(1) FA 2003 is amended as follows.
(2) In section 76(3) (payment to accompany land transaction return), omit paragraph (b).
(3) In section 80(2) (adjustment for change of circumstance: payment to accompany return), for paragraph (d) substitute—
(d) the tax or additional tax payable must be paid not later than the filing date for the return.
(4) In section 81 (withdrawal of relief: further return)—
(a) in subsection (2), omit paragraph (b), and
(b) after that subsection insert—
(2A) Tax payable must be paid not later than the filing date for the return.
(5) In section 81A(1) (later linked transaction: return), for paragraph (d) substitute—
(d) the tax or additional tax payable must be paid not later than the filing date for the return.
(6) In section 86 (payment of tax)—
(a) in subsection (1), for “at the same time that a land transaction return is made in respect of the transaction.” substitute “ not later than the filing date for the land transaction return relating to the transaction. ”, and
(b) in subsection (2), for “at the same time that a return is made in respect of the withdrawal” substitute “ not later than the filing date for the return relating to the withdrawal ”.
(7) In paragraph 2 of Schedule 10 (payment to accompany land transaction return), omit sub-paragraph (2)(b).
(8) For each of paragraphs 3(3)(d), 4(3)(d) and 8(3)(d) of Schedule 17A (leases) substitute—
(d) the tax or additional tax payable must be paid not later than the filing date for the return.
(9) The amendments made by this section have effect as follows—
(a) the amendment made by subsection (2) has effect in relation to land transactions with an effective date on or after the day on which this Act is passed,
(b) the amendment made by subsection (3) has effect in relation to returns where the event as a result of which the return is required occurs on or after the day on which this Act is passed,
(c) the amendment made by subsection (4) has effect in relation to returns where the disqualifying event occurs on or after the day on which this Act is passed,
(d) the amendment made by subsection (5) has effect in relation to returns where the effective date of the later transaction is on or after the day on which this Act is passed,
(e) the amendment made by subsection (6) has effect in relation to land transactions with an effective date on or after the day on which this Act is passed,
(f) the amendment made by subsection (7) has effect in relation to land transactions with an effective date on or after the day on which this Act is passed, and
(g) the amendment made by subsection (8) has effect in respect of requirements to deliver a return or further return which arise on or after the day on which this Act is passed.
82 Criminal investigations: powers of Revenue and Customs
(1) Section 114 of the Police and Criminal Evidence Act 1984 (c. 60) (application of Act to customs and excise) is amended as follows.
(2) In paragraph (a) of subsection (2)—
(a) for “investigations conducted by officers of Customs and Excise of offences which relate to assigned matters, as defined in section 1 of the Customs and Excise Management Act 1979,” substitute “ investigations conducted by officers of Revenue and Customs ”, and
(b) for “persons detained by officers of Customs and Excise;” substitute “ persons detained by officers of Revenue and Customs; ”.
(3) In the opening words of paragraph (b) of that subsection, for “investigations of offences conducted by officers of Customs and Excise” substitute “ investigations of offences conducted by officers of Revenue and Customs ”.
(4) In sub-paragraph (i) of that paragraph, for “section” substitute “ sections ”.
(5) In the section 14A deemed to be inserted by that sub-paragraph—
(a) for “and which relates to an assigned matter, as defined in section 1 of the Customs and Excise Management Act 1979,” substitute “ and which relates to a matter in relation to which Her Majesty's Revenue and Customs have functions, ” and
(b) in the heading, for “Customs and Excise” substitute “ Revenue and Customs ”.
(6) After that section insert—
Revenue and Customs: restriction on other powers to apply for production of documents
14B (1) An officer of Revenue and Customs may make an application for the delivery of, or access to, documents under a provision specified in subsection (3) only if the condition in subsection (2) is satisfied.
(2) The condition is that the officer thinks that an application under Schedule 1 would not succeed because the material required does not consist of or include special procedure material.
(3) The provisions are—
(a) section 20BA of, and Schedule 1AA to, the Taxes Management Act 1970 (serious tax fraud);
(b) paragraph 11 of Schedule 11 to the Value Added Tax Act 1994 (VAT);
(c) paragraph 4A of Schedule 7 to the Finance Act 1994 (insurance premium tax);
(d) paragraph 7 of Schedule 5 to the Finance Act 1996 (landfill tax);
(e) paragraph 131 of Schedule 6 to the Finance Act 2000 (climate change levy);
(f) paragraph 8 of Schedule 7 to the Finance Act 2001 (aggregates levy);
(g) Part 6 of Schedule 13 to the Finance Act 2003 (stamp duty land tax).
(7) In paragraph (c) of subsection (2)—
(a) for “customs detention” substitute “ Revenue and Customs detention ”, and
(b) for “an officer of Customs and Excise” substitute “ an officer of Revenue and Customs ”.
(8) After that paragraph insert—
(d) that where an officer of Revenue and Customs searches premises in reliance on a warrant under section 8 of, or paragraph 12 of Schedule 1 to, this Act (as applied by an order under this subsection) the officer shall have the power to search persons found on the premises—
(i) in such cases and circumstances as are specified in the order, and
(ii) subject to any conditions specified in the order; and
(e) that powers and functions conferred by a provision of this Act (as applied by an order under this subsection) may be exercised only by officers of Revenue and Customs acting with the authority (which may be general or specific) of the Commissioners for Her Majesty's Revenue and Customs.
(9) After that subsection insert—
(2A) A certificate of the Commissioners that an officer of Revenue and Customs had authority under subsection (2)(e) to exercise a power or function conferred by a provision of this Act shall be conclusive evidence of that fact.
(10) For subsection (3) substitute—
(3) An order under subsection (2)—
(a) may make provision that applies generally or only in specified cases or circumstances,
(b) may make different provision for different cases or circumstances,
(c) may, in modifying a provision, in particular impose conditions on the exercise of a function, and
(d) shall not be taken to limit a power under section 164 of the Customs and Excise Management Act 1979.
(11) The heading of section 114 accordingly becomes “ Application of Act to Revenue and Customs ”.
(1) Article 85 of the Police and Criminal Evidence (Northern Ireland) Order 1989 (S.I. 1989/1341 (N.I. 12)) (application of Order to customs and excise) is amended as follows.
(2) In sub-paragraph (a) of paragraph (1)—
(a) for “investigations conducted by officers of Customs and Excise of offences which relate to assigned matters, as defined in section 1 of the Customs and Excise Management Act 1979,” substitute “ investigations conducted by officers of Revenue and Customs ”, and
(b) for “persons detained by officers of Customs and Excise;” substitute “ persons detained by officers of Revenue and Customs; ”.
(3) In the opening words of sub-paragraph (b) of that paragraph, for “investigations of offences conducted by officers of Customs and Excise” substitute “ investigations of offences conducted by officers of Revenue and Customs ”.
(4) In paragraph (i) of that sub-paragraph, for “Article” substitute “ Articles ”.
(5) In the Article 16A deemed to be inserted by that paragraph—
(a) for “and which relates to an assigned matter, as defined in section 1 of the Customs and Excise Management Act 1979,” substitute “ and which relates to a matter in relation to which Her Majesty's Revenue and Customs have functions, ” and
(b) in the heading, for “Customs and Excise” substitute “ Revenue and Customs ”.
(6) After that Article insert—
Revenue and Customs: restriction on other powers to apply for production of documents
16B (1) An officer of Revenue and Customs may make an application for the delivery of, or access to, documents under a provision specified in paragraph (3) only if the condition in paragraph (2) is satisfied.
(2) The condition is that the officer thinks that an application under Schedule 1 would not succeed because the material required does not consist of or include special procedure material.
(3) The provisions are—
(a) section 20BA of, and Schedule 1AA to, the Taxes Management Act 1970 (serious tax fraud);
(b) paragraph 11 of Schedule 11 to the Value Added Tax Act 1994 (VAT);
(c) paragraph 4A of Schedule 7 to the Finance Act 1994 (insurance premium tax);
(d) paragraph 7 of Schedule 5 to the Finance Act 1996 (landfill tax);
(e) paragraph 131 of Schedule 6 to the Finance Act 2000 (climate change levy);
(f) paragraph 8 of Schedule 7 to the Finance Act 2001 (aggregates levy);
(g) Part 6 of Schedule 13 to the Finance Act 2003 (stamp duty land tax).
(7) After sub-paragraph (b) of paragraph (1) insert—
(c) that where an officer of Revenue and Customs searches premises in reliance on a warrant under Article 10 of, or paragraph 9 of Schedule 1 to, this Order (as applied by an order under this paragraph) the officer shall have the power to search persons found on the premises—
(i) in such cases and circumstances as are specified in the order, and
(ii) subject to any conditions specified in the order; and
(d) that powers and functions conferred by a provision of this Order (as applied by an order under this paragraph) may be exercised only by officers of Revenue and Customs acting with the authority (which may be general or specific) of the Commissioners for Her Majesty's Revenue and Customs.
(8) After that paragraph insert—
(1A) A certificate of the Commissioners that an officer of Revenue and Customs had authority under paragraph (1)(d) to exercise a power or function conferred by a provision of this Order shall be conclusive evidence of that fact.
(9) For paragraph (2) substitute—
(2) An order under paragraph (1)—
(a) may, in modifying a provision, in particular impose conditions on the exercise of a function, and
(b) shall not be taken to limit a power under section 164 of the Customs and Excise Management Act 1979.
(10) The heading of Article 85 accordingly becomes “ Application of Order to Revenue and Customs ”.
(1) In Schedule 2 to CRCA 2005 (restrictions on the exercise of functions), omit—
(a) paragraph 7 (Police and Criminal Evidence Act 1984 (c. 60)), and
(b) paragraph 9 (Police and Criminal Evidence (Northern Ireland) Order 1989 (S.I. 1989/1341 (N.I. 12))).
(2) Nothing in section 6 or 7 of CRCA 2005 (initial functions) restricts the functions in connection with which officers of Revenue and Customs may exercise a power under—
(a) the Police and Criminal Evidence Act 1984 by virtue of section 114 of that Act (as amended by section 82 above), or
(b) the Police and Criminal Evidence (Northern Ireland) Order 1989 by virtue of Article 85 of that Order (as amended by section 83 above).
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) Schedule 22 contains amendments and repeals consequential on extension of police powers to Revenue and Customs.
(5) Sections 82 and 83 and this section come into force in accordance with provision made by the Treasury by order.
(6) The power to make an order under subsection (5) is exercisable by statutory instrument.
In section 8 of the Police and Criminal Evidence Act 1984, after subsection (6) insert—
(7) Section 4 of the Summary Jurisdiction (Process) Act 1881 (execution of process of English courts in Scotland) shall apply to a warrant issued on the application of an officer of Revenue and Customs under this section by virtue of section 114 below.
(1) This section relates to the Criminal Justice and Public Order Act 1994 (c. 33).
(2) Sections 136 to 139 (execution of warrants and powers of arrest and search) shall apply to an officer of Revenue and Customs as they apply to a constable; and for that purpose—
(a) a reference to a constable (including a reference to a constable of a police force in England and Wales, a constable of a police force in Scotland or a constable of a police force in Northern Ireland) shall be treated as a reference to an officer of Revenue and Customs, and
(b) a reference to a police station, or a designated police station, includes a reference to an office of Revenue and Customs or (in England and Wales and Northern Ireland) a designated office of Revenue and Customs.
(2A) In the application of section 137C where a person is arrested under section 137A by an officer of Revenue and Customs in respect of a specified offence that is being investigated by an officer of Revenue and Customs—
(a) subsection (2)(b) is to be read as if (instead of requiring the detention to be authorised by both an officer of at least the rank of inspector in the arresting force and an officer of at least the rank of inspector in the investigating force) it required the detention to be authorised by an officer of Revenue and Customs of at least the grade equivalent to the rank of inspector;
(b) subsection (2)(c) is to be read as if (instead of requiring the detention to be authorised by both an officer of a rank above that of inspector in the arresting force and an officer of a rank above that of inspector in the investigating force) it required the detention to be authorised by an officer of Revenue and Customs of a grade above that equivalent to the rank of inspector;
(c) subsection (3) is omitted;
(d) in subsections (4) and (5), the reference to an officer of the investigating force is to be read as a reference to an officer of Revenue and Customs;
(e) in subsection (6), the reference to an appropriate officer in the investigating force is to be read as a reference to an appropriate officer of Revenue and Customs (as defined by subsection (7));
(f) subsection (6)(a) is omitted;
(g) in subsection (7)(b), the reference to an officer of at least the rank of inspector is to be read as a reference to an officer of Revenue and Customs of at least the equivalent grade;
(h) in subsection (7)(c), the reference to an officer of a rank above that of inspector is to be read as a reference to an officer of Revenue and Customs of above the equivalent grade;
(i) subsections (8) to (10) are omitted.
(2B) Where section 137C applies in accordance with subsection (2A), Schedule 7B applies with the following modifications—
(a) any reference to a constable in the arresting force is to be read as a reference to an officer of Revenue and Customs;
(b) any reference to an officer of at least, or above, a particular rank in the investigating force is to be read as a reference to an officer of Revenue and Customs of at least, or above, the equivalent grade;
(c) any reference to the arresting force or to the investigating force (otherwise than in relation to a description of officer in the force) is to be read as a reference to officers of Revenue and Customs;
(d) instead of the modification made by paragraph 9, section 42 of the Criminal Justice (Scotland) Act 2016 is to be read as if the references in subsections (1)(c)(ii) and (3)(b) to the police were references to officers of Revenue and Customs;
(e) the Schedule is to be read as if it also provided for references in the provisions applied by section 137D(2)(d), (3)(d) and (4)(d) to a police station to include references to an office of Revenue and Customs.
(2C) In the application of section 137C where a person is arrested under section 137A by an officer of Revenue and Customs in respect of a specified offence other than one that is being investigated by an officer of Revenue and Customs—
(a) any reference to an officer of at least, or above, the rank of inspector in the arresting force is to be read as a reference to an officer of Revenue and Customs of at least, or above, the equivalent grade;
(b) the reference in subsection (6)(a) to the arresting force is to be read as a reference to any officer of Revenue and Customs.
(2D) Where section 137C applies in accordance with subsection (2C), Schedule 7B applies with the following modifications—
(a) any reference to a constable in the arresting force is to be read as a reference to an officer of Revenue and Customs;
(b) any reference to the arresting force (otherwise than in relation to a description of officer in the force) is to be read as a reference to officers of Revenue and Customs;
(c) instead of the modification made by paragraph 9, section 42 of the Criminal Justice (Scotland) Act 2016 is to be read as if the references in subsections (1)(c)(ii) and (3)(b) to the police were references to officers of Revenue and Customs;
(d) the Schedule is to be read as if it also provided for references in the provisions applied by section 137D(2)(d), (3)(d) and (4)(d) to a police station to include references to an office of Revenue and Customs.
(2E) In the application of those sections to an officer of Revenue and Customs—
(a) sections 136(4B) and 137(7B) apply with the omission of the words from “and, if the constable” to the end;
(b) section 137ZA applies with the omission of subsection (6).
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) An officer of Revenue and Customs may exercise a power under sections 136 to 139 in the exercise of any function of the Commissioners for Her Majesty's Revenue and Customs or of officers of Revenue and Customs, within the meaning of the Commissioners for Revenue and Customs Act 2005 (see section 51(2) to (2B) of that Act) .
(5) In subsection (2)—
“office of Revenue and Customs” means premises wholly or partly occupied by Her Majesty's Revenue and Customs, and
“designated office of Revenue and Customs” has the meaning given by an order under section 114 of the Police and Criminal Evidence Act 1984 (c. 60) (power to extend provisions to HMRC) or, in Northern Ireland, by an order under Article 85 of the Police and Criminal Evidence (Northern Ireland) Order 1989 (S.I. 1989/1341 (N.I. 12)) (power to extend Order to HMRC).
(6) In section 136, after subsection (8) insert—
(9) Powers under this section and sections 137 to 139 may be exercised by an officer of Revenue and Customs in accordance with section 87 of the Finance Act 2007.
(1) Section 8 of TMA 1970 (personal tax return) is amended as follows.
(2) In subsection (1)(a), omit “, on or before the day mentioned in subsection (1A) below”.
(3) Omit subsection (1A).
(4) After subsection (1C) insert—
(1D) A return under this section for a year of assessment (Year 1) must be delivered—
(a) in the case of a non-electronic return, on or before 31st October in Year 2, and
(b) in the case of an electronic return, on or before 31st January in Year 2.
(1E) But subsection (1D) is subject to the following two exceptions.
(1F) Exception 1 is that if a notice in respect of Year 1 is given after 31st July in Year 2 (but on or before 31st October), a return must be delivered—
(a) during the period of 3 months beginning with the date of the notice (for a non-electronic return), or
(b) on or before 31st January (for an electronic return).
(1G) Exception 2 is that if a notice in respect of Year 1 is given after 31st October in Year 2, a return (whether electronic or not) must be delivered during the period of 3 months beginning with the date of the notice.
(1H) The Commissioners—
(a) shall prescribe what constitutes an electronic return, and
(b) may make different provision for different cases or circumstances.
(1) Section 8A of TMA 1970 (trustee's tax return) is amended as follows.
(2) In subsection (1)(a), omit “, on or before the day mentioned in subsection (1A) below”.
(3) Omit subsection (1A).
(4) After subsection (1AA) insert—
(1B) A return under this section for a year of assessment (Year 1) must be delivered—
(a) in the case of a non-electronic return, on or before 31st October in Year 2, and
(b) in the case of an electronic return, on or before 31st January in Year 2.
(1C) But subsection (1B) is subject to the following two exceptions.
(1D) Exception 1 is that if a notice in respect of Year 1 is given after 31st July in Year 2 (but on or before 31st October), a return must be delivered—
(a) during the period of 3 months beginning with the date of the notice (for a non-electronic return), or
(b) on or before 31st January (for an electronic return).
(1E) Exception 2 is that if a notice in respect of Year 1 is given after 31st October in Year 2, a return (whether electronic or not) must be delivered during the period of 3 months beginning with the date of the notice.
(1F) The Commissioners—
(a) shall prescribe what constitutes an electronic return, and
(b) may make different provision for different cases or circumstances.
(1) In section 12AA of TMA 1970, for subsection (4) (partnership return: filing date) substitute—
(4) In the case of a partnership which includes one or more individuals, a notice under subsection (2) or (3) above may specify different days depending on whether a return in respect of a year of assessment (Year 1) is electronic or non-electronic.
(4A) The day specified for a non-electronic return must not be earlier than 31st October of Year 2.
(4B) The day specified for an electronic return must not be earlier than 31st January of Year 2.
(4C) But subsections (4A) and (4B) are subject to the following two exceptions.
(4D) Exception 1 is that if the notice is given after 31st July in Year 2 (but on or before 31st October)—
(a) the day specified for a non-electronic return must be after the end of the period of three months beginning with the date of the notice, and
(b) the day specified for an electronic return must not be earlier than 31st January.
(4E) Exception 2 is that if the notice is given after 31st October in Year 2, the day specified for a return (whether or not electronic) must be after the end of the period of three months beginning with the date of the notice.
(2) For subsection (5) of that section (partnership return where a company is a partner: filing date) substitute—
(5) In the case of a partnership which includes one or more companies, a notice may specify different dates depending on whether a notice in respect of a relevant period is electronic or non-electronic.
(5A) The day specified for a non-electronic return must not be earlier than the end of the period of nine months beginning at the end of the relevant period.
(5B) The day specified for an electronic return must not be earlier than the first anniversary of the end of the relevant period.
(5C) But where the notice is given more than nine months after the end of the relevant period, the day specified for a return (whether or not electronic) must be after the end of the period of three months beginning with the date of the notice.
(5D) For the purposes of this section “relevant period” means the period in respect of which the return is required.
(5E) The Commissioners—
(a) shall prescribe what constitutes an electronic return for the purposes of this section, and
(b) may make different provision for different cases or circumstances.
(1) In section 9(2) of TMA 1970 (returns to include self-assessment)—
(a) in paragraph (a), for “30th September” substitute “ 31st October ”, and
(b) in paragraph (b), for “31st July” substitute “ 31st August ”.
(2) In section 9ZA of TMA 1970 (amendment of personal or trustee return), for subsection (3) substitute—
(3) In this section “the filing date”, in respect of a return for a year of assessment (Year 1), means—
(a) 31st January of Year 2, or
(b) if the notice under section 8 or 8A is given after 31st October of Year 2, the last day of the period of three months beginning with the date of the notice.
(3) In section 9A(6) of TMA 1970 (notice of enquiry: “the filing date”), for the words from “means” to the end substitute “ means, in relation to a return, the last day for delivering it in accordance with section 8 or 8A. ”
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) In section 28C of TMA 1970 (determination of tax where no return delivered), for subsection (6) substitute—
(6) In this section “the filing date” in respect of a return for a year of assessment (Year 1) means either—
(a) 31st January of Year 2, or
(b) if the notice under section 8 or 8A was given after 31st October of Year 2, the last day of the period of three months beginning with the day on which the notice is given.
(6) In section 33A of TMA 1970 (error in partnership return)—
(a) in subsection (1), insert at the end “ for a year of assessment (Year 1), or for a relevant period which ends in Year 1 ”,
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) in subsection (9), omit the definition of “filing date”, and
(d) in that subsection, after the definition of “relevant partner” insert—
“relevant period” means a period in respect of which a return is required.
(7) In section 93(10) of TMA 1970 (penalty for failure to make individual or trustee return), for the definition of “filing date” substitute—
“the filing date” in respect of a return for a year of assessment (Year 1) means—
(a) 31st January of Year 2, or
(b) if the notice under section 8 or 8A was given after 31st October of Year 2, the last day of the period of three months beginning with the day on which the notice is given.
(8) In section 93A of TMA 1970 (failure to make partnership return), after subsection (7) insert—
(7A) For the purposes of this section the filing date for a year of assessment (Year 1) in the case of a partnership which includes one or more individuals is—
(a) 31st January of Year 2, or
(b) if the notice under section 12AA was given after 31st October of Year 2, the last day of the period of three months beginning with the date of the notice.
(7B) For the purposes of this section the filing date for a year of assessment (Year 1) in the case of a partnership which includes one or more companies is—
(a) the first anniversary of the period for which the return is required, or
(b) where the notice is given more than nine months after the end of the period for which the return is required, the last day of the period of three months beginning with the date of the notice.
(9) In subsection (8) of section 93A, omit the definition of “the filing date”.
(10) In paragraph 4 of Schedule 15 to FA 2006 (accountancy change: spreading of adjustment)—
(a) in sub-paragraph (1), after “a tax year” insert “ (Year 1) ”, and
(b) in sub-paragraph (2), for “normal self-assessment filing date for the tax year.” substitute “ 31st January of Year 2. ”
(1) Sections 88 to 91 have effect—
(a) in relation to a return under section 8 or 8A of TMA 1970, or a return under section 12AA of that Act for a partnership which includes one or more individuals, in respect of a return for a year of assessment beginning on or after 6th April 2007, and
(b) in relation to a return under section 12AA of that Act for a partnership which includes one or more companies, in respect of a return for a relevant period beginning on or after 6th April 2007.
(2) In subsection (1)(b) “relevant period” means a period in respect of which a return is required.
(1) Section 135 of FA 2002 (mandatory electronic filing) is amended as follows.
(2) In subsection (7), after paragraph (b) insert—
(ba) to specify other consequences of contravention of, or failure to comply with, the regulations (which may include disregarding a return delivered otherwise than by the use of electronic communications);
.
(3) In subsection (10), for the definition of “taxation matter” substitute—
“taxation matter” means any matter relating to a tax (or duty) for which the Commissioners are responsible.
(4) Section 76 of VATA 1994 (assessment) is amended as follows.
(5) In subsection (1), after paragraph (c) insert—
or
(d) a penalty under regulations made under section 135 of the Finance Act 2002 (mandatory electronic filing of returns) in connection with VAT,
.
(6) In that subsection, before “may have ceased” insert “ or the regulations ”.
(7) In subsection (3), insert at the end—
; and
(f) in the case of a penalty under regulations made under section 135 of the Finance Act 2002, the relevant period is the prescribed accounting period in respect of which the contravention of, or failure to comply with, the regulations occurred.
(8) In section 83 of VATA 1994 (appeals), after paragraph (zb) insert—
(zc) a decision of the Commissioners about the application of regulations under section 135 of the Finance Act 2002 (mandatory electronic filing of returns) in connection with VAT (including, in particular, a decision as to whether a requirement of the regulations applies and a decision to impose a penalty);
.
(9) In section 84 of VATA 1994 (appeals), after subsection (6A) insert—
(6B) Nothing in section 83(zc) shall be taken to confer on a tribunal any power to vary an amount assessed by way of penalty except in so far as it is necessary to reduce it to the amount which is appropriate under regulations made under section 135 of the Finance Act 2002.
(1) Section 204 of FA 2003 (mandatory electronic payment by large employers) is amended as follows.
(2) For subsections (1) and (2) substitute—
(1) The Commissioners for Her Majesty's Revenue and Customs may make regulations requiring a person to use electronic means in making specified payments under legislation relating to a tax (or duty) for which the Commissioners are responsible.
(2) The regulations may provide for exceptions.
(3) In subsection (5)(b), for “the Inland Revenue” substitute “ Her Majesty's Revenue and Customs ”.
(4) In subsection (6)(a), for “the Inland Revenue” substitute “ Her Majesty's Revenue and Customs ”.
(5) In subsection (8)—
(a) in paragraph (a), for “a contravention of, or any failure to comply with,” substitute “ a contravention by a large employer of, or any failure by a large employer to comply with, ”, and
(b) in paragraph (b), for “taxation matter within the care and management of the Commissioners” substitute “ matter relating to a tax (or duty) for which the Commissioners are responsible ”.
(6) In subsection (12)—
(a) for the definition of “the Inland Revenue” substitute—
“Her Majesty's Revenue and Customs” includes a person acting under the authority of the Commissioners in relation to payment by electronic means;
, and
(b) after that definition insert—
“large employer” means a person paying PAYE income to 250 or more recipients (and regulations under this section may make provision as to the date or period by reference to which this is to be determined and the circumstances in which a person is to be treated as paying PAYE income to a recipient);
.
(7) The heading accordingly becomes “ Mandatory electronic payment ”.
(8) In section 205(1) of FA 2003 (application of section 204 for other purposes)—
(a) after “taxation” insert “ (or duty) ”, and
(b) for “the Commissioners of Inland Revenue” substitute “ the Commissioners for Her Majesty's Revenue and Customs ”.
(1) The Commissioners may make regulations providing for a payment to HMRC made by cheque to be treated as made when the cheque clears, as defined in the regulations.
(2) Section 70A of TMA 1970 (payment by cheque treated as made on receipt by HMRC) is subject to regulations under subsection (1).
(3) Regulations under subsection (1)—
(a) may make provision generally or only for specified purposes,
(b) may make different provision for different purposes, and
(c) may include incidental, consequential or transitional provision.
(4) Regulations under subsection (1)—
(a) shall be made by statutory instrument, and
(b) shall be subject to annulment in pursuance of a resolution of the House of Commons.
(5) In this section—
(a) “the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs, and
(b) “HMRC” means Her Majesty's Revenue and Customs.
(6) In section 204 of FA 2003 (electronic payment), insert at the end—
(13) Regulations under section 95(1) of the Finance Act 2007 (payment by cheque) may, in particular, provide for a payment which is made by cheque in contravention of regulations under this section to be treated as made when the cheque clears, as defined in the regulations under that section.
(7) In section 70A of TMA 1970 (payments by cheque), insert at the end—
(3) This section is subject to regulations under section 95(1) of the Finance Act 2007 (payment by cheque).
(8) In VATA 1994, after section 58A insert—
Payment by cheque
58B Regulations under section 95(1) of the Finance Act 2007 (payment by cheque) may, in particular, provide for a payment which is made by cheque in contravention of regulations under section 25(1) above to be treated as made when the cheque clears, as defined in the regulations under section 95(1) of that Act.
(1) In section 9A(2)(a) of TMA 1970 (period during which HMRC can open enquiry into return), for “after the filing date;” substitute “ after the day on which the return was delivered; ”.
(2) In section 12AC(2)(a) of TMA 1970 (period during which HMRC can open enquiry into partnership return), for “after the filing date;” substitute “ after the day on which the return was delivered; ”.
(3) In paragraph 24(2) of Schedule 18 to FA 1998 (period during which HMRC can open enquiry into company tax return), for “from the filing date.” substitute “ from the day on which the return was delivered (subject to sub-paragraph (6)). ”
(4) In paragraph 24 of that Schedule, insert at the end—
(6) In the case of a company which is a member of a group other than a small group, the 12-month period in sub-paragraph (2) shall start not from the day on which the return was delivered but from the filing date.
(7) In sub-paragraph (6) “group” and “small group” have the same meaning as in sections 383(2) and 474(1) of the Companies Act 2006 (or, until their commencement, as in the provisions that they replicate).
(5) The amendments made by subsections (1) and (2) apply to returns which relate to the tax year 2007-08 or a later tax year.
(6) The amendments made by subsections (3) and (4) apply to returns which relate to accounting periods ending after 31st March 2008.
(1) Schedule 24 contains provisions imposing penalties on taxpayers who—
(a) make errors in certain documents sent to HMRC, or
(b) unreasonably fail to report errors in assessments by HMRC.
(2) That Schedule comes into force in accordance with provision made by the Treasury by order.
(3) An order—
(a) may commence a provision generally or only for specified purposes,
(b) may make different provision for different purposes, and
(c) may include incidental, consequential or transitional provision.
(4) The power to make an order is exercisable by statutory instrument.
98 VAT: joint and several liability of traders in supply chain where tax unpaid
(1) In section 77A of VATA 1994 (joint and several liability of traders in supply chain where tax unpaid), for subsection (9) substitute—
(9) The Treasury may by order amend subsection (1) above.
(9A) The Treasury may by order amend this section in order to extend or otherwise alter the circumstances in which a person shall be presumed to have reasonable grounds for suspecting matters to be as mentioned in subsection (2)(b) above.
(9B) Any order under this section may make such incidental, supplemental, consequential or transitional provision as the Treasury think fit.
(2) In section 97(4) of that Act (orders ceasing to have effect unless approved by House of Commons), after paragraph (ea) insert—
(eb) an order under section 77A(9) or (9A);
.
(1) Schedule 4 to VATA 1994 (matters to be treated as supply of goods or services) is amended as follows.
(2) In paragraph 5 (non-business use etc of business goods), omit sub-paragraph (4A) (exception to rule in case of interests in land and buildings etc that non-business use of business assets treated as supply of services).
(3) In paragraph 9 (application of paragraphs 5 to 8 where land forms part of assets of business), insert at the end—
(4) In this paragraph “grant” includes surrender.
(4) Paragraph 7 of Schedule 6 to VATA 1994 (valuation of supply of services otherwise than for consideration by virtue of paragraph 5(4) of Schedule 4 etc) is amended as follows.
(5) The existing provision becomes sub-paragraph (1) and after that sub-paragraph insert—
(2) Regulations may, in relation to a supply of services by virtue of paragraph 5(4) of Schedule 4 (but otherwise than for a consideration), make provision for determining how the full cost to the taxable person of providing the services is to be calculated.
(3) The regulations may, in particular, make provision for the calculation to be made by reference to any prescribed period.
(4) The regulations may make—
(a) different provision for different circumstances;
(b) such incidental, supplementary, consequential or transitional provision as the Commissioners think fit.
(6) The amendment made by subsection (2) comes into force on 1st September 2007.
(7) The amendment made by subsection (3) has effect in relation to surrenders on or after 21st March 2007.
(1) Section 49 of VATA 1994 (transfers of going concern) is amended as follows.
(2) In subsection (1) (transferor's supplies treated as transferee's supplies for purposes of registration and transferor's records to be kept by transferee after transfer)—
(a) after “Where a business” insert “ , or part of a business, ”,
(b) after “on the business” insert “ or part of the business ”, and
(c) omit paragraph (b) (together with the “and” before it).
(3) In subsection (2) (regulations for securing continuity of Act in case of transfers of going concerns), after “a business” insert “ , or part of a business, ”.
(4) After that subsection insert—
(2A) Regulations under subsection (2) above may, in particular, provide for the duties under this Act of the transferor to preserve records relating to the business or part of the business for any period after the transfer to become duties of the transferee unless the Commissioners, at the request of the transferor, otherwise direct.
(5) In subsection (3) (provision which may be made by regulations), in paragraph (a), after “the transferor” insert “ (other than the duties mentioned in subsection (2A) above) ”.
(6) After that subsection insert—
(4) Subsection (5) below applies where—
(a) a business, or part of a business, carried on by a taxable person is transferred to another person as a going concern, and
(b) the transferor continues to be required under this Act to preserve for any period after the transfer any records relating to the business or part of the business.
(5) So far as is necessary for the purpose of complying with the transferee's duties under this Act, the transferee (“E”) may require the transferor—
(a) to give to E, within such time and in such form as E may reasonably require, such information contained in the records as E may reasonably specify,
(b) to give to E, within such time and in such form as E may reasonably require, such copies of documents forming part of the records as E may reasonably specify, and
(c) to make the records available for E's inspection at such time and place as E may reasonably require (and permit E to take copies of, or make extracts from, them).
(6) Where a business, or part of a business, carried on by a taxable person is transferred to another person as a going concern, the Commissioners may disclose to the transferee any information relating to the business when it was carried on by the transferor for the purpose of enabling the transferee to comply with the transferee's duties under this Act.
(7) In section 94(6) of VATA 1994 (meaning of “business” etc)—
(a) after “a business” insert “ , or part of a business, ”, and
(b) for “its assets or liabilities” substitute “ the assets or liabilities of the business or part of the business ”.
(8) In paragraph 1(2) of Schedule 1 to that Act (registration in respect of taxable supplies), after “Where a business” insert “ , or part of a business, ”.
(9) In paragraph 8(2)(b) of Schedule 4 to that Act (matters to be treated as supply of goods or services), after “a business” insert “ , or part of a business, ”.
(10) The amendments made by this section have effect in relation to transfers pursuant to contracts entered into on or after 1st September 2007.
(1) In section 72 of FA 1994 (interpretation: “premium”), after subsection (1A) insert—
(1B) Where—
(a) an amount is charged (to the insured or any other person) in respect of the acquisition of a right (whether of the insured or any other person) to require the insurer to provide, or offer to provide, any of the cover included in a taxable insurance contract, and
(b) any payment in respect of that amount is not regarded as a payment received under that contract by the insurer by virtue of subsection (1A) above,
the payment is to be regarded as a payment received under that contract by the insurer unless it is chargeable to tax at the higher rate by virtue of section 52A above.
(2) The amendment made by subsection (1) has effect in relation to amounts charged on or after 22nd March 2007.
102 Abolition of PRT for fields recommissioned after earlier decommissioning
(1) Section 185 of FA 1993 (abolition of PRT for oil fields with development consents on or after 16th March 1993) is amended as follows.
(2) In subsection (1) (meaning of “non-taxable field” and “taxable field”), after paragraph (b) insert “ or an oil field which does not meet the conditions in paragraphs (a) and (b) above but which does meet the conditions in subsection (1A) below ”.
(3) After that subsection insert—
(1A) An oil field meets the conditions in this subsection if—
(a) the Secretary of State has at any time approved one or more abandonment programmes under Part 4 of the Petroleum Act 1998 (or Part 1 of the Petroleum Act 1987) in relation to all assets of the field which are relevant assets;
(b) those programmes have been carried out to the satisfaction of the Secretary of State;
(c) a development decision is made in relation to the field; and
(d) that decision is made on or after 16th March 1993 and after those programmes have been so carried out.
(1B) For the purposes of subsection (1A)(a) above, an asset is a relevant asset of an oil field if—
(a) it has at any time been a qualifying asset (within the meaning of the 1983 Act) in relation to any participator in the field; and
(b) it has at any time been used for the purpose of winning oil from the field.
(1C) For the purposes of subsection (1A)(c) and (d) above, a development decision is made in relation to an oil field when—
(a) consent for development is granted to a licensee by the Secretary of State in respect of the whole or part of the field; or
(b) a programme of development is served on a licensee or approved by the Secretary of State for the whole or part of the field.
(4) In subsection (7) (meaning of “development” etc), for “subsections (1) and (2)” substitute “ this section ”.
(5) An oil field which meets the conditions in subsection (1A) of section 185 of FA 1993 (as inserted by subsection (3) above) becomes a non-taxable field for the purposes of any enactment relating to petroleum revenue tax—
(a) in any case where the development decision is made before 1st July 2007, on that date, and
(b) in any other case, on the date on which the development decision is made.
(1) Section 6A of the Oil Taxation Act 1983 (c. 56) (tax-exempt tariffing receipts) is amended as follows.
(2) In subsection (4), insert at the end
or
(c) use in relation to a UK recommissioned field (see subsection (5) below) or oil won from such a field.
(3) In subsection (5), insert at the end—
“UK recommissioned field” means any oil field which is not a new field or qualifying existing field but as respects which the conditions in section 185(1A) of the Finance Act 1993 are satisfied (fields recommissioned after earlier decommissioning).
(4) The amendments made by this section are deemed to have come into force on 1st July 2007.
104 Allowance of unrelievable loss from abandoned field
(1) In section 6 of the Oil Taxation Act 1975 (c. 22) (allowance of unrelievable loss from abandoned field), after subsection (4) insert—
(4A) For the purposes of this section and Schedule 8 to this Act, the winning of oil from an oil field shall not be regarded as having permanently ceased until all the oil wells in the field have been permanently abandoned.
(2) The amendment made by subsection (1) is deemed to have come into force on 1st July 2007.
(1) In section 5 of VERA 1994 (exempt vehicles), after subsection (2) insert—
(3) The Secretary of State may by order amend Schedule 2 in order to make provision about the descriptions of—
(a) tractors, and
(b) vehicles used for purposes relating to agriculture, horticulture or forestry,
that are to be exempt vehicles.
(4) An order under subsection (3) may in particular repeal any of paragraphs 20A to 20D of Schedule 2.
(2) In section 60(3) of that Act (orders subject to affirmative procedure), after “under” insert “ section 5(3) or ”.
107 Limitation period in old actions for mistake of law relating to direct tax
(1) Section 32(1)(c) of the Limitation Act 1980 (c. 58) (extended period for bringing action in case of mistake) does not apply in relation to any action brought before 8th September 2003 for relief from the consequences of a mistake of law relating to a taxation matter under the care and management of the Commissioners of Inland Revenue.
(2) Subsection (1) has effect regardless of how the grounds on which the action was brought were expressed and of whether it was also brought otherwise than for such relief.
(3) But subsection (1) does not have effect in relation to an action, or so much of an action as relates to a cause of action, if—
(a) the action, or cause of action, has been the subject of a judgment of the House of Lords given before 6th December 2006 as to the application of section 32(1)(c) in relation to such relief, or
(b) the parties to the action are, in accordance with a group litigation order, bound in relation to the action, or cause of action, by a judgment of the House of Lords in another action given before that date as to the application of section 32(1)(c) in relation to such relief.
(4) If the judgment of any court was given on or after 6th December 2006 but before the day on which this Act is passed, the judgment is to be taken to have been what it would have been had subsections (1) to (3) been in force at all times since the action was brought (and any defence of limitation which would have been available had been raised).
(5) And any payment made to satisfy a liability under the judgment which (in consequence of subsection (4)) is to be taken not to have been imposed is repayable (with interest from the date of the payment).
(5A) Subsection (1) also does not have effect in relation to an action, or so much of an action as relates to a cause of action, if the consequences of a mistake of law to which the action, or cause of action, relates is the charging of tax contrary to EU law.
(6) In this section—
“group litigation order” means an order of a court providing for the case management of actions which give rise to common or related issues of fact or law, and
“judgment” includes order (and “given” includes made).
(1) Part 7 of FA 2004 (disclosure of tax avoidance schemes) is amended as follows.
(2) After section 306 insert—
Doubt as to notifiability
306A (1) HMRC may apply to the Special Commissioners for an order that—
(a) a proposal is to be treated as notifiable, or
(b) arrangements are to be treated as notifiable.
(2) An application must specify—
(a) the proposal or arrangements in respect of which the order is sought, and
(b) the promoter.
(3) On an application the Special Commissioners may make the order only if satisfied that HMRC—
(a) have taken all reasonable steps to establish whether the proposal or arrangements are notifiable, and
(b) have reasonable grounds for suspecting that the proposal or arrangements may be notifiable.
(4) Reasonable steps under subsection (3)(a) may (but need not) include taking action under section 313A or 313B.
(5) Grounds for suspicion under subsection (3)(b) may include—
(a) the fact that the relevant arrangements fall within a description prescribed under section 306(1)(a);
(b) an attempt by the promoter to avoid or delay providing information or documents about the proposal or arrangements under or by virtue of section 313A or 313B;
(c) the promoter's failure to comply with a requirement under or by virtue of section 313A or 313B in relation to another proposal or other arrangements.
(6) Where an order is made under this section in respect of a proposal or arrangements, the prescribed period for the purposes of section 308(1) or (3) in so far as it applies by virtue of the order—
(a) shall begin after a date prescribed for the purpose, and
(b) may be of a different length than the prescribed period for the purpose of other applications of section 308(1) or (3).
(7) An order under this section in relation to a proposal or arrangements is without prejudice to the possible application of section 308, other than by virtue of this section, to the proposal or arrangements.
(3) In section 307 (“promoter”), insert at the end—
(6) In the application of this Part to a proposal or arrangements which are not notifiable, a reference to a promoter is a reference to a person who would be a promoter under subsections (1) to (5) if the proposal or arrangements were notifiable.
(4) After section 308 insert—
Supplemental information
308A (1) This section applies where—
(a) a promoter (P) has provided information in purported compliance with section 308(1) or (3), but
(b) HMRC believe that P has not provided all the prescribed information.
(2) HMRC may apply to the Special Commissioners for an order requiring P to provide specified information about, or documents relating to, the notifiable proposal or arrangements.
(3) The Special Commissioners may make an order under subsection (2) in respect of information or documents only if satisfied that HMRC have reasonable grounds for suspecting that the information or documents—
(a) form part of the prescribed information, or
(b) will support or explain the prescribed information.
(4) A requirement by virtue of subsection (2) shall be treated as part of P's duty under section 308(1) or (3).
(5) In so far as P's duty under section 308(1) or (3) arises out of a requirement by virtue of subsection (2) above, the prescribed period shall begin after a date prescribed for the purpose.
(6) In so far as P's duty under section 308(1) or (3) arises out of a requirement by virtue of subsection (2) above, the prescribed period—
(a) may be of a different length than the prescribed period for the purpose of other applications of section 308(1) or (3), and
(b) may be extended by HMRC by direction.
(5) After section 313 insert—
Pre-disclosure enquiry
313A (1) Where HMRC suspect that a person (P) is the promoter of a proposal or arrangements which may be notifiable, they may by written notice require P to state—
(a) whether in P's opinion the proposal or arrangements are notifiable by P, and
(b) if not, the reasons for P's opinion.
(2) A notice must specify the proposal or arrangements to which it relates.
(3) For the purpose of subsection (1)(b)—
(a) it is not sufficient to refer to the fact that a lawyer or other professional has given an opinion,
(b) the reasons must show, by reference to this Part and regulations under it, why P thinks the proposal or arrangements are not notifiable by P, and
(c) in particular, if P asserts that the arrangements do not fall within any description prescribed under section 306(1)(a), the reasons must provide sufficient information to enable HMRC to confirm the assertion.
(4) P must comply with a requirement under or by virtue of subsection (1) within—
(a) the prescribed period, or
(b) such longer period as HMRC may direct.
Reasons for non-disclosure: supporting information
313B (1) Where HMRC receive from a person (P) a statement of reasons why a proposal or arrangements are not notifiable by P, HMRC may apply to the Special Commissioners for an order requiring P to provide specified information or documents in support of the reasons.
(2) P must comply with a requirement under or by virtue of subsection (1) within—
(a) the prescribed period, or
(b) such longer period as HMRC may direct.
(3) The power under subsection (1)—
(a) may be exercised more than once, and
(b) applies whether or not the statement of reasons was received under section 313A(1)(b).
(6) After section 314 insert—
Order to disclose
314A (1) HMRC may apply to the Special Commissioners for an order that—
(a) a proposal is notifiable, or
(b) arrangements are notifiable.
(2) An application must specify—
(a) the proposal or arrangements in respect of which the order is sought, and
(b) the promoter.
(3) On an application the Special Commissioners may make the order only if satisfied that section 306(1)(a) to (c) applies to the relevant arrangements.
(7) After section 317 insert—
Special Commissioners: procedure
317A Sections 56B to 56D of the Taxes Management Act 1970 (procedure) shall apply (with any necessary modifications) to applications under this Part as to appeals.
(8) In section 318(1) (interpretation)—
(a) after the definition of “corporation tax” insert—
“HMRC” means the Commissioners for Her Majesty's Revenue and Customs;
and
(b) after the definition of “reference number” insert—
“the Special Commissioners” has the meaning given by section 4 of the Taxes Management Act 1970;
.
(9) In section 98C of TMA 1970 (notifications under Part 7 of FA 2004)—
(a) in subsection (2), at the end insert—
, and
(e) sections 313A and 313B (duty of promoter to respond to inquiry).
, and
(b) after that subsection insert—
(2A) Where a failure to comply with a provision mentioned in subsection (2) concerns a proposal or arrangements in respect of which an order has been made under section 306A of the Finance Act 2004 (doubt as to notifiability), the amount specified in subsection (1)(b) above shall be increased to the prescribed sum.
(2B) Where a failure to comply with a provision mentioned in subsection (2) concerns a proposal or arrangements in respect of which an order has been made under section 314A of the Finance Act 2004 (order to disclose), the amount specified in subsection (1)(b) above shall be increased to the prescribed sum in relation to days falling after the prescribed period.
(2C) In subsection (2A) and (2B)—
(a) “the prescribed sum” means a sum prescribed by the Treasury by regulations, and
(b) “the prescribed period” means a period beginning with the date of the order under section 314A and prescribed by the Commissioners by regulations.
(2D) The making of an order under section 314A of that Act does not of itself mean that, for the purposes of section 118(2) of this Act, a person either did or did not have a reasonable excuse for non-compliance before the order was made.
(2E) Where an order is made under section 314A of that Act then for the purposes of section 118(2) of this Act—
(a) the person identified in the order as the promoter of the proposal or arrangements cannot, in respect of any time after the end of the period mentioned in subsection (2B), rely on doubt as to notifiability as an excuse for failure to comply with section 308 of that Act, and
(b) any delay in compliance with that section after the end of that period is unreasonable unless attributable to something other than doubt as to notifiability.
(2F) Regulations under subsection (2C)—
(a) may include incidental or transitional provision,
(b) shall be made by statutory instrument,
(c) in the case of regulations under subsection (2C)(a), shall not be made unless a draft has been laid before and approved by resolution of the House of Commons, and
(d) in the case of regulations under subsection (2C)(b), shall be subject to annulment in pursuance of a resolution of the House of Commons.
(10) The amendments made by this section come into force on the passing of this Act; and—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) a power under Part 7 of FA 2004 as amended by this section may be exercised in relation to, or by virtue of, matters arising wholly or partly before the passing of this Act.
Schedule 26 contains—
(a) new definitions of “recognised stock exchange” for the purposes of the Tax Acts and TCGA 1992,
(b) provision for the valuation for the purposes of TCGA 1992 of certain shares or securities listed on recognised stock exchanges,
(c) provision for the valuation for the purposes of Chapter 8 of Part 4 of ITTOIA 2005 of strips and securities exchanged for strips, and
(d) minor and consequential amendments in relation to stock exchanges.
(1) The Treasury may by regulations make provision about—
(a) the tax consequences of a merger to form an SE or SCE,
(b) the tax consequences of a merger where—
(i) each party to the merger is resident in a member State, and
(ii) the parties are not all resident in the same member State,
(c) the tax consequences of a transfer between companies of a business or part of a business, where—
(i) each party to the transfer is resident in a member State, and
(ii) the parties are not all resident in the same member State,
(d) the tax consequences of a share exchange to which section 135 of TCGA 1992 (exchange of securities) applies where companies A and B are resident in different member States,
(e) the residence of an SE or SCE.
(2) Regulations may, in particular, make provision—
(a) about the taxation of chargeable gains (including conferring relief from taxation in relation to transfers or mergers which satisfy specified conditions),
(b) conferring relief from taxation on a distribution of a company which satisfies specified conditions,
(c) about the treatment of securities issued on a transfer or merger,
(d) about the treatment of loan relationships,
(e) about the treatment of derivative contracts,
(f) about the treatment of intangible fixed assets, and
(g) about capital allowances.
(3) Regulations may make provision only if the Treasury think it necessary or expedient for the purposes of complying with the United Kingdom's obligations under the Mergers Directive.
(4) In this section—
“the Mergers Directive” means Council Directive 2009/133/EC,
“SCE” means an SCE formed in accordance with Council Regulation (EC) 1435/2003 on the Statute for a European Cooperative Society, and
“SE” means an SE formed in accordance with Council Regulation (EC) 2157/2001 on the Statute for a European Company.
(5) Regulations under this section may—
(a) amend the Taxes Acts,
(b) make incidental or consequential amendments of enactments other than the Taxes Acts,
(c) make provision having retrospective effect,
(d) make provision generally or only for specified cases or circumstances,
(e) make different provision for different cases or circumstances,
(f) make incidental, consequential or transitional provision.
(6) In this section “the Taxes Acts” has the meaning given by section 118(1) of TMA 1970.
(1) The Excise Duties (Small Non-Commercial Consignments) Relief Regulations 1986 (S.I. 1986/938) are revoked.
(2) The revocation made by subsection (1) does not apply in relation to goods consigned before the day on which this Act is passed.
(1) In section 1(4)(b) of the Provisional Collection of Taxes Act 1968 (c. 2) (circumstances in which a resolution affecting income tax etc ceases to have effect), for “Standing Committee” substitute “ Public Bill Committee ”.
(2) In section 50(2)(a) of FA 1973 (corresponding provision for stamp duty), for “Standing Committee” substitute “ Public Bill Committee ”.
(1) In this Act—
“BGDA 1981” means the Betting and Gaming Duties Act 1981 (c. 63),
“CAA 2001” means the Capital Allowances Act 2001 (c. 2),
“CEMA 1979” means the Customs and Excise Management Act 1979 (c. 2),
“CRCA 2005” means the Commissioners for Revenue and Customs Act 2005 (c. 11),
“CTA 2009” means the Corporation Tax Act 2009;
“ICTA” means the Income and Corporation Taxes Act 1988 (c. 1),
“IHTA 1984” means the Inheritance Tax Act 1984 (c. 51),
“ITA 2007” means the Income Tax Act 2007 (c. 3),
“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003 (c. 1),
“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005 (c. 5),
“TCGA 1992” means the Taxation of Chargeable Gains Act 1992 (c. 12),
“TMA 1970” means the Taxes Management Act 1970 (c. 9),
“VATA 1994” means the Value Added Tax Act 1994 (c. 23), and
“VERA 1994” means the Vehicle Excise and Registration Act 1994 (c. 22).
(2) In this Act—
“FA”, followed by a year, means the Finance Act of that year, and
“F(No.2)A”, followed by a year, means the Finance (No.2) Act of that year.
Section 8
Part 1 Imposition of duty
1 The sections set out below are to be inserted in Part 2 of BGDA 1981 (gaming duties) before section 26A (which is renumbered 26N).
2 Those sections are—
Remote gaming duty
Interpretation
26A (1) For the purposes of remote gaming duty “remote gaming” means gaming in which persons participate by the use of—
(a) the internet,
(b) telephone,
(c) television,
(d) radio, or
(e) any other kind of electronic or other technology for facilitating communication.
(2) For the purposes of remote gaming duty the expressions listed below shall be construed (for the whole of the United Kingdom) in accordance with the Gambling Act 2005.
Expression | Defining provision of Gambling Act 2005
Provision of facilities | Section 5(1) to (3)
Remote gambling equipment | Section 36(4) and (5)
Remote operating licence | Section 67
(3) In relation to remote gaming duty “P” means a person who provides facilities for remote gaming.
(4) The Treasury may by order amend the definition of “remote gaming” in subsection (1) (and an order may include incidental, consequential or transitional provision).
The duty
26B A duty of excise to be known as remote gaming duty shall be charged on the provision of facilities for remote gaming if—
(a) the facilities are provided in reliance on a remote operating licence, or
(b) at least one piece of remote gambling equipment used in the provision of the facilities is situated in the United Kingdom (whether or not the facilities are provided for use wholly or partly in the United Kingdom).
The rate
26C (1) Remote gaming duty is chargeable at the rate of 15% of P's remote gaming profits for an accounting period.
(2) P's remote gaming profits for an accounting period are—
(a) the amount of P's remote gaming receipts for the period (calculated in accordance with section 26E), minus
(b) the amount of P's expenditure for the period on remote gaming winnings (calculated in accordance with section 26F).
Accounting periods
26D (1) The following are accounting periods for the purposes of remote gaming duty—
(a) the period of three months beginning with 1st January,
(b) the period of three months beginning with 1st April,
(c) the period of three months beginning with 1st July, and
(d) the period of three months beginning with 1st October.
(2) The Commissioners may agree with P for specified periods to be treated as accounting periods, instead of those described in subsection (1), for purposes of remote gaming duty relating to P.
(3) The Commissioners may by direction make transitional arrangements for the periods to be treated as accounting periods where—
(a) P becomes registered, or ceases to be registered, under section 26J, or
(b) an agreement under subsection (2) begins or ends.
Remote gaming receipts
26E (1) The amount of P's remote gaming receipts for an accounting period is the aggregate of—
(a) amounts falling due to P in that period in respect of entitlement to use facilities for remote gaming provided by P, and
(b) amounts staked, or falling due to be paid, in that period by a user of facilities for remote gaming provided by P, if or in so far as responsibility for paying any amount won by the user falls on P (or a person with whom P is connected or has made arrangements).
(2) Amounts in respect of VAT shall be ignored for the purposes of subsection (1).
(3) The Treasury may by order provide that where a person who uses facilities (U) relies on an offer which waives payment or permits payment of less than the amount which would have been required to be paid without the offer, U is to be treated for the purposes of this section as having paid that amount.
Remote gaming winnings
26F (1) The amount of P's expenditure on remote gaming winnings for an accounting period is the aggregate of the value of prizes provided by P in that period which have been won (at any time) by persons using facilities for remote gaming provided by P.
(2) Prizes provided by P to one user on behalf of another are not to be treated as prizes provided by P.
(3) A reference to providing a prize to a user (U) includes a reference to crediting money in respect of gaming winnings by U to an account if U is notified that—
(a) the money is being held in the account, and
(b) U is entitled to withdraw it on demand.
(4) The return of a stake is to be treated as the provision of a prize.
(5) Where P participates in arrangements under which a number of persons who provide facilities for remote gaming contribute towards a fund which is wholly used to provide prizes in connection with the use of those facilities (sometimes described as arrangements for “linked progressive jackpot games ”)—
(a) the making by P of a contribution which relates to the provision by P of facilities for remote gaming shall be treated as the provision of a prize, and
(b) the award of a prize from the fund shall not be treated as the provision of a prize by P.
(6) Where P credits the account of a user of facilities provided by P (otherwise than as described in subsection (3)), the credit shall be treated as the provision of a prize; but the Commissioners may direct that this subsection shall not apply in a specified case or class of cases.
(7) Subsections (2) to (6) of section 20 shall apply (with any necessary modifications) for the purpose of remote gaming duty as for the purpose of bingo duty.
Losses
26G Where the calculation of P's remote gaming profits for an accounting period produces a negative amount, it may be carried forward in reduction of the profits of one or more later accounting periods.
Exemptions
26H (1) Remote gaming duty shall not be charged in respect of the provision of facilities for remote gaming if and in so far as—
(a) the provision is charged with another gambling tax, or
(b) the use of the facilities is charged with another gambling tax.
(2) Remote gaming duty shall not be charged in respect of the provision of facilities for remote gaming if and in so far as—
(a) the provision would be charged with another gambling tax but for an express exception, or
(b) the use of the facilities would be charged with another gambling tax but for an express exception.
(3) In this section “gambling tax” means—
(a) amusement machine licence duty,
(b) bingo duty,
(c) gaming duty,
(d) general betting duty,
(e) lottery duty, and
(f) pool betting duty.
(4) The Treasury may by order—
(a) confer an exemption from remote gaming duty, or
(b) remove or vary (whether or not by textual amendment) an exemption under this section.
(5) In calculating P's remote gaming profits for an accounting period, no account shall be taken of amounts or prizes if, or in so far as, they relate to the provision of facilities to which an exemption applies under or by virtue of this section.
Liability to pay
26I (1) P is liable for any remote gaming duty charged on P's remote gaming profits for an accounting period.
(2) If P is a body corporate, P and P's directors are jointly and severally liable for any remote gaming duty charged on P's remote gaming profits for an accounting period.
(3) The Commissioners may make regulations about payment of remote gaming duty; and the regulations may, in particular, make provision about—
(a) timing;
(b) instalments;
(c) methods of payment;
(d) when payment is to be treated as made;
(e) the process and effect of assessments by the Commissioners of amounts due.
(4) Subject to regulations under subsection (3), section 12 of the Finance Act 1994 (assessment) shall apply in relation to liability to pay remote gaming duty.
Registration
26J (1) The Commissioners shall maintain a register of persons who provide facilities for remote gaming in respect of which remote gaming duty may be chargeable.
(2) A person may not provide facilities for remote gaming in respect of which remote gaming duty may be chargeable without being registered.
(3) The Commissioners may make regulations about registration; in particular, the regulations may include provision (which may include provision conferring a discretion on the Commissioners) about—
(a) the procedure for applying for registration;
(b) the timing of applications;
(c) the information to be provided;
(d) notification of changes;
(e) de-registration;
(f) re-registration after a person ceases to be registered.
(4) The regulations may require a registered person to give notice to the Commissioners before applying for a remote operating licence.
(5) The regulations may permit the Commissioners to make registration, or continued registration, of a foreign person conditional; and the regulations may, in particular, permit the Commissioners to require—
(a) the provision of security for payment of remote gaming duty;
(b) the appointment of a United Kingdom representative with responsibility for discharging liability to remote gaming duty.
(6) In subsection (5) “foreign person” means a person who—
(a) in the case of an individual, is not usually resident in the United Kingdom,
(b) in the case of a body corporate, does not have an established place of business in the United Kingdom, and
(c) in any other case, does not include an individual who is usually resident in the United Kingdom.
(7) The regulations may include provision for the registration of groups of persons; and may provide for the modification of the provisions of this Part about remote gaming duty in their application to groups.
(8) The regulations—
(a) may make provision which applies generally or only for specified purposes, and
(b) may make different provision for different purposes.
Returns
26K (1) The Commissioners may make regulations requiring persons who provide facilities for remote gaming in respect of which remote gaming duty may be chargeable to make returns to the Commissioners in respect of their activities.
(2) The regulations may, in particular, make provision about—
(a) liability to make a return;
(b) timing;
(c) form;
(d) content;
(e) method of making;
(f) declarations;
(g) authentication;
(h) when a return is to be treated as made.
(3) The regulations—
(a) may make provision which applies generally or only for specified purposes, and
(b) may make different provision for different purposes.
Enforcement
26L (1) Contravention of a provision made by or by virtue of sections 26I to 26K—
(a) is conduct to which section 9 of the Finance Act 1994 applies (penalties), and
(b) attracts daily penalties under that section.
(2) A person who is knowingly concerned in, or in taking steps with a view to, the fraudulent evasion of remote gaming duty commits an offence.
(3) A person guilty of an offence under subsection (2) shall be liable on summary conviction to—
(a) a penalty of—
(i) the statutory maximum, or
(ii) if greater, three times the duty which is unpaid or the payment of which is sought to be avoided,
(b) imprisonment for a term not exceeding six months, or
(c) both.
(4) A person guilty of an offence under subsection (2) shall be liable on conviction on indictment to—
(a) a penalty of any amount,
(b) imprisonment for a term not exceeding seven years, or
(c) both.
Review and appeal
26M (1) Sections 14 to 16 of the Finance Act 1994 (review and appeal) shall apply in relation to liability to pay remote gaming duty.
(2) Sections 14 to 16 of that Act shall also apply to the decisions listed in subsection (3) below.
(3) Those decisions are—
(a) a decision to refuse a request for an agreement under section 26D(2),
(b) a decision to give a direction under section 26D(3),
(c) a decision not to give a direction under section 26D(3),
(d) a decision to direct that section 26F(6) shall not apply in a specified case,
(e) a decision under regulations by virtue of section 26J(3), and
(f) a decision about security by virtue of section 26J(5)(a).
(4) A decision of a kind specified in subsection (3) shall be treated as an ancillary matter for the purposes of sections 14 to 16 of the Finance Act 1994.
Part 2 Consequential amendments
3 In BGDA 1981, before section 26N (non-sterling amounts) (as renumbered by paragraph 1 above) insert the italic cross-heading “ General ”.
4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 In section 32 of that Act (subordinate legislation), after subsection (2) insert—
(3) But in the case of an order under section 26H(4) which has the effect of adding to the class of activities in respect of which remote gaming duty is chargeable—
(a) subsection (2) above shall not apply, and
(b) the order may not be made unless a draft has been laid before and approved by resolution of the House of Commons.
6 In section 33(2) of that Act (no legalising effect), after “bingo duty” insert “ , remote gaming duty ”.
Section 23
Introductory
1 Schedule 6 to FA 2000 (climate change levy) is amended as follows.
Reduced-rate supplies
2 In paragraph 4(2)(b) (taxable supplies: introduction), after “paragraph 24” insert “ or 45A ”.
3 In paragraph 5(3) (supplies of electricity), for “or 24” substitute “ , 24 or 45A ”.
4 In paragraph 6(2A) (supplies of gas), after “24” insert “ or 45A ”.
5 (1) Paragraph 34 (other commodities: deemed supplies) is amended as follows.
(2) In sub-paragraph (1)(b), for “or 24” substitute “ , 24 or 45A ”.
(3) After sub-paragraph (3) insert—
(4) A supply that is deemed to be made under paragraph 45A is treated as taking place upon the later determination.
6 In paragraph 39(1)(c) (regulations as to time of supply), for “or 24” substitute “ , 24 or 45A ”.
7 For paragraph 44 substitute—
44 (1) For the purposes of this Schedule, a taxable supply is a reduced-rate supply if—
(a) the taxable commodity is supplied to a facility specified in a certificate given by the Secretary of State to the Commissioners as a facility which is to be taken as being covered by a climate change agreement for a period specified in the certificate, and
(b) the supply is made at a time falling in that period.
(2) Sub-paragraph (1) has effect subject to paragraph 45.
(3) The Commissioners may by regulations make provision for giving effect to sub-paragraph (1).
(4) Regulations under this paragraph may, in particular, include provision for determining whether any taxable commodity is supplied to a facility.
(5) The provision that may be made by virtue of sub-paragraph (4) includes, in particular, provision for a taxable commodity of any description specified in the regulations to be taken as supplied to a facility only if the commodity is delivered to the facility.
8 (1) Paragraph 45 (reduced-rate supplies: variation of notices under paragraph 44) is amended as follows.
(2) Omit sub-paragraphs (2) to (4).
(3) In sub-paragraph (5)—
(a) in paragraph (b), for “the variation notice is published” substitute “ the variation certificate is given ”, and
(b) for the words following that paragraph substitute “ the original certificate has effect as if the facility had never been specified in it ”.
(4) In sub-paragraph (6)—
(a) in paragraph (b), for “the variation notice is published” substitute “ the variation certificate is given ”, and
(b) for the words following that paragraph substitute “ the original certificate has effect as if the last day of the period specified for the facility in the original certificate were the day on which the variation certificate is given ”.
(5) In sub-paragraph (7), for the words from “the original notice” to the end substitute
the original certificate has effect as if the last day of the period specified for the facility in the original certificate were the later of—
(a) the day on which the variation certificate is given, and
(b) the day specified in the variation certificate.
(6) The italic heading before that paragraph accordingly becomes “ Reduced-rate supplies: variation of certificates under paragraph 44 ”.
9 After that paragraph insert—
Reduced-rate supplies: deemed supply
45A (1) This paragraph applies where—
(a) a taxable supply has been made to any person (“the recipient”),
(b) the supply was made on the basis that it was a reduced-rate supply, and
(c) it is later determined that the supply was not a reduced-rate supply.
(2) For the purposes of this Schedule—
(a) the recipient is deemed to make a taxable supply to itself of the taxable commodity, and
(b) the amount payable by way of levy on that deemed supply is 80 per cent. of the amount that would be payable if the supply were not a reduced-rate supply.
10 In paragraph 147 (interpretation), in the definition of “reduced-rate supply”—
(a) for “44(3)” substitute “ 44(1) ”, and
(b) for “44(4)” substitute “ 44(2) ”.
Notifications and certificates
11 (1) Paragraph 11 (exemption: supply not for burning in UK) is amended as follows.
(2) In sub-paragraph (1)—
(a) omit “has, before the supply is made, notified the supplier”, and
(b) omit “that he” (in both places).
(3) In sub-paragraph (3)—
(a) omit “has, before the supply is made, notified the supplier that”, and
(b) omit “he”.
12 (1) Paragraph 101 (civil penalties: incorrect notifications etc) is amended as follows.
(2) Omit sub-paragraph (1).
(3) In sub-paragraph (2)—
(a) after “paragraphs” insert “ 11, ” and
(b) after “the certificate is” insert “ (or becomes) ”.
(4) In sub-paragraph (3)—
(a) for “sub-paragraph (1) or (2)” substitute “ this paragraph ”, and
(b) omit “notification or”.
(5) In sub-paragraph (4)—
(a) for “notification or certificate” substitute “ certificate (or not revoking or varying it) ”,
(b) for “the person who gave it” substitute “ the person concerned ”, and
(c) for the words from “there is” to the end substitute “ the person has a reasonable excuse ”.
(6) In sub-paragraph (5)—
(a) for “notification or certificate” substitute “ certificate (or not revoking or varying it) ”, and
(b) for “the giving of the notification or certificate” substitute “ that ”.
(7) The italic heading before paragraph 101 accordingly becomes “ Civil penalties: incorrect certificates ”.
Commencement
13 (1) Paragraphs 2 to 10 come into force on such day as the Treasury may by order made by statutory instrument appoint.
(2) But any power to make regulations under any provision inserted or amended by any of those paragraphs may be exercised at any time after this Act is passed.
(3) The power to make an order under sub-paragraph (1)—
(a) may be exercised so as to bring a provision into force only in such cases as may be described in the order,
(b) may be exercised so as to make different provision for different cases or descriptions of case,
(c) includes power to make incidental, consequential, supplemental or transitional provision or savings.
Section 25
Part 1 Amendments of ITEPA 2003
1 ITEPA 2003 is amended as follows.
2 In section 7(5) (meaning of “employment income” etc), for paragraph (a) substitute—
(a) Chapters 7 to 9 of this Part (agency workers, workers under arrangements made by intermediaries, and workers providing services through managed service companies),
.
3 In section 48(2) (workers under arrangements made by intermediaries: scope of Chapter) for “or” at the end of paragraph (a) substitute—
(aa) applies to services provided by a managed service company (within the meaning of Chapter 9 of this Part), or
.
4 After section 61 insert—
Chapter 9 Managed service companies
Application of this Chapter
Scope of this Chapter
61A (1) This Chapter has effect with respect to the provision of services by a managed service company.
(2) Nothing in this Chapter—
(a) affects the operation of Chapter 7 of this Part (agency workers), or
(b) applies to payments or transfers to which section 966(3) or (4) of ITA 2007 applies (visiting performers: duty to deduct and account for sums representing income tax).
Meaning of “managed service company”
61B (1) A company is a “managed service company” if—
(a) its business consists wholly or mainly of providing (directly or indirectly) the services of an individual to other persons,
(b) payments are made (directly or indirectly) to the individual (or associates of the individual) of an amount equal to the greater part or all of the consideration for the provision of the services,
(c) the way in which those payments are made would result in the individual (or associates) receiving payments of an amount (net of tax and national insurance) exceeding that which would be received (net of tax and national insurance) if every payment in respect of the services were employment income of the individual, and
(d) a person who carries on a business of promoting or facilitating the use of companies to provide the services of individuals (“an MSC provider”) is involved with the company.
(2) An MSC provider is “involved with the company” if the MSC provider or an associate of the MSC provider—
(a) benefits financially on an ongoing basis from the provision of the services of the individual,
(b) influences or controls the provision of those services,
(c) influences or controls the way in which payments to the individual (or associates of the individual) are made,
(d) influences or controls the company's finances or any of its activities, or
(e) gives or promotes an undertaking to make good any tax loss.
(3) A person does not fall within subsection (1)(d) merely by virtue of providing legal or accountancy services in a professional capacity.
(4) A person does not fall within subsection (1)(d) merely by virtue of carrying on a business consisting only of placing individuals with persons who wish to obtain their services (including by contracting with companies which provide their services).
(5) Subsection (4) does not apply if the person or an associate of the person—
(a) does anything within subsection (2)(c) or (e), or
(b) does anything within subsection (2)(d) other than influencing the company's finances or activities by doing anything within subsection (2)(b).
Section 61B: supplementary
61C (1) The Treasury may by order provide that persons of a prescribed description do not fall within section 61B(1)(d).
(2) An order under subsection (1) may be made so as to have effect in relation to the whole of the tax year in which it is made.
(3) In section 61B and this section, “company” means a body corporate or partnership.
(4) References in section 61B to an associate of a person (“P”) include a person who, for the purpose of securing that the individual's services are provided by a company, acts in concert with P (or with P and other persons).
(5) In section 61B(2)(e), “undertaking to make good any tax loss” means an undertaking (in any terms) to make good (in whole or in part, and by any means) any cost to the individual or an associate of the individual resulting from a relevant provision, or a particular kind of relevant provision, applying in relation to payments made to the individual or associate.
(6) In subsection (5) “relevant provision” means—
(a) a provision of the Tax Acts,
(b) an enactment relating to national insurance, or
(c) a provision of subordinate legislation made under any such provision or enactment.
The deemed employment payment
Worker treated as receiving earnings from employment
61D (1) This section applies if—
(a) the services of an individual (“the worker”) are provided (directly or indirectly) by a managed service company (“the MSC”),
(b) the worker, or an associate of the worker, receives (from any person) a payment or benefit which can reasonably be taken to be in respect of the services, and
(c) the payment or benefit is not earnings (within Chapter 1 of Part 3) received by the worker directly from the MSC.
(2) The MSC is treated as making to the worker, and the worker is treated as receiving, a payment which is to be treated as earnings from an employment (“the deemed employment payment”).
(3) The deemed employment payment is treated as made at the time the payment or benefit mentioned in subsection (1)(b) is received.
(4) In this Chapter—
“the worker” has the meaning given by subsection (1),
“the relevant services” means the services mentioned in that subsection, and
“the client” means the person to whom the relevant services are provided.
(5) Section 61F supplements this section.
Calculation of deemed employment payment
61E (1) The amount of the deemed employment payment is the amount resulting from the following steps—
Step 1
Find (applying section 61F) the amount of the payment or benefit mentioned in section 61D(1)(b).
Step 2
Deduct (applying Chapters 1 to 5 of Part 5) the amount of any expenses met by the worker that would have been deductible from the taxable earnings from the employment if—
(a) the worker had been employed by the client to provide the relevant services, and
(b) the expenses had been met by the worker out of those earnings.
If the result at this point is nil or a negative amount, there is no deemed employment payment.
Step 3
Assume that the result of step 2 represents an amount together with employer's national insurance contributions on it, and deduct what (on that assumption) would be the amount of those contributions.
The result is the deemed employment payment.
(2) In step 2 of subsection (1), the reference to expenses met by the worker includes, where the MSC is a partnership and the worker is a member of the partnership, expenses met by the worker for and on behalf of the partnership.
(3) In step 2 of subsection (1), the expenses deductible include the amount of any mileage allowance relief which the worker would have been entitled to in respect of the use of a vehicle falling within subsection (4) if—
(a) the worker had been employed by the client to provide the relevant services, and
(b) the vehicle had not been a company vehicle (within the meaning of Chapter 2 of Part 4).
(4) A vehicle falls within this subsection if—
(a) it is provided by the MSC for the worker, or
(b) where the MSC is a partnership and the worker is a member of the partnership, it is provided by the worker for the purposes of the business of the partnership.
(5) For the purposes of subsection (1) any necessary apportionment of payments or benefits that are referable partly to the provision of the relevant services and partly to other matters is to be made on a just and reasonable basis.
Sections 61D and 61E: application of rules relating to earnings from employment
61F (1) The following provisions apply for the purposes of sections 61D and 61E.
(2) A “payment or benefit” means anything that, if received by an employee for performing the duties of an employment, would be general earnings from the employment.
(3) The amount of a payment or benefit is taken to be—
(a) in the case of a payment or cash benefit, the amount received, and
(b) in the case of a non-cash benefit, the cash equivalent of the benefit.
(4) The cash equivalent of a non-cash benefit is taken to be—
(a) the amount that would be general earnings if the benefit were general earnings from an employment, or
(b) in the case of living accommodation, whichever is the greater of that amount and the cash equivalent determined in accordance with section 398(2).
(5) A payment or benefit is treated as received—
(a) in the case of a payment or cash benefit, when payment is made of or on account of the payment or benefit;
(b) in the case of a non-cash benefit, when it would have been treated as received for the purposes of Chapter 4 or 5 of this Part (see section 19 or 32) if—
(i) the worker had been an employee, and
(ii) the benefit had been provided by reason of the employment.
Application of Income Tax Acts in relation to deemed employment
61G (1) The Income Tax Acts (in particular, the PAYE provisions) apply in relation to the deemed employment payment as follows.
(2) They apply as if—
(a) the worker were employed by the MSC to provide the relevant services, and
(b) the deemed employment payment were a payment by the MSC of earnings from that employment;
but this is subject to subsection (3).
(3) No deduction under Part 5 (deductions allowed from employment income) or section 232 (mileage allowance relief) may be made from the deemed employment payment.
(4) The worker is not chargeable to tax in respect of the deemed employment payment if, or to the extent that, by reason of any combination of the factors mentioned in subsection (5), the worker would not be chargeable to tax if—
(a) the worker were employed by the client to perform the relevant services, and
(b) the deemed employment payment were a payment by the client of earnings from that employment.
(5) The factors are—
(a) the worker being resident, ordinarily resident or domiciled outside the United Kingdom,
(b) the client being resident or ordinarily resident outside the United Kingdom, and
(c) the relevant services being provided outside the United Kingdom.
(6) Where the MSC is a partnership and the worker is a member of the partnership, the deemed employment payment is treated as received by the worker in the worker's personal capacity and not as income of the partnership.
(7) Where—
(a) the worker is resident in the United Kingdom, and
(b) the relevant services are provided in the United Kingdom,
the MSC is treated as having a place of business in the United Kingdom, whether or not it in fact does so.
Supplementary provisions
Relief in case of distributions by managed service company
61H (1) A claim for relief may be made under this section where the MSC—
(a) is a body corporate,
(b) is treated as making a deemed employment payment in any tax year, and
(c) either in that tax year (whether before or after that payment is treated as made), or in a subsequent tax year, makes a distribution (a “relevant distribution”).
(2) A claim for relief under this section must be made—
(a) by the MSC by notice to an officer of Revenue and Customs, and
(b) within 5 years after 31st January following the tax year in which the distribution is made.
(3) If on a claim being made an officer of Revenue and Customs is satisfied that relief should be given in order to avoid a double charge to tax, the officer must direct the giving of such relief by way of amending any assessment, by discharge or repayment of tax, or otherwise, as appears to the officer appropriate.
(4) Relief under this section is given by setting the amount of the deemed employment payment against the relevant distribution so as to reduce the distribution.
(5) In the case of more than one relevant distribution, an officer of Revenue and Customs must exercise the power conferred by this section so as to secure that so far as practicable relief is given by setting the amount of a deemed employment payment—
(a) against relevant distributions of the same tax year before those of other years,
(b) against relevant distributions received by the worker before those received by another person, and
(c) against relevant distributions of earlier years before those of later years.
(6) Where the amount of a relevant distribution is reduced under this section, the amount of any associated tax credit is reduced accordingly.
Meaning of “associate”
61I (1) Subsections (2) to (4) apply for the purposes of this Chapter.
(2) “Associate”, in relation to an individual, means—
(a) a member of the individual's family or household,
(b) a relative of the individual,
(c) a partner of the individual, or
(d) the trustee of any settlement in relation to which the individual, or a relative of the individual or member of the individual's family (living or dead), is or was a settlor.
(3) “Associate”, in relation to a company, means a person connected with the company.
(4) “Associate”, in relation to a partnership, means any associate of a member of the partnership.
(5) If—
(a) a managed service company (“the MSC”) is a partnership, and
(b) a person is an associate of another person by virtue only of being a member of the partnership,
the person is to be treated, for the purposes of this Chapter as it applies in relation to the MSC, as if the person were not an associate of that other person.
(6) In subsection (2), “relative” means ancestor, lineal descendant, brother or sister.
(7) For the purposes of subsection (2)—
(a) a man and woman living together as husband and wife are treated as if they were married to each other, and
(b) two persons of the same sex living together as if they were civil partners of each other are treated as if they were civil partners of each other.
Interpretation of Chapter
61J (1) In this Chapter—
“associate” has the meaning given by section 61I,
“business” means any trade, profession or vocation,
“the client” has the meaning given by section 61D(4),
“employer's national insurance contributions” means secondary Class 1 or Class 1A national insurance contributions,
“managed service company” has the meaning given by section 61B,
“national insurance contributions” means contributions under Part 1 of SSCBA 1992 or Part 1 of SSCB(NI)A 1992,
“PAYE provisions” means the provisions of Part 11 or PAYE regulations,
“the relevant services” has the meaning given by section 61D(4), and
“the worker” has the meaning given by section 61D(4).
(2) Nothing in section 995 of ITA 2007 (meaning of control) applies for the purposes of this Chapter.
5 In section 218(1) (exclusion of lower-paid employments from parts of benefits code: calculation of earnings rate), in Step 1, at the end of paragraph (d) insert
and
(e) in the case of an employment within section 61G(2) (deemed employment payment by managed service company), the total amount of deemed employment payments for the year.
6 After section 688 insert—
Managed service companies: recovery from other persons
688A (1) PAYE regulations may make provision authorising the recovery from a person within subsection (2) of any amount that an officer of Revenue and Customs considers should have been deducted by a managed service company (“the MSC”) from a payment of, or on account of, PAYE income of an individual.
(2) The persons are—
(a) a director or other office-holder, or an associate, of the MSC,
(b) an MSC provider,
(c) a person who (directly or indirectly) has encouraged or been actively involved in the provision by the MSC of the services of the individual, and
(d) a director or other office-holder, or an associate, of a person (other than an individual) who is within paragraph (b) or (c).
(3) A person does not fall within subsection (2)(c) merely by virtue of—
(a) providing legal or accountancy advice in a professional capacity, or
(b) placing the individual with persons who wish to obtain the services of the individual (including by contracting with the MSC for the provision of those services).
(4) The supplementary provision that may be made by the regulations includes provision as to the liability of one person within subsection (2) to another such person.
(5) In this section—
“associate” has the meaning given by section 61I,
“director” has the meaning given by section 67,
“managed service company” has the meaning given by section 61B, and
“MSC provider” means an MSC provider who is involved with the MSC (within the meaning of section 61B).
(6) Section 61C(4) (extended meaning of “associate”) applies for the purposes of subsection (2)(d).
(7) The Treasury may by order amend this section (but not this subsection or subsection (8)).
(8) The Treasury must not make an order under subsection (7) unless a draft of it has been laid before and approved by a resolution of the House of Commons.
7 In section 717(4) (orders and regulations not subject to negative procedure), insert at the end “ or section 688A(7) (PAYE regulations: managed service companies) ”.
8 In Part 2 of Schedule 1 (index of defined expressions), insert at the appropriate places—
associate (in Chapter 9 of Part 2) | section 61I (but see section 61C(4))
business (in Chapter 9 of Part 2) | section 61J
the client (in Chapter 9 of Part 2) | section 61D(4)
employer's national insurance contributions (in Chapter 9 of Part 2) | section 61J
managed service company (in Chapter 9 of Part 2) | section 61B
national insurance contributions (in Chapter 9 of Part 2) | section 61J
PAYE provisions (in Chapter 9 of Part 2) | section 61J
the relevant services (in Chapter 9 of Part 2) | section 61D(4)
the worker (in Chapter 9 of Part 2) | section 61D(4)
.
Part 2 Calculation of profits of MSCs: deduction for deemed employment payments
Deduction for deemed employment payments for income tax purposes
9 In ITTOIA 2005, after section 164 insert—
Managed service companies
Deduction for deemed employment payments
164A (1) This section applies for the purpose of calculating the profits of a trade, profession or vocation carried on by a managed service company (“the MSC”) which is treated as making a deemed employment payment in connection with the trade, profession or vocation.
(2) A deduction is allowed for—
(a) the amount of the deemed employment payment, and
(b) the amount of any employer's national insurance contributions paid by the MSC in respect of it.
(3) The deduction is allowed for the period of account in which the deemed employment payment is treated as made.
(4) The amount of the deduction allowed under subsection (2) is limited to the amount that reduces the profits of the firm for the tax year to nil.
(5) No deduction in respect of—
(a) the deemed employment payment, or
(b) any employer's national insurance contributions paid by the MSC in respect of it,
may be made except in accordance with this section.
(6) In this section “deemed employment payment”, “employer's national insurance contributions” and “managed service company” have the same meaning as in Chapter 9 of Part 2 of ITEPA 2003.
Deduction for deemed employment payments for corporation tax purposes
10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SCHEDULE 4 Restrictions on trade loss relief for partners
Section 26
Limit on amount of sideways relief and capital gains relief available in any tax year
1 (1) In ITA 2007, before section 104 (and the italic cross-heading before it) insert—
Limit on amount of sideways relief and capital gains relief
Limit on reliefs in any tax year not to exceed cap for tax year
103C (1) This section applies if an individual carries on one or more trades—
(a) as a non-active partner in a firm during a tax year, or
(b) as a limited partner in a firm at a time in that tax year,
and the individual makes a loss in any of those trades (an “affected loss”) in that tax year.
(2) There is a restriction on the amount of sideways relief and capital gains relief which (after applying the restrictions under the other provisions of this Chapter) may be given to the individual for any affected loss (but see subsections (6) and (7)).
(3) The restriction is that the total amount of the sideