in respect of more than one extended failure (in accordance with sub-paragraph (6)), the extended failure with the latest filing date.
Amount of penalty: CIS returns
7 Paragraphs 8 to 13 apply in the case of a return falling within item 6 in the Table.
8 P is liable to a penalty under this paragraph of £100.
9 (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 2 months beginning with the penalty date.
(2) The penalty under this paragraph is £200.
10 (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 make payments which would have been shown in the return in question, and
(b) £300.
11 (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 the amount that P is liable to pay to HMRC in accordance with Chapter 3 of Part 3 of FA 2004, 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 make payments which would have been shown in the return in question, and
(b) £3,000.
(4) If the withholding of the information is deliberate but not concealed, the penalty is the greater of—
(a) 70% of any liability to make payments which would have been shown in the return in question, and
(b) £1,500.
(5) In any other caseany case not falling within sub-paragraph (2), the penalty under this paragraph is the greater of—
(a) 5% of any liability to make payments which would have been shown in the return in question, and
(b) £300.
12 (1) P is liable to a penalty under this paragraph if (and only if)—
(a) P's failure continues after the end of the period of 12 months beginning with the penalty date, and
(b) the information required in the return relates only to persons registered for gross payment (within the meaning of Chapter 3 of Part 3 of FA 2004).
(2) Where, by failing to make the return, P deliberately withholds information which relates to such persons, the penalty under this paragraph is—
(a) if the withholding of the information is deliberate and concealed, £3,000, and
(b) if the withholding of the information is deliberate but not concealed, £1,500.
13 (1) This paragraph applies—
(a) at any time before P first makes a return falling within item 6 in the Table, to any return falling within that item, and
(b) at any time after P first makes a return falling within that item, to that return and any earlier return.
(2) In respect of any return or returns to which this paragraph applies—
(a) paragraphs 10(2)(b) and 11(5)(b) do not apply, and
(b) P is not liable to penalties under paragraphs 8 and 9 which exceed, in total, £3,000.
(3) In sub-paragraph (1)(b) “earlier return” means any return falling within item 6 which has a filing date earlier than the date on which P first made a return.
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, 7B, 13A, 13B and 14 to 28 29 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 2829 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.
Reductions for disclosure
14 (A1) In this paragraph, “relevant information” means information which has been withheld by a failure to make a return.
(1) Paragraph 15 provides for reductions in the penalty under paragraph 6(3) or (4) where P discloses relevant information that involves a domestic matter or 11(3) or (4), 11(3) or (4), 13E(3) or (4) or 13J(3) or (4) where P discloses relevant information.
(1A) Paragraph 15A provides for reductions in the penalty under paragraph 6(3) or (4) where P discloses relevant information that involves an offshore matter or an offshore transfer.
(1B) Sub-paragraph (2) applies where—
(a) P is liable to a penalty under paragraph 6(3) or (4) and P discloses relevant information that involves a domestic matter, or
(b) P is liable to a penalty under any of the other provisions mentioned in sub-paragraph (1) and P discloses relevant information.
(2) P discloses relevant information by—
(a) telling HMRC about it,
(b) giving HMRC reasonable help in quantifying any tax unpaid by reason of its having been withheld, and
(c) allowing HMRC access to records for the purpose of checking how much tax is so unpaid.
(2A) Sub-paragraph (2B) applies where P is liable to a penalty under paragraph 6(3) or (4) and P discloses relevant information that involves an offshore matter or an offshore transfer.
(2B) P discloses relevant information by—
(a) telling HMRC about it,
(b) giving HMRC reasonable help in quantifying any tax unpaid by reason of its having been withheld,
(c) allowing HMRC access to records for the purpose of checking how much tax is so unpaid, and
(d) providing HMRC with additional information.
(2C) The Treasury must make regulations setting out what is meant by “additional information” for the purposes of sub-paragraph (2B)(d).
(2D) Regulations under sub-paragraph (2C) are to be made by statutory instrument.
(2E) An instrument containing regulations under sub-paragraph (2C) is subject to annulment in pursuance of a resolution of the House of Commons.
(3) Disclosure of relevant information—
(a) is “unprompted” if made at a time when P has no reason to believe that HMRC have discovered or are about to discover the relevant information, and
(b) otherwise, is “prompted”.
(4) In relation to disclosure “quality” includes timing, nature and extent.
(5) Paragraph 6A(4) to (5) applies to determine whether relevant information involves an offshore matter, an offshore transfer or a domestic matter for the purposes of this paragraph.
15 (1) Where a person who would otherwise be liable to a 100% penalty has made an unprompted disclosure, HMRC must reduce the 100% to a percentage, not below 30%, which reflects the quality of the disclosure.
If a person who would otherwise be liable to a penalty of a percentage shown in column 1 of the Table (a “standard percentage”) has made a disclosure, HMRC must reduce the standard percentage to one that reflects the quality of the disclosure.
(2) Where a person who would otherwise be liable to a 100% penalty has made a prompted disclosure, HMRC must reduce the 100% to a percentage, not below 50%, which reflects the quality of the disclosure.
But the standard percentage may not be reduced to a percentage that is below the minimum shown for it—
(a) in the case of a prompted disclosure, in column 2 of the Table, and
(b) in the case of an unprompted disclosure, in column 3 of the Table.
Standard % | Minimum % for prompted disclosure | Minimum % for unprompted disclosure
70% | 35% | 20%
100% | 50% | 30%
(3) Where a person who would otherwise be liable to a 70% penalty has made an unprompted disclosure, HMRC must reduce the 70% to a percentage, not below 20%, which reflects the quality of the disclosure.
(4) Where a person who would otherwise be liable to a 70% penalty has made a prompted disclosure, HMRC must reduce the 70% to a percentage, not below 35%, which reflects the quality of the disclosure.
(5) But HMRC must not under this paragraph—
(a) reduce a penalty under paragraph 6(3) or (4) below £300, or
(b) reduce a penalty under paragraph 11(3) or (4)sub-paragraph (3) or (4) of any of paragraphs 11, 13E and 13J below the amount set by paragraph 11(3)(b) or (4)(b) (as the case may be)paragraph (b) of that sub-paragraph.
15A (1) If a person who would otherwise be liable to a penalty of a percentage shown in column 1 of the Table (a “standard percentage”) has made a disclosure, HMRC must reduce the standard percentage to one that reflects the quality of the disclosure.
(2) But the standard percentage may not be reduced to a percentage that is below the minimum shown for it—
(a) in the case of a prompted disclosure, in column 2 of the Table, and
(b) in the case of an unprompted disclosure, in column 3 of the Table.
Standard % | Minimum % for prompted disclosure | Minimum % for unprompted disclosure
70% | 45% | 30%
87.5% | 53.75% | 35%
100% | 60% | 40%
105% | 62.5% | 40%
125% | 72.5% | 50%
140% | 80% | 50%
150% | 85% | 55%
200% | 110% | 70%
(3) But HMRC must not under this paragraph reduce a penalty below £300.
Special reduction
16 (1) If HMRC think it right because of special circumstances, they may reduce a penalty under any paragraph of this Schedule.
(2) In sub-paragraph (1) “special circumstances” does not include—
(a) ability to pay, or
(b) the fact that a potential loss of revenue from one taxpayer is balanced by a potential over-payment by another.
(3) In sub-paragraph (1) the reference to reducing a penalty includes a reference to—
(a) staying a penalty, and
(b) agreeing a compromise in relation to proceedings for a penalty.
Interaction with other penalties and late payment surcharges
17 (1) Where P is liable for a penalty under any paragraph of this Schedule which is determined by reference to a liability to tax, the amount of that penalty is to be reduced by the amount of any other penalty incurred by P, if the amount of the penalty is determined by reference to the same liability to tax.
(2) In sub-paragraph (1) the reference to “any other penalty” does not include—
(a) a penalty under any other paragraph of this Schedule, or
(b) a penalty under Schedule 56 (penalty for late payment of tax), or
(c) a penalty under Part 4 of FA 2014 (penalty where corrective action not taken after follower notice etc) or
(d) a penalty under Schedule 22 to FA 2016 (asset-based penalty).
(3) Where P is liable for a penalty under more than one paragraph of this Schedule which is determined by reference to a liability to tax, the aggregate of the amounts of those penalties must not exceed 100% the relevant percentage of the liability to tax.
(4) The relevant percentage is—
(a) if one of the penalties is a penalty under paragraph 6(3) or (4) and the information withheld is category 3 information, 200%,
(b) if one of the penalties is a penalty under paragraph 6(3) or (4) and the information withheld is category 2 information, 150%, and
(c) in all other cases, 100%.
Cancellation of penalty
17A (1) This paragraph applies where—
(a) P is liable for a penalty under any paragraph of this Schedule in relation to a failure to make a return falling within item 1 or 2 in the Table, and
(b) HMRC decide to give P a notice under section 8B withdrawing a notice under section 8 or 8A of that Act.
(2) The notice under section 8B of TMA 1970 may include provision under this paragraph cancelling liability to the penalty from the date specified in the notice.
17B (1) This paragraph applies where—
(a) P is liable for a penalty under any paragraph of this Schedule in relation to a failure to make a return falling within item 3 in the Table, and
(b) a request is made under section 12AAA of TMA 1970 for HMRC to withdraw a notice under section 12AA of that Act.
(2) The notice under section 12AAA of TMA 1970 may include provision under this paragraph cancelling liability to the penalty from the date specified in the notice.
Assessment
18 (1) Where P is liable for a penalty under any paragraph of this Schedule HMRC must—
(a) assess the penalty,
(b) notify P, and
(c) state in the notice the period in respect of which the penalty is assessed.
(2) A penalty under any paragraph of this Schedule must be paid before the end of the period of 30 days beginning with the day on which notification of the penalty is issued.
(3) An assessment of a penalty under any paragraph of this Schedule—
(a) is to be treated for procedural purposes in the same way as an assessment to tax (except in respect of a matter expressly provided for by this Schedule),
(b) may be enforced as if it were an assessment to tax, and
(c) may be combined with an assessment to tax.
(4) A supplementary assessment may be made in respect of a penalty if an earlier assessment operated by reference to an underestimate of the liability to tax which would have been shown in a return.
(5) Sub-paragraph (6) applies if—
(a) an assessment in respect of a penalty is based on a liability to tax that would have been shown in a return, and
(b) that liability is found by HMRC to be excessive.
(6) HMRC may by notice to P amend the assessment so that it is based upon the correct amount.
(7) An amendment under sub-paragraph (6)—
(a) does not affect when the penalty must be paid;
(b) may be made after the last day on which the assessment in question could have been made under paragraph 19.
19 (1) An assessment of a penalty under any paragraph of this Schedule in respect of any amount must be made on or before the later of date A and (where it applies) date B.
(2) Date A is —
(a) in the case of an assessment of a penalty under paragraph 6C, the last day of the period of 2 years beginning with the end of the tax month in respect of which the penalty is payable,
(b) in the case of an assessment of a penalty under paragraph 6D, the last day of the period of 2 years beginning with the filing date for the relevant extended failure (as defined in paragraph 6D(10)), and
(c) in any other case,
the last day of the period of 2 years beginning with the filing date.
(3) Date B is the last day of the period of 12 months beginning with—
(a) the end of the appeal period for the assessment of the liability to tax which would have been shown in the return or returns (as the case may be in relation to penalties under section 6C or 6D), or
(b) if there is no such assessment, the date on which that liability is ascertained or it is ascertained that the liability is nil.
(4) In sub-paragraph (3)(a) “appeal period” means the period during which—
(a) an appeal could be brought, or
(b) an appeal that has been brought has not been determined or withdrawn.
(5) Sub-paragraph (1) does not apply to a re-assessment under paragraph 24(2)(b).
Appeal
20 (1) P may appeal against a decision of HMRC that a penalty is payable by P.
(2) P may appeal against a decision of HMRC as to the amount of a penalty payable by P.
21 (1) An appeal under paragraph 20 is to be treated in the same way as an appeal against an assessment to the tax concerned (including by the application of any provision about bringing the appeal by notice to HMRC, about HMRC review of the decision or about determination of the appeal by the First-tier Tribunal or Upper Tribunal).
(2) Sub-paragraph (1) does not apply—
(a) so as to require P to pay a penalty before an appeal against the assessment of the penalty is determined, or
(b) in respect of any other matter expressly provided for by this Act.
22 (1) On an appeal under paragraph 20(1) that is notified to the tribunal, the tribunal may affirm or cancel HMRC's decision.
(2) On an appeal under paragraph 20(2) that is notified to the tribunal, the tribunal may—
(a) affirm HMRC's decision, or
(b) substitute for HMRC's decision another decision that HMRC had power to make.
(3) If the tribunal substitutes its decision for HMRC's, the tribunal may rely on paragraph 16—
(a) to the same extent as HMRC (which may mean applying the same percentage reduction as HMRC to a different starting point), or
(b) to a different extent, but only if the tribunal thinks that HMRC's decision in respect of the application of paragraph 16 was flawed.
(4) In sub-paragraph (3)(b) “flawed” means flawed when considered in the light of the principles applicable in proceedings for judicial review.
(5) In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 21(1)).
Reasonable excuse
23 (1) Liability to a penalty under any paragraph of this Schedule does not arise in relation to a failure to make a return if P satisfies HMRC or (on appeal) the First-tier Tribunal or Upper Tribunal that there is a reasonable excuse for the failure.
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.
(2) For the purposes of sub-paragraph (1)—
(a) an insufficiency of funds is not a reasonable excuse, unless attributable to events outside P's control,
(b) where P relies on any other person to do anything, that is not a reasonable excuse unless P took reasonable care to avoid the failure, and
(c) where P had a reasonable excuse for the failure but the excuse has ceased, P is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.
Determination of penalty geared to tax liability where no return made
24 (1) References to a liability to tax which would have been shown in a return are references to the amount which, if a complete and accurate return had been delivered on the filing date, would have been shown to be due or payable by the taxpayer in respect of the tax concerned for the period to which the return relates.
(2) In the case of a penalty which is assessed at a time before P makes the return to which the penalty relates—
(a) HMRC is to determine the amount mentioned in sub-paragraph (1) to the best of HMRC's information and belief, and
(b) if P subsequently makes a return, the penalty must be re-assessed by reference to the amount of tax shown to be due and payable in that return (but subject to any amendments or corrections to the return).
(3) In calculating a liability to tax which would have been shown in a return, no account is to be taken of any relief under section 458 of CTA 2010 (relief in respect of repayment etc of loan) which is deferred under subsection (5) of that section.
Partnerships
25 (1) This paragraph applies where—
(a) the representative partner, or
(b) a successor of the representative partner,
fails to make a return falling within item 3 in the Table (partnership returns).
(2) A penalty in respect of the failure is payable by every relevant partner.
(3) In accordance with sub-paragraph (2), any reference in this Schedule to P is to be read as including a reference to a relevant partner.
(4) An appeal under paragraph 20 in connection with a penalty payable by virtue of this paragraph may be brought only by—
(a) the representative partner, or
(b) a successor of the representative partner.
(5) Where such an appeal is brought in connection with a penalty payable in respect of a failure, the appeal is to treated as if it were an appeal in connection with every penalty payable in respect of that failure.
(6) In this paragraph—
“relevant partner” means a person who was a partner in the partnership to which the return relates at any time during the period in respect of which the return was required;
“representative partner” means a person who has been required by a notice served under or for the purposes of section 12AA(2) or (3) of TMA 1970 to deliver any return;
“successor” has the meaning given by section 12AA(11) of TMA 1970.
Double jeopardy
26 P is not liable to a penalty under any paragraph of this Schedule in respect of a failure or action in respect of which P has been convicted of an offence.
Interpretation
27 (1) This paragraph applies for the construction of this Schedule.
(2) The withholding of information by P is—
(a) “deliberate and concealed” if P deliberately withholds the information and makes arrangements to conceal the fact that the information has been withheld, and
(b) “deliberate but not concealed” if P deliberately withholds the information but does not make arrangements to conceal the fact that the information has been withheld.
(2A) The Commissioners” means the Commissioners for Her Majesty's Revenue and Customs.
(3) “HMRC” means Her Majesty's Revenue and Customs.
(3A) Tax month” means the period beginning with the 6th day of a month and ending with the 5th day of the following month.
(4) References to a liability to tax, in relation to a return falling within item 6 in the Table (construction industry scheme), are to a liability to make payments in accordance with Chapter 3 of Part 3 of FA 2004.
(5) References to an assessment to tax, in relation to inheritance tax and stamp duty reserve tax, are to a determination.
SCHEDULE 56 Penalty for failure to make payments on time
Section 107
Penalty for failure to pay tax
1 (1) A penalty is payable by a person (“P”) where P fails to pay an amount of tax specified in column 3 of the Table below on or before the date specified in column 4.
(2) Paragraphs 3 to 8 8J set out—
(a) the circumstances in which a penalty is payable, and
(b) subject to paragraph 9, the amount of the penalty.
(3) If P's failure falls within more than one provision of this Schedule, P is liable to a penalty under each of those provisions.
(4) In the following provisions of this Schedule, the “penalty date”, in relation to an amount of tax, means the day after the date specified in or for the purposes of column 4 of the Table in relation to that amount..
(5) Sub-paragraph (4) is subject to paragraph 2A.
Tax to which payment relates | Amount of tax payable | Date after which penalty is incurred
PRINCIPAL AMOUNTS
1 | Income tax or capital gains tax | Amount payable under section 59B(3) or (4) of TMA 1970 | The date falling 30 days after the date specified in section 59B(3) or (4) of TMA 1970 as the date by which the amount must be paid
1A | Income tax or capital gains tax | Amount payable under section 59BA(4) or (5) of TMA 1970 | The date falling 30 days after the date specified in section 59BA(4) or (5) of TMA 1970 as the date by which the amount must be paid.
2 | Income tax | Amount payable under PAYE regulations ... | The date determined by or under PAYE regulations as the date by which the amount must be paid
3 | Income tax | Amount shown in return under section 254(1) of FA 2004 | The date falling 30 days after the date specified in section 254(5) of FA 2004 as the date by which the amount must be paid
3A | Income tax | Amount payable under regulations under section 244L(2)(a) of FA 2004 | The date falling 30 days after the due date determined by or under the regulations
3B | Capital gains tax | Amount payable under paragraph 6 of Schedule 2 to FA 2019 where not included in a return under section 8 or 8A of TMA 1970 | The date falling 30 days after 31 January in the tax year following the one in which the disposal was made
3C | Capital gains tax | Amount payable under a CGT exit charge payment plan entered into in accordance with Schedule 3ZAA to TMA 1970 | The later of— the date falling 30 days after the date specified in section 59B of TMA 1970 as the date by which the amount is due to be paid, and the date on which the amount is payable under the plan.
4 | Deductions on account of tax under Chapter 3 of Part 3 of FA 2004 (construction industry scheme) | Amount payable under section 62 of FA 2004 (except an amount falling within item 17, 23 or 24) | The date determined by or under regulations under section 71 of FA 2004 as the date by which the amount must be paid
4A | Apprenticeship levy | Amount payable under regulations under section 105 of FA 2016 | The date determined by or under regulations under section 105 of FA 2016
5 | Corporation tax | Amount shown in company tax return under paragraph 3 of Schedule 18 to FA 1998 | The filing date for the company tax return for the accounting period for which the tax is due (see paragraph 14 of Schedule 18 to FA 1998)
6 | Corporation tax | Amount payable under regulations under section 59E of TMA 1970 (except an amount falling within item 17, 23 or 24) | The filing date for the company tax return for the accounting period for which the tax is due (see paragraph 14 of Schedule 18 to FA 1998)
6ZZA | Corporation tax | Amount payable under section 357YQ of CTA 2010 | The end of the period within which, in accordance with section 357YQ(5), the amount must be paid.
6ZA | Corporation tax | Amount payable under an exit charge payment plan entered into in accordance with Schedule 3ZB to TMA 1970 | The later of— the first day after the period of 12 months beginning immediately after the migration accounting period (as defined in Part 1 or 2 of Schedule 3ZB to TMA 1970, as the case may be), and the date on which the amount is payable under the plan.
6ZAA | Corporation tax | Amount payable under a CT payment plan entered into in accordance with Schedule 3ZC to TMA 1970 | The later of— the first day after the period of 12 months beginning immediately after the accounting period to which the CT payment plan relates, and the date on which the amount is payable under the plan.
. . . | . . . | . . . | . . .
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
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
7 | Inheritance tax | Amount payable under section 226 of IHTA 1984 (except an amount falling within item 14 or 21) | The filing date (determined under section 216 of IHTA 1984) for the account in respect of the liability for that amount
8 | Inheritance tax | Amount payable under section 227 or 229 of IHTA 1984 (except an amount falling within item 14 or 21) | For the first instalment, the filing date (determined under section 216 of IHTA 1984) for the account in respect of the liability for that amountFor any later instalment, the date falling 30 days after the date determined under section 227 or 229 of IHTA 1984 as the date by which the instalment must be paid
9 | Stamp duty land tax | Amount payable under section 86(1) or (2) of FA 2003 | The date falling 30 days after the date specified in section 86(1) or (2) of FA 2003 as the date by which the amount must be paid
10 | Stamp duty reserve tax | Amount payable under section 87, 93 or 96 of FA 1986 or Schedule 19 to FA 1999 (except an amount falling within item 17, 23 or 24) | The date falling 30 days after the date determined by or under regulations under section 98 of FA 1986 as the date by which the amount must be paid
10A | Annual tax on enveloped dwellings | Amount payable under section 163(1) or (2) of FA 2013 (except an amount falling within item 23). | The date falling 30 days after the date specified in section 163(1) or (2) of FA 2013 as the date by which the amount must be paid
11 | Petroleum revenue tax | Amount charged in an assessment under paragraph 11(1) of Schedule 2 to OTA 1975 | The date falling 30 days after the date determined in accordance with paragraph 13 of Schedule 2 to OTA 1975 as the date by which the amount must be paid
11ZA | Soft drinks industry levy | Amount payable under regulations under section 52 of FA 2017 or paragraphs 6 or 14 of Schedule 8 to that Act | The date determined by or under regulations under section 52 of FA 2017
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
11AA | Plastic packaging tax | Amount payable under regulations under section 61 of FA 2021 | The date determined by or under regulations under section 61 of FA 2021 as the date by which the amount must be paid
11AB | Plastic packaging tax | Amount payable by virtue of secondary liability and assessment notice or joint and several liability notice under Schedule 9 to FA 2021 | The date determined in accordance with Schedule 9 to FA 2021 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 | Alcohol duty | Amount payable under regulations under section 88 of F(No. 2)A 2023 (except an amount falling within item 17A, 23 or 24) | The date determined by or under regulations under section 88 of F(No. 2)A 2023 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
11GA | Excise duties | Amount payable under regulations under section 60A of the Customs and Excise Management Act 1979 (except an amount falling within item 17A, 23 or 24). | The date determined by or under regulations under section 60A of the Customs and Excise Management Act 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
11N | Machine games duty | Amount payable under paragraph 6 of Schedule 24 to FA 2012 (except an amount falling within item 17A, 23 or 24) | The date determined by or under regulations under paragraph 19 of Schedule 24 to FA 2012 as the date by which the amount must be paid
AMOUNTS PAYABLE IN DEFAULT OF A RETURN BEING MADE
12 | Income tax or capital gains tax | Amount payable under section 59B(5A) of TMA 1970 | The date falling 30 days after the date specified in section 59B(5A) of TMA 1970 as the date by which the amount must be paid
13 | Corporation tax | Amount shown in determination under paragraph 36 or 37 of Schedule 18 to FA 1998 | The filing date for the company tax return for the accounting period for which the tax is due (see paragraph 14 of Schedule 18 to FA 1998)
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
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
14 | Inheritance tax | Amount shown in a determination made by HMRC in the circumstances set out in paragraph 2 | The filing date (determined under section 216 of IHTA 1984) for the account in respect of the liability for that amount
15 | Stamp duty land tax | Amount shown in determination under paragraph 25 of Schedule 10 to FA 2003 (including that paragraph as applied by section 81(3) of that Act) | The date falling 30 days after the filing date for the return in question
15A | Annual tax on enveloped dwellings | Amount shown in determination under paragraph 18 of Schedule 33 to FA 2013 | The date falling 30 days after the filing date for the return in question
16 | Petroleum revenue tax | Amount charged in an assessment made where participator fails to deliver return for a chargeable period | The date falling 6 months and 30 days after the end of the chargeable period
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
16AA | Plastic packaging tax | Amount assessed under Schedule 10 to FA 2021 | 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
17 | Tax falling within any of items 1 2, 3B to 6, 9 , 10 or 10A | Amount (not falling within any of items 12 13 to 15A) which is shown in an assessment or determination made by HMRC in the circumstances set out in paragraph 2 | The date falling 30 days after the date by which the amount would have been required to be paid if it had been shown in the return in question
17A | Tax falling within any of items 11D to 11M11N | 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
AMOUNTS SHOWN TO BE DUE IN OTHER ASSESSMENTS, DETERMINATIONS, ETC
18 | Income tax or capital gains tax | Amount payable under section 55 or 56(3)(b) of TMA 1970 | The date falling 30 days after the date determined in accordance with section 55(3), (4), (6) or (9) or section 56(3)(b) of TMA 1970 as the date by which the amount must be paid
19 | Income tax or capital gains tax | Amount payable under section 59B(5) or (6) of TMA 1970 | The date falling 30 days after the date specified in section 59B(5) or (6) of TMA 1970 as the date by which the amount must be paid
20 | . . . | . . . | . . .
21 | Inheritance tax | Amount shown in— an amendment or correction of a return showing an amount falling within item 7 or 8, or a determination made by HMRC in circumstances other than those set out in paragraph 2 | The later of— the filing date (determined under section 216 of IHTA 1984) for the account in respect of the liability for that amount, and the date falling 30 days after the date on which the amendment, correction, assessment or determination is made
22 | Petroleum revenue tax | Amount charged in an assessment, or an amendment of an assessment, made in circumstances other than those set out in items 11 and 16 | The date falling 30 days after— the date by which the amount must be paid, or the date on which the assess-ment or amendment is made, whichever is later
23 | Tax falling within any of items 1 to 6, 9 or 10 items 1 to 6A 2, 3B to 6 , 6C, 9, 10, 11A or 11B to 11M 11N | Amount (not falling within any of items 18 to 20 item 18 or 19) shown in an amendment or correction of a return showing an amount falling within any of items 1 to 6, 9 or 10 items 1 to 6A 2, 3B to 6 , 6C, 9, 10, 11A or 11B to 11M 11N | The date falling 30 days after— the date by which the amount must be paid, or the date on which the amendment or correction is made, whichever is later
24 | Tax falling within any of items 1 to 6, 9 or 10 items 1 to 6A 2, 3B to 6 , 6C, 9, 10, 11A or 11B to 11M 11N | Amount (not falling within any of items 18 to 20 item 18 or 19) shown in an assessment or determination made by HMRC in circumstances other than those set out in paragraph 2 | The date falling 30 days after— the date by which the amount must be paid, or the date on which the assessment or determin-ation is made, whichever is later
Assessments and determinations in default of return
2 The circumstances referred to in items 14, 17, 21 and 24 are where—
(a) P or another person is required to make or deliver a return falling within any item in the Table in Schedule 55,
(b) that person fails to make or deliver the return on or before the date by which it is required to be made or delivered, and
(c) if the return had been made or delivered as required, the return would have shown that an amount falling within any of items 1 2 and 3B to 10 11M 11N was due and payable.
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.
Amount of penalty: occasional amounts and amounts in respect of periods of 6 months or more
3 (1) This paragraph applies in the case of—
(a) a payment of tax falling within any of items 1, 3 , 3B , 3C and 7 to 24 3B, 6B, 7 to 11ZA and 12 13 to 24 in the Table,
(aza) a payment of tax falling within items 11AA or 11AB in the Table,
(aa) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) a payment of tax falling within item 4A or item 2 or 4 any of items 2, 4, 6A, 6C and 11A to 11M 11N which relates to a period of 6 months or more, and
(c) a payment of tax falling within item 2 which is payable under regulations under section 688A of ITEPA 2003 (recovery from other persons of amounts due from managed service companies),
(ca) an amount in respect of apprenticeship levy falling within item 4A which is payable by virtue of regulations under section 106 of FA 2016 (recovery from third parties).
(d) a payment of tax falling within item 6A which relates to a transitional period for the purposes of the annual accounting scheme;
(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.
(2) P is liable to a penalty of 5% of the unpaid tax.
(3) If any amount of the tax is unpaid after the end of the period of 5 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
(4) If any amount of the tax is unpaid after the end of the period of 11 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
4 (1) This paragraph applies in the case of a payment of tax falling within any of items 5 to 6ZAA in the Table.
(2) P is liable to a penalty of 5% of the unpaid tax.
(3) If any amount of the tax is unpaid after the end of the period of 3 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
(4) If any amount of the tax is unpaid after the end of the period of 9 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
Amount of penalty: PAYE and CIS amounts etc.
5 (1) Paragraphs 6 to 8 apply in the case of a payment of tax falling within item 2 , 4 or 4A in the Table.
(2) But those paragraphs do not apply in the case of a payment mentioned in paragraph 3(1)(b) , (c) or (ca).
6 (1) P is liable to a penalty under this paragraph, in relation to each tax, each time that P makes a default in relation to a tax year.
(2) For the purposes of this paragraph, P makes a default in relation to a tax year 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 of tax payable in relation to the tax year;
(b) a payment of earnings-related contributions within the meaning of the Social Security (Contributions) Regulations 2001 ( S.I. 2001/1004) payable in relation to the tax year;
(ba) a payment under regulations under section 105 of FA 2016 of an amount in respect of apprenticeship levy payable in relation to the tax year;
(c) a payment due under the Income Tax (Construction Industry Scheme) Regulations 2005 ( S.I. 2005/2045) payable in relation to the tax year ;
(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) and due for the tax year .
(3) But where a failure to make one of those payments (or to pay an amount comprising two or more of those payments) would, apart from this sub-paragraph, constitute the first default in relation to a tax year, that failure does not count as a default in relation to that year for the purposes of a penalty under this paragraph.
(4) The amount of the penalty for a default made in relation to a tax year is determined by reference to—
(a) the amount of the tax comprised in the default, and
(b) the number of previous defaults that P has made in relation to the same tax year.
(5) If the default is P's 1st, 2nd or 3rd default in relation to the tax year, P is liable, at the time of the default, to a penalty of 1% of the amount of tax comprised in the default.
(6) If the default is P's 4th, 5th or 6th default in relation to the tax year, P is liable, at the time of the default, to a penalty of 2% of the amount of tax comprised in the default.
(7) If the default is P's 7th, 8th or 9th default in relation to the tax year, P is liable, at the time of the default, to a penalty of 3% of the amount of tax comprised in the default.
(7A) If the default is P's 10th or subsequent default in relation to the tax year, P is liable, at the time of the default, to a penalty of 4% of the amount of tax comprised in the default.
(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 previous default counts for the purposes of sub-paragraphs (5) to (7A) even if it is remedied before the time of the default giving rise to the penalty.
(8A) Regulations made by the Commissioners for Her Majesty's Revenue and Customs may specify—
(a) circumstances in which, for the purposes of sub-paragraph (2), a payment of less than the full amount may be treated as a payment in full;
(b) circumstances in which sub-paragraph (3) is not to apply.
(8B) Regulations under sub-paragraph (8A) may—
(a) make different provision for different cases, and
(b) include incidental, consequential and supplementary provision.
(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 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.
8 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 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, 6C and 11A to, 11A and 11B to 11M 11N 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 11N 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.
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, and
(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 PAPD−POAD, and
BPT (which is the amount paid on time in satisfaction of any liability to pay BPD) is equal to PAPP−POAP.
(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.
Special reduction
9 (1) If HMRC think it right because of special circumstances, they may reduce a penalty under any paragraph of this Schedule.
(2) In sub-paragraph (1) “special circumstances” does not include—
(a) ability to pay, or
(b) the fact that a potential loss of revenue from one taxpayer is balanced by a potential over-payment by another.
(3) In sub-paragraph (1) the reference to reducing a penalty includes a reference to—
(a) staying a penalty, and
(b) agreeing a compromise in relation to proceedings for a penalty.
Interaction with other penalties and late payment surcharges
9A In the application of the following provisions, no account shall be taken of a penalty under this Schedule—
(a) section 97A of TMA 1970 (multiple penalties),
(b) paragraph 12(2) of Schedule 24 to FA 2007 (interaction with other penalties), and
(c) paragraph 15(1) of Schedule 41 to FA 2008 (interaction with other penalties).
Suspension of penalty during currency of agreement for deferred payment
10 (1) This paragraph applies if—
(a) P fails to pay an amount of tax when it becomes due and payable,
(b) P makes a request to HMRC that payment of the amount of tax be deferred, and
(c) HMRC agrees that payment of that amount may be deferred for a period (“the deferral period”).
(2) If P would (apart from this sub-paragraph) become liable, between the date on which P makes the request and the end of the deferral period, to a penalty under any paragraph of this Schedule for failing to pay that amount, P is not liable to that penalty.
(3) But if—
(a) P breaks the agreement (see sub-paragraph (4)), and
(b) HMRC serves on P a notice specifying any penalty to which P would become liable apart from sub-paragraph (2),
P becomes liable, at the date of the notice, to that penalty.
(4) P breaks an agreement if—
(a) P fails to pay the amount of tax in question when the deferral period ends, or
(b) the deferral is subject to P complying with a condition (including a condition that part of the amount be paid during the deferral period) and P fails to comply with it.
(5) If the agreement mentioned in sub-paragraph (1)(c) is varied at any time by a further agreement between P and HMRC, this paragraph applies from that time to the agreement as varied.
Assessment
11 (1) Where P is liable for a penalty under any paragraph of this Schedule HMRC must—
(a) assess the penalty,
(b) notify P, and
(c) state in the notice the period in respect of which the penalty is assessed.
(2) A penalty under any paragraph of this Schedule must be paid before the end of the period of 30 days beginning with the day on which notice of the assessment of the penalty is issued.
(3) An assessment of a penalty under any paragraph of this Schedule—
(a) is to be treated for procedural purposes in the same way as an assessment to tax (except in respect of a matter expressly provided for by this Schedule),
(b) may be enforced as if it were an assessment to tax, and
(c) may be combined with an assessment to tax.
(4) A supplementary assessment may be made in respect of a penalty if an earlier assessment operated by reference to an underestimate of an amount of tax which was due or payable.
(4A) If an assessment in respect of a penalty is based on an amount of tax due or payable that is found by HMRC to be excessive, HMRC may by notice to P amend the assessment so that it is based upon the correct amount.
(4B) An amendment made under sub-paragraph (4A)—
(a) does not affect when the penalty must be paid;
(b) may be made after the last day on which the assessment in question could have been made under paragraph 12.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12 (1) An assessment of a penalty under any paragraph of this Schedule in respect of any amount must be made on or before the later of date A and (where it applies) date B.
(2) Date A is the last day of the period of 2 years beginning with the date specified in or for the purposes of column 4 of the Table (that is to say, the last date on which payment may be made without incurring a penalty).
(3) Date B is the last day of the period of 12 months beginning with—
(a) the end of the appeal period for the assessment of the amount of tax in respect of which the penalty is assessed, or
(b) if there is no such assessment, the date on which that amount of tax is ascertained.
(4) In sub-paragraph (3)(a) “appeal period” means the period during which—
(a) an appeal could be brought, or
(b) an appeal that has been brought has not been determined or withdrawn.
Appeal
13 (1) P may appeal against a decision of HMRC that a penalty is payable by P.
(2) P may appeal against a decision of HMRC as to the amount of a penalty payable by P.
14 (1) An appeal under paragraph 13 is to be treated in the same way as an appeal against an assessment to the tax concerned (including by the application of any provision about bringing the appeal by notice to HMRC, about HMRC review of the decision or about determination of the appeal by the First-tier Tribunal or Upper Tribunal).
(2) Sub-paragraph (1) does not apply—
(a) so as to require P to pay a penalty before an appeal against the assessment of the penalty is determined, or
(b) in respect of any other matter expressly provided for by this Act.
15 (1) On an appeal under paragraph 13(1) that is notified to the tribunal, the tribunal may affirm or cancel HMRC's decision.
(2) On an appeal under paragraph 13(2) that is notified to the tribunal, the tribunal may—
(a) affirm HMRC's decision, or
(b) substitute for HMRC's decision another decision that HMRC had power to make.
(3) If the tribunal substitutes its decision for HMRC's, the tribunal may rely on paragraph 9—
(a) to the same extent as HMRC (which may mean applying the same percentage reduction as HMRC to a different starting point), or
(b) to a different extent, but only if the tribunal thinks that HMRC's decision in respect of the application of paragraph 9 was flawed.
(4) In sub-paragraph (3)(b) “flawed” means flawed when considered in the light of the principles applicable in proceedings for judicial review.
(5) In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 14(1)).
Reasonable excuse
16 (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.
(2) For the purposes of sub-paragraph (1)—
(a) an insufficiency of funds is not a reasonable excuse unless attributable to events outside P's control,
(b) where P relies on any other person to do anything, that is not a reasonable excuse unless P took reasonable care to avoid the failure, and
(c) where P had a reasonable excuse for the failure but the excuse has ceased, P is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.
Double jeopardy
17 P is not liable to a penalty under any paragraph of this Schedule in respect of a failure or action in respect of which P has been convicted of an offence.
Interpretation
18 (1) This paragraph applies for the construction of this Schedule.
(2) “HMRC” means Her Majesty's Revenue and Customs.
(3) References to tax include construction industry deductions under Chapter 3 of Part 3 of FA 2004.
(4) References to a determination, in relation to an amount payable under PAYE regulations or under Chapter 3 of Part 3 of FA 2004, include a certificate.
(5) References to an assessment to tax, in relation to inheritance tax and stamp duty reserve tax, are to a determination.
Section 109
Part 1 Amendments of Schedule 24 to FA 2007
1 Schedule 24 to FA 2007 (penalties for errors) is amended as follows.
2 In paragraph 2 (under-assessment by HMRC), insert at the end—
(4) In this paragraph (and in Part 2 of this Schedule so far as relating to this paragraph)—
(a) “assessment” includes determination, and
(b) accordingly, references to an under-assessment include an under-determination.
3 In paragraph 5 (normal rule for calculating potential lost revenue), for sub-paragraph (4)(b) substitute—
(b) any relief under subsection (4) of section 419 of ICTA (relief in respect of repayment etc of loan) which is deferred under subsection (4A) of that section;
.
4 In paragraph 9(1)(b) and (c) (reductions for disclosure), for “supply or false information” substitute “ supply of false information ”.
5 In paragraph 13 (assessment), insert at the end—
(7) In this Part of this Schedule references to an assessment to tax, in relation to inheritance tax and stamp duty reserve tax, are to a determination.
6 For paragraph 16(2) (appeals) substitute—
(2) Sub-paragraph (1) does not apply—
(a) so as to require P to pay a penalty before an appeal against the assessment of the penalty is determined, or
(b) in respect of any other matter expressly provided for by this Act.
7 (1) Paragraph 19 (companies: officers' liability) is amended as follows.
(2) In sub-paragraph (3)—
(a) after “a body corporate” insert “ other than a limited liability partnership ”,
(b) in paragraph (a), omit the “or” at the end, and
(c) after that paragraph insert—
(aa) a manager, and
.
(3) After that sub-paragraph insert—
(3A) In the application of sub-paragraph (1) to a limited liability partnership, “officer” means a member.
(4) Insert at the end—
(6) In this paragraph “company” means any body corporate or unincorporated association, but does not include a partnership, a local authority or a local authority association.
8 Omit paragraph 28(da) (interpretation of references to assessment).
9 In paragraphs 30 and 31 (consequential amendments) for “paragraph 7” substitute “ paragraphs 7 and 7B ”.
Part 2 Amendments of Schedule 41 to FA 2008
10 Schedule 41 to FA 2008 (penalties for failure to notify and certain other wrongdoing) is amended as follows.
11 For paragraph 18(2) (appeals) substitute—
(2) Sub-paragraph (1) does not apply—
(a) so as to require P to pay a penalty before an appeal against the assessment of the penalty is determined, or
(b) in respect of any other matter expressly provided for by this Act.
12 (1) Paragraph 22 (companies: officers' liability) is amended as follows.
(2) In sub-paragraph (3)—
(a) after “a body corporate” insert “ other than a limited liability partnership ”,
(b) in paragraph (a), omit the “or” at the end,
(c) after that paragraph insert—
(aa) a manager, and
.
(3) After that sub-paragraph insert—
(3A) In the application of sub-paragraph (1) to a limited liability partnership, “officer” means a member.
(4) Insert at the end—
(6) In this paragraph “company” means any body corporate or unincorporated association, but does not include a partnership, a local authority or a local authority association.
Part 3 Other amendments
13 (1) TMA 1970 is amended as follows.
(2) In section 100(2) (determination of penalties by officer), omit paragraph (g) and the “or” before it.
(3) After section 103 insert—
Disapplication of sections 100 to 103 in the case of certain penalties
103ZA Sections 100 to 103 do not apply to a penalty under—
(a) Schedule 24 to FA 2007 (penalties for errors),
(b) Schedule 36 to FA 2008 (information and inspection powers),
(c) Schedule 41 to that Act (penalties for failure to notify and certain other wrongdoing),
(d) Schedule 55 to FA 2009 (penalties for failure to make returns etc), or
(e) Schedule 56 to that Act (penalties for failure to make payments on time).
14 In FA 2008 omit—
(a) paragraph 74 of Schedule 36 (information and inspection powers), and
(b) paragraph 20(3) of Schedule 40 (amendment of Schedule 24 to FA 2007).
SCHEDULE 58 Recovery of debts under PAYE regulations
Section 110
PAYE regulations
1 Section 684 of ITEPA 2003 (PAYE regulations) is amended as follows.
2 In subsection (1), omit “for Her Majesty's Revenue and Customs”.
3 (1) Subsection (2) is amended as follows.
(2) For “PAYE regulations may, in particular, include” substitute “ The provision that may be made in PAYE regulations includes ”.
(3) In the list of provisions, in item 1, in paragraph (a), omit “for Her Majesty's Revenue and Customs”.
(4) In item 2, for “or remaining unpaid (or treated as overpaid or remaining unpaid)” substitute “ (or treated as overpaid) on account of, or any amounts other than relevant debts remaining unpaid (or treated as remaining unpaid) ”.
(5) After item 2 insert—
2A Provision—
(a) for deductions to be made in respect of relevant debts of a payee,
(b) as to the circumstances in which such deductions may be made, and
(c) where such deductions are made, as to the date on which the relevant debts are to be treated as paid.
(6) In item 3, for “income tax has been and is” substitute “ amounts have been and are ”.
4 After subsection (3) insert—
(3A) PAYE regulations under item 2A in the above list may not make provision enabling deductions totalling more than £2,000 to be made from a payee's income for a tax year without the payee's consent.
(3B) The Treasury may by order amend the amount specified in subsection (3A).
5 In paragraph (a) of subsection (7A), after “tax” insert “ or other amounts ”.
6 After that subsection insert—
(7AA) In this section “relevant debt”, in relation to a payee, means—
(a) a sum payable by the payee to the Commissioners under or by virtue of an enactment, other than an excluded debt, and
(b) a sum payable by the payee to the Commissioners under a contract settlement.
(7AB) For the purposes of subsection (7AA)—
(a) child tax credit or working tax credit that the payee is liable to repay is an excluded debt, and
(b) if the payee is an employer, any amount that the payee is required to deduct from the PAYE income of employees for a tax year is an excluded debt until the tax year has ended.
7 In subsection (7C), before the definition of “payer” insert—
“the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;
“contract settlement” means an agreement made in connection with the liability of the payee or another person to make a payment to the Commissioners under or by virtue of an enactment.
Consequential provision
8 In section 29(5) of the Tax Credits Act 2002 (recovery of overpayments)—
(a) for “tax” substitute “ income tax ”, and
(b) insert at the end “that is not a relevant debt (within the meaning of section 684 of the Income Tax (Earnings and Pensions) Act 2003)”.
9 (1) Part 11 of ITEPA 2003 (pay as you earn) is amended as follows.
(2) In section 682(1) (scope of Part), insert at the end “ and includes provision in respect of the deduction of certain other amounts from, and the repayment of certain other amounts with, PAYE income ”.
(3) In section 685 (tax tables)—
(a) in subsection (1), omit “for Her Majesty's Revenue and Customs”, and
(b) in subsection (2)(b), for “or 2” substitute “ , 2 or 2A ”.
10 (1) The Treasury may by order make provision—
(a) amending or repealing provisions of Part 11 of ITEPA 2003,
(b) amending, repealing or revoking provisions of enactments or instruments that refer to provisions of that Part, and
(c) amending, repealing or revoking provisions of enactments or instruments that apply, or confer power to apply, PAYE regulations or otherwise refer to such regulations.
(2) An order under this paragraph may only make provision to the extent that it is appropriate in consequence of, or in connection with, the amendments made by this Schedule.
(3) An order under this paragraph may include transitional provision and savings.
(4) An order under this paragraph is to be made by statutory instrument.
(5) A statutory instrument containing an order under this paragraph is subject to annulment in pursuance of a resolution of the House of Commons.
SCHEDULE 59 Climate change levy: removal of reduced rate
Section 118
Part 1 New provision for removal of reduced rate
1 In Schedule 6 to FA 2000 (climate change levy), after paragraph 45A insert—
Removal of reduced rate where targets set by climate change agreement not met
45B (1) This paragraph applies where, by virtue of such a certificate as is mentioned in paragraph 44(1), a facility is to be taken as being covered by a climate change agreement for a period specified in that certificate (“the certification period”).
(2) If it appears to the Secretary of State that the progress made in the certification period towards meeting targets set for the facility by the agreement has been such as under the provisions of the agreement is unsatisfactory, the Secretary of State may issue a certificate under this paragraph.
(3) The certificate must (in addition to specifying the facility, agreement and certification period to which it applies) specify—
(a) T, that is, the value (expressed in terms of a reduction in tonnes of carbon dioxide equivalent) of achieving the targets set for the facility by the agreement, and
(b) P, that is, the value (expressed in the same terms) of the progress made by the facility, during the certification period, towards meeting those targets.
(4) Where a certificate has been issued under this paragraph—
(a) each taxable supply made to the facility at any time falling within the certification period is to be treated as not being a reduced-rate supply, and
(b) accordingly, an amount (determined in accordance with sub-paragraph (5)) is payable by way of levy on that taxable supply.
(5) The amount payable under this paragraph on a taxable supply is—
T
-
P
T
×
0.8R
where—
T and P have the values mentioned in sub-paragraph (3), and
R is the amount which would have been payable by way of levy on the supply (had it not been a reduced-rate supply) at the time that it was made, in accordance with paragraph 42(1)(a).
(6) The Secretary of State must send the certificate to—
(a) the Commissioners, and
(b) the person who is the operator of the facility.
(7) A certificate under this paragraph may be issued after the certification period ends.
(8) A person liable to account for levy under this paragraph—
(a) is liable to account for it otherwise than by reference to an accounting period, and
(b) must not (by virtue of regulations under paragraph 41) become liable to pay it as from a date before the date on which the certificate under this paragraph is issued.
(9) Levy due under this paragraph is payable in addition to any levy already payable on any supply made in the certification period.
(10) In this paragraph—
“certification period”, in a case where the certificate referred to in sub-paragraph (1) has been varied under paragraph 45, means the period for which that certificate has effect as varied;
“tonne of carbon dioxide equivalent” has the meaning given in the Climate Change Act 2008.
Part 2 Consequential amendments
2 Schedule 6 to FA 2000 is amended as follows.
3 (1) Paragraph 40 (persons liable to account for levy) is amended as follows.
(2) In sub-paragraph (1), after “sub-paragraph (2)” insert “ or (3) ”.
(3) After sub-paragraph (2) insert—
(3) In the case of levy charged on a taxable supply under paragraph 45B, the person liable to account for the levy is the operator of the facility to which the supply was made.
4 In paragraph 41(2A) (application of Part 7 where person liable to account otherwise than by reference to accounting period), after “regulations under sub-paragraph (1)(a)(ii) above” insert “ or by virtue of paragraph 45B(8) ”.
5 In paragraph 42 (amount payable by way of levy), after sub-paragraph (1) insert—
(1A) Sub-paragraph (1) is subject to paragraph 45B.
6 In paragraph 44(2) (definition of “reduced-rate supply” to have effect subject to paragraph 45), for “paragraph 45” substitute “ paragraphs 45 and 45B ”.
7 In paragraph 45A (deemed supplies), after sub-paragraph (2) insert—
(3) This paragraph does not apply where a supply is treated as not being a reduced-rate supply by virtue of paragraph 45B.
8 (1) Paragraph 91 (interpretation etc of Part 7 of the Schedule) is amended as follows.
(2) In sub-paragraph (5) (modification of references to accounting periods in case of levy due otherwise than by reference to such periods), after “regulations under paragraph 41(1)(a)(ii)” insert “ or by virtue of paragraph 45B(8) ”.
9 In paragraph 147 (interpretation), in the definition of “reduced-rate supply”, for “paragraph 45” substitute “ paragraphs 45 and 45B ”.
SCHEDULE 60 Landfill tax: prescribed landfill site activities
Section 119
Introduction
1 Part 3 of FA 1996 (landfill tax) is amended as follows.
Prescribed landfill site activities to be treated as disposals
2 After section 65 insert—
Prescribed landfill site activities to be treated as disposals
65A (1) An order may prescribe a landfill site activity for the purposes of this section.
(2) If a prescribed landfill site activity is carried out at a landfill site, the activity is to be treated—
(a) as a disposal at the landfill site of the material involved in the activity,
(b) as a disposal of that material as waste, and
(c) as a disposal of that material made by way of landfill.
(3) Connected provision may be made by order.
(4) Provision may be made under this section in such way as the Treasury think fit.
(5) An order under subsection (1) may prescribe a landfill site activity by reference to conditions.
(6) Those conditions may, in particular, relate to either or both of the following—
(a) whether the landfill site activity is carried out in a designated area of a landfill site, and
(b) whether there has been compliance with a requirement to give information relating to—
(i) the landfill site activity, or
(ii) the material involved in the landfill site activity,
including information relating to whether the activity is carried out in a designated area of a landfill site.
(7) An order under this section—
(a) may amend, or otherwise modify, this Part or any other enactment relating to landfill tax, but
(b) may not alter any rate at which landfill tax is charged.
(8) Subsections (5) to (7) do not limit the generality of subsection (4).
(9) In this section—
“connected provision” means provision which appears to the Treasury to be necessary or expedient in connection with provision made under subsection (1);
“designated area” means an area of a landfill site designated in accordance with—
an order under this section, or
regulations under Part 1 of Schedule 5;
“landfill site activity” means any of the following descriptions of activity, or an activity that falls within any of the following descriptions—
using or otherwise dealing with material at a landfill site;
storing or otherwise having material at a landfill site.
3 In section 71(7) (orders and regulations), after paragraph (c) insert—
(ca) an order under section 65A above which produces the result that a landfill site activity which would not otherwise be prescribed for the purposes of section 65A is so prescribed;
(cb) an order under section 65A above which amends this Part or any enactment contained in an Act;
.
Material temporarily held
4 Omit section 62 (taxable disposals: regulations about material temporarily held at a landfill site).
Material at landfill sites
5 Part 1 of Schedule 5 (information) is amended as follows.
6 For the heading before paragraph 1 substitute— “ Information: general ”
7 After paragraph 1 insert—
Information: material at landfill sites
1A (1) Regulations may make provision about giving the Commissioners information relating to material at a landfill site or a part of a landfill site.
(2) Regulations under this paragraph may require a person to give information.
(3) Regulations under this paragraph may—
(a) require a person, or authorise an officer of Revenue and Customs to require a person, to designate a part of a landfill site (an “information area”), and
(b) require material, or prescribed descriptions of material, to be deposited in an information area.
(4) Regulations under this paragraph may make provision about information relating to what is done with material.
(5) Sub-paragraphs (2) to (4) do not prejudice the generality of sub-paragraph (1).
8 For the heading before paragraph 2 substitute— “ Records: registrable persons ”
9 After paragraph 2 insert—
Records: material at landfill sites
2A (1) Regulations may require a person to make records relating to material at a landfill site or a part of a landfill site.
(2) Regulations under this paragraph may make provision about records relating to what is done with material.
(3) Sub-paragraphs (2) to (7) of paragraph 2 apply in relation to regulations under this paragraph as they apply in relation to regulations under paragraph 2.
(4) But, in the application of paragraph 2(3)(a) in relation to regulations under this paragraph, the reference to registrable persons has effect as a reference to persons.
Site restoration
10 Omit section 43C (site restoration).
11 In Part 1 of Schedule 5 (information), after paragraph 1A (inserted by paragraph 7) insert—
Information: site restoration
1B (1) Before commencing restoration of all or part of a landfill site, the operator of the site must—
(a) notify the Commissioners in writing that the restoration is to commence, and
(b) provide such other written information as the Commissioners may require generally or in the particular case.
(2) In this paragraph “restoration” means work, other than capping waste, which is required by a relevant instrument to be carried out to restore a landfill site to use on completion of waste disposal operations.
(3) The following are relevant instruments—
(a) a planning consent,
(b) a waste management licence, and
(c) a permit authorising the disposal of waste on or in land.
Landfill tax returns
12 In section 49(b) (accounting for tax and time for payment), omit “as may be prescribed”.
Commencement and savings
13 (1) The repeal made by paragraph 10 comes into force on 1 September 2009.
(2) The amendment made by paragraph 11 has effect in relation to restoration of landfill sites commencing on or after 1 September 2009.
(3) The repeal of section 62 made by paragraph 4, and the repeal in section 49 made by paragraph 12—
(a) do not affect any regulations made under the repealed provisions before the passing of this Act, and
(b) do not prevent the powers conferred by the repealed provisions from being used after the passing of this Act to revoke any regulations made under the powers before that time.
Section 123
Part 1 Introductory
Interpretation
1 (1) In this Schedule—
“alternative finance investment bond” means arrangements to which section 564G of ITA 2007 or section 151N of TCGA 1992 (investment bond arrangements) applies ;
“bond assets”, “bond-holder”, “bond-issuer” and “capital” have the meaning given by that section;
“effective date”, for a transaction relating to land in Scotland or Wales, is the date which would be the effective date (under section 119 of FA 2003) if Part 4 of FA 2003 applied to land in Scotland or Wales;
“HMRC” means Her Majesty's Revenue and Customs;
“prescribed” means prescribed in regulations made by HMRC;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1A) In this Schedule “qualifying interest” means—
(a) in relation to land in England and Wales—
(i) an estate in fee simple absolute, or
(ii) a term of years absolute,
whether subsisting at law or in equity;
(b) in relation to land in Scotland—
(i) the interest of an owner of land, or
(ii) the tenant's right over or interest in a property subject to a lease;
(c) in relation to land in Northern Ireland—
(i) any freehold estate, or
(ii) any leasehold estate,
whether subsisting at law or in equity;
except that it does not include a lease for a term of years, or (in Scotland) for a period, of 21 years or less.
(2) Section 564S of ITA 2007 (treatment of bond-holder and bond-issuer) applies for the purposes of any enactment about stamp duty land tax as it applies for the purposes of the Income Tax Acts.
Part 2 Issue, transfer and redemption of rights under arrangements
Issue, transfer and redemption of rights under bond not be treated as chargeable transaction
2 Section 564S of ITA 2007 (treatment of bond-holder and bond-issuer) applies for the purposes of any enactment about stamp duty land tax as it applies for the purposes of the Income Tax Acts.
Relief not available where bond-holder acquires control of underlying asset
3 (1) Paragraph 2 does not apply if control of the underlying asset is acquired by—
(a) a bond-holder, or
(b) a group of connected bond-holders.
(2) A bond-holder (“BH”), or a group of connected bond-holders, acquires control of the underlying asset if—
(a) the rights of bond-holders under an alternative finance investment bond include the right of management and control of the bond assets, and
(b) BH, or the group, acquires sufficient rights to enable BH, or the members of the group acting jointly, to exercise the right of management and control of the bond assets to the exclusion of any other bond-holders.
4 (1) But paragraph 3(1) does not apply (and, accordingly, section 564S of ITA 2007 applies by virtue of paragraph 2) in either of the following cases.
(2) The first case is where—
(a) at the time that the rights were acquired BH (or all of the connected bond-holders) did not know and had no reason to suspect that the acquisition enabled the exercise of the right of management and control of the bond assets to the exclusion of other bond-holders, and
(b) as soon as reasonably practicable after BH (or any of the bond-holders) becomes aware that the acquisition enables that exercise, BH transfers (or some or all of the bond-holders transfer) sufficient rights for that exercise no longer to be possible.
(3) The second case is where BH—
(a) underwrites a public offer of rights under the bond, and
(b) does not exercise the right of management and control of the bond assets.
(4) In this paragraph—
“connected” is to be read in accordance with section 1122 of CTA 2010, and
“underwrite”, in relation to an offer of rights under a bond, means to agree to make payments of capital under the bond in the event that other persons do not make those payments.
Part 3 Transactions relating to underlying assets consisting of land
Introductory
General conditions for operation of reliefs etc
5 (1) This paragraph defines conditions A to G for the purposes of paragraphs 6 to 18.
Paragraphs 20 and 22 set out circumstances in which the reliefs provided by paragraphs 6 to 18 are not available even if conditions A to G are met.
(2) Condition A is that one person (“P”) and another (“Q”) enter into arrangements under which—
(a) P transfers to Q a qualifying interest in land (“the first transaction”), and
(b) P and Q agree that, when the interest ceases to be held by Q as mentioned in sub-paragraph (3)(b), Q will transfer the interest to P.
(3) Condition B is that—
(a) Q, as bond-issuer, enters into an alternative finance investment bond (whether before or after entering into the arrangements mentioned in sub-paragraph (2)), and
(b) the interest in land to which those arrangements relate is held by Q as a bond asset.
(4) Condition C is that, for the purpose of generating income or gains for the alternative finance investment bond—
(a) Q and P enter into a leaseback agreement, or
(b) such other condition or conditions as may be specified in regulations made by the Treasury is or are met.
(5) For the purposes of condition C, Q and P enter into a leaseback agreement if Q grants to P, out of the interest transferred to Q—
(a) a lease (if the interest transferred is freehold or, in Scotland, the interest of the owner), or
(b) a sub-lease (if the interest transferred is leasehold or, in Scotland, the tenant's right over or interest in a property subject to a lease).
(6) Condition D (which applies in the case of land in England ... or Northern Ireland) is that, before the end of the period of 120 days beginning with the effective date of the first transaction, Q provides HMRC with the prescribed evidence that—
(a) in England ..., a satisfactory legal charge has been entered in the register of title kept under section 1 of the Land Registration Act 2002,
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) in Northern Ireland, a satisfactory charge has been entered in the register of titles kept under section 10 of the Land Registration Act (Northern Ireland) 1970.
(7) A charge ... is satisfactory for the purposes of condition D if it—
(a) is a first charge on... the interest transferred to Q,
(b) is in favour of the Commissioners for Her Majesty's Revenue and Customs, and
(c) is for the amount mentioned in sub-paragraph (8).
(8) That amount is the total of—
(a) the amount of stamp duty land tax which would (apart from paragraph 6(2)) be chargeable on the first transaction if the chargeable consideration for that transaction had been the market value of the interest at that time, and
(b) any interest and any penalties which would for the time being be payable on or in respect of that amount of tax, if the tax had been due and payable (but not paid) in respect of the first transaction.
(9) Condition E is that the total of the payments of capital made to Q before the termination of the bond is not less than 60% of the value of the interest in the land at the time of the first transaction.
(10) Condition F is that Q holds the interest in the land as a bond asset until the termination of the bond.
(11) Condition G is that—
(a) before the end of the period of 30 days beginning with the date on which the interest in the land ceases to be held as a bond asset, that interest is transferred by Q to P (“the second transaction”), and
(b) the second transaction is effected not more than 10 years after the first transaction.
(12) The Treasury may by regulations amend sub-paragraph (11)(b) by substituting for the period mentioned there such other period as may be specified.
Stamp duty land tax
Relief from stamp duty land tax: first transaction
6 (1) This paragraph applies if—
(a) the first transaction relates to an interest in land in England ... or Northern Ireland, and
(b) each of conditions A to C is met before the end of the period of 30 days beginning with the effective date of that transaction.
(2) Where this paragraph applies the first transaction is exempt from charge to stamp duty land tax.
(3) Where the interest in the land is replaced as the bond asset by an interest in other land, this paragraph is subject to paragraph 18.
(4) This paragraph is also subject to paragraph 20.
7 (1) This paragraph applies if paragraph 6 applies but —
(a) the interest in the land is transferred by Q to P without conditions E and F having been met,
(b) the period mentioned in paragraph 5(11)(b) expires without each of those conditions having been met, or
(c) at any time it becomes apparent for any other reason that any of conditions E to G cannot or will not be met.
(2) This paragraph also applies if paragraph 6 applies but condition D is not met.
(3) The relief provided by paragraph 6(2) is withdrawn and stamp duty land tax is chargeable on the first transaction in accordance with this paragraph.
(4) The amount chargeable is the tax that would have been chargeable in respect of the first transaction (but for relief under paragraph 6(2)) if the chargeable consideration for that transaction had been the market value of the interest at the time of that transaction.
(5) Interest is due and payable on the amount of that tax as from the end of the period of 14 days after the effective date of that transaction until the tax is paid.
(6) Q must deliver a further land transaction return before the end of the period of 30 days after the date on which this paragraph first applies.
(7) The return must include a self-assessment of the amount of tax chargeable.
(8) Tax payable must be paid not later than the filing date for the further return.
(9) Schedule 10 to FA 2003 (returns, assessments and other matters) applies to a return under this paragraph as it applies to a return under section 76 of that Act (general requirement to deliver land transaction return), with the following modifications—
(a) references to the transaction to which the return relates are to the event by virtue of which this paragraph applies, and
(b) references to the effective date of the transaction are to the date on which that event occurs.
Relief from stamp duty land tax: second transaction
8 (1) The second transaction is exempt from charge to stamp duty land tax if—
(a) each of conditions A to G is met, and
(b) the provisions of Part 4 of FA 2003 relating to the first transaction are complied with.
(2) Where the interest in the land is replaced as the bond asset by an interest in other land, this paragraph is subject to paragraph 18.
(3) This paragraph is also subject to paragraph 20.
Discharge of charge when conditions for relief met
9 If, after the effective date of the second transaction, Q provides HMRC with the prescribed evidence that each of conditions A to C and E to G has been met, the land ceases to be subject to the charge ... registered in pursuance of condition D.
Taxation of capital gains
Relief from taxation of capital gains: first transaction
10 (1) This paragraph applies if each of conditions A to C is met before the end of the period of 30 days beginning with the effective date of the first transaction.
(2) That transaction is not to be regarded for the purposes of TCGA 1992 as an acquisition by Q or a disposal by P.
(3) If condition C is met by virtue of Q and P having entered into a leaseback agreement, the granting of the lease or sub-lease is not to be regarded for the purposes of TCGA 1992 as an acquisition by P or a disposal by Q.
(4) Sub-paragraphs (2) and (3) are subject to paragraph 11 (treatment of transactions where any of conditions D to G is not met).
(5) Where the interest in the land is replaced as the bond asset by an interest in other land, this paragraph is subject to paragraph 18.
(6) This paragraph is also subject to paragraph 20.
11 (1) This paragraph applies if—
(a) the interest in the land is transferred by Q to P without conditions E and F having been met,
(b) the period mentioned in paragraph 5(11)(b) expires without each of those conditions having been met, or
(c) at any time it becomes apparent for any other reason that any of conditions E to G cannot or will not be met.
(2) This paragraph also applies where (in the case of an interest in land in England ... or Northern Ireland) condition D is not met.
(3) Where this paragraph applies, paragraph 10(2) and (3) (disregard of transactions for purposes of TCGA 1992) do not apply.
(4) Where, by virtue of sub-paragraph (3), any chargeable gain or loss is treated as accruing to a person, that gain or loss is to be treated as accruing—
(a) in the case mentioned in sub-paragraph (1)(a), immediately before the transfer from Q to P,
(b) in any case mentioned in paragraph (b) or (c) of sub-paragraph (1), at the time mentioned in that paragraph, and
(c) in the case mentioned in sub-paragraph (2), at the end of the period mentioned in paragraph 5(6).
Relief from taxation of capital gains: second transaction
12 (1) The second transaction is not to be regarded for the purposes of TCGA 1992 as an acquisition by P or a disposal by Q if—
(a) each of conditions A to C and E to G is met, and
(b) in the case of an interest in land in England ... or Northern Ireland, condition D is met.
(2) Where the interest in the land is replaced as the bond asset by an interest in other land, this paragraph is subject to paragraph 18.
(3) This paragraph is also subject to paragraph 20.
Capital allowances
Introductory
13 (1) Paragraphs 14 to 17 make provision about the treatment, for the purposes of CAA 2001, of transactions relating to land in connection with an alternative finance investment bond.
(2) Any expression which is used in any of paragraphs 14 to 17 and in CAA 2001 has the meaning which it has in that Act.
Treatment for purposes of capital allowances
14 (1) This paragraph applies to an asset if—
(a) each of conditions A to C is met before the end of the period of 30 days beginning with the effective date of the first transaction, and
(b) the asset falls within sub-paragraph (2).
(2) An asset falls within this sub-paragraph if it is part of the subject matter of the first transaction and constitutes—
(a) plant or machinery, or
(b) a building or structure (or part of a building or structure).
(3) For the purposes of CAA 2001—
(a) expenditure incurred by Q in acquiring the asset by virtue of the first transaction is not to be regarded as capital expenditure, and
(b) in a case within sub-paragraph (2)(a), Q is not to be regarded as becoming, and P is not to be regarded as ceasing to be, the owner of the asset by virtue of that transaction; and
(c) in a case within sub-paragraph (2)(b), Q is not to be regarded as acquiring, and P is not to be regarded as ceasing to have, the relevant interest in the asset by virtue of that transaction.
(4) Sub-paragraph (3) applies in relation to the transactions mentioned in sub-paragraph (5) as it applies in relation to the first transaction (but reading the references to Q as references to P and the reference to P as a reference to Q).
(5) The transactions are—
(a) any leaseback agreement entered into by Q and P in order that condition C is met, and
(b) the second transaction.
(6) This paragraph is subject to paragraphs 15 to 17.
Loss or destruction of asset
15 (1) This paragraph applies to an asset if the first and second conditions are met.
(2) The first condition is that the asset—
(a) is part of the subject matter of the first transaction, and
(b) constitutes plant or machinery.
(3) The second condition is that, at any time when the asset is held as a bond asset, one of the following events occurs—
(a) the person with possession of the asset loses possession of it in circumstances where it is reasonable to assume that the loss is permanent, or
(b) the asset ceases to exist as such (as a result of destruction, dismantling or otherwise).
(4) That event is to be treated as a disposal event (in relation to P) occurring in the chargeable period in which that event occurs.
(5) For the purposes of sub-paragraph (4), the disposal value that P is required to bring into account is—
(a) where the case falls within item 3 or 4 of the Table in section 61(2) of CAA 2001 and the amount received by P as mentioned in that item is other than zero, that amount, and
(b) in any other case, the market value of the asset at the time of the event.
Q retaining asset when no longer held for purposes of bond
16 (1) This paragraph applies to an asset if the first and second conditions are met.
(2) The first condition is that the asset is part of the subject matter of the first transaction and constitutes—
(a) plant or machinery, or
(b) a building or structure (or part of a building or structure).
(3) The second condition is that Q—
(a) ceases to hold the asset as a bond asset (whether at the end of the bond term or at any other time), but
(b) does not transfer the asset to P or any other person.
(4) At the time that Q ceases to hold the asset as a bond asset —
(a) in a case within sub-paragraph (2)(a), Q is to be treated as becoming, and P is to be treated as ceasing to be, the owner of the asset, and
(b) in a case within sub-paragraph (2)(b), Q is to be treated as acquiring, and P is to be treated as ceasing to have, the relevant interest in the asset.
(5) Accordingly, Q's ceasing to hold the asset as a bond asset is to be treated—
(a) as regards plant or machinery, as a disposal event (in relation to P) occurring in the chargeable period in which the cessation takes place, ...
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) For the purposes of sub-paragraph (5)—
(a) in the case falling within paragraph (a), the disposal value that P is required to bring into account is the market value of the asset at the time of the transfer, ...
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Q transferring asset to third person
17 (1) This paragraph applies to an asset if the first and second conditions are met.
(2) The first condition is that the asset is part of the subject matter of the first transaction and constitutes—
(a) plant or machinery, or
(b) a building or structure (or part of a building or structure).
(3) The second condition is that Q transfers the asset to any person other than P.
(4) At the time that Q transfers the asset —
(a) in a case within sub-paragraph (2)(a), that other person is to be treated as becoming, and P is to be treated as ceasing to be, the owner of the asset, and
(b) in a case within sub-paragraph (2)(b), that other person is to be treated as acquiring, and P is to be treated as ceasing to have, the relevant interest in the asset.
(5) Accordingly, the transfer is to be treated—
(a) as regards plant or machinery, as a disposal event (in relation to P) occurring in the chargeable period in which the transfer takes place, ...
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) For the purposes of sub-paragraph (5)—
(a) in the case falling within paragraph (a), the disposal value that P is required to bring into account is the market value of the asset at the time of the transfer, ...
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplementary
Substitution of asset
18 (1) This paragraph applies if—
(a) conditions A to C and G are met in relation to an interest in land (“the original land”),
(b) Q ceases to hold the original land as a bond asset (and, accordingly, transfers it to P) before the termination of the alternative finance investment bond,
(c) P and Q enter into further arrangements falling within paragraph 5(2) relating to an interest in other land (“the replacement land”), and
(d) the value of the interest in the replacement land at the time that it is transferred from P to Q is greater than or equal to the value of the interest in the original land at the time of the first transaction.
(2) Paragraphs 6 to 17 apply—
(a) in relation to the original land with the modification set out in sub-paragraph (3), and
(b) in relation to the replacement land with the modifications set out in sub-paragraph (4).
(3) Condition F does not need to be met in relation to the original land if conditions A, B, C, F and G (as modified by sub-paragraph (4)) are met in relation to the replacement land.
(4) In relation to the replacement land—
(a) condition E applies as if the reference to the interest in the land were a reference to the interest in the original land, and
(b) condition G applies as if the reference in paragraph 5(11)(b) to the first transaction were a reference to the first transaction relating to the original land.
(5) If the replacement land is in England ... or Northern Ireland, the original land ceases to be subject to the charge ... registered in pursuance of condition D when—
(a) Q provides HMRC with the prescribed evidence that condition G is met in relation to the original land, and
(b) condition D is met in relation to the replacement land.
(6) If the replacement land is not in England ... or Northern Ireland, the original land ceases to be subject to the charge ... registered in pursuance of condition D when Q provides HMRC with the prescribed evidence that—
(a) condition G is met in relation to the original land, and
(b) each of conditions A to C is met in relation to the replacement land.
(7) This paragraph also applies where the replacement land is replaced by further replacement land; and in that event—
(a) the references to the original land (except those in sub-paragraph (4)) are to be read as references to the replacement land, and
(b) the references to the replacement land are to be read as references to the further replacement land.
HMRC to notify Registrar of discharge of charge
19 (1) Where a charge ... is discharged in accordance with paragraph 9 or 18(5) or (6), HMRC must—
(a) in the case of a charge on land in England ..., notify the Chief Land Register of the discharge in accordance with land registration rules (within the meaning of the Land Registration Act 2002),
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) in the case of a charge on land in Northern Ireland, notify the Registrar of Titles of the discharge.
(2) HMRC must do so within the period of 30 days beginning with the date on which Q provides the evidence in question.
Relief not available where bond-holder acquires control of underlying asset
20 (1) The reliefs provided by paragraphs 6 to 12 (and paragraph 18 so far as it relates to those paragraphs) are not available if control of the underlying asset is acquired by—
(a) a bond-holder, or
(b) a group of connected bond-holders.
(2) A bond-holder (“BH”), or a group of connected bond-holders, acquires control of the underlying asset if—
(a) the rights of bond-holders under an alternative finance investment bond include the right of management and control of the bond assets, and
(b) BH, or the group, acquires sufficient rights to enable BH, or the members of the group acting jointly, to exercise the right of management and control of the bond assets to the exclusion of any other bond-holders.
(3) In accordance with sub-paragraph (1), in the case of the reliefs provided by paragraphs 6 and 10—
(a) if BH, or the group, acquires control of the underlying asset before the end of the period of 14 days beginning with the effective date of the first transaction, paragraphs 6 and 10 do not apply, and
(b) if BH, or the group, acquires control of the underlying asset after the end of that period and conditions A to C have been met, paragraphs 7 and 11 apply.
21 (1) But paragraph 20 does not prevent the reliefs being available in either of the following cases.
(2) The first case is where—
(a) at the time that the rights were acquired BH (or all of the connected bond-holders) did not know and had no reason to suspect that the acquisition enabled the exercise of the right of management and control of the bond assets to the exclusion of other bond-holders, and
(b) as soon as reasonably practicable after BH (or any of the bond-holders) becomes aware that the acquisition enables that exercise, BH transfers (or some or all of the bond-holders transfer) sufficient rights for that no longer to be possible.
(3) The second case is where BH—
(a) underwrites a public offer of rights under the bond, and
(b) does not exercise the right of management and control of the bond assets.
(4) In this paragraph—
“connected” is to be read in accordance with section 1122 of CTA 2010, and
“underwrite”, in relation to an offer of rights under a bond, means to agree to make payments of capital under the bond in the event that other persons do not make those payments.
Relief not available if purpose of arrangements is improper
22 (1) The reliefs provided by paragraphs 6 to 12 (and paragraph 18 so far as it relates to those paragraphs) are not available if the arrangements mentioned in paragraph 5(2)—
(a) are not effected for genuine commercial reasons, or
(b) form part of arrangements of which the main purpose, or one of the main purposes, is the avoidance of liability to tax.
(2) In sub-paragraph (1) “tax” means income tax, corporation tax, capital gains tax, stamp duty or stamp duty land tax.
Regulations
23 (1) Regulations under any paragraph of this Schedule—
(a) may make provision generally or only for specified purposes, or different provision for different purposes, and
(b) may make consequential, supplementary or incidental provision (including amendments of any enactment).
(2) Regulations under any paragraph of this Schedule are to be made by statutory instrument.
(3) A statutory instrument containing regulations under any paragraph of this Schedule is subject to annulment in pursuance of a resolution of the House of Commons.
Part 4 Supplementary
Consequential amendments of FA 2003
24 FA 2003 is amended as follows.
25 After section 73B insert—
Alternative finance investment bonds
73C Schedule 61 to the Finance Act 2009 makes provision for relief from charge in the case of arrangements falling within section 48A of the Finance Act 2005 (alternative finance investment bonds).
26 In section 86 (payment of tax), after subsection (5) insert—
(5A) The above provisions are also subject to paragraph 7 of Schedule 61 to the Finance Act 2009 (payment of tax where land ceases to qualify for relief in respect of alternative finance investment bonds).
Consequential amendments of FA 2005
27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consequential amendment of CTA 2009
28 In CTA 2009, in Schedule 1, omit paragraph 651(a).
Commencement
29 (1) The following provisions of this Schedule come into force on the day on which this Act is passed—
(a) Part 2,
(b) Part 1 so far as relating to that Part, and
(c) paragraphs 24, 25, 27 and 28.
(2) The following provisions of this Schedule have effect where the effective date of the first transaction (within the meaning given by paragraph 5(2)) is on or after the day on which this Act is passed—
(a) Part 3,
(b) Part 1 so far as relating to that Part, and
(c) paragraph 26.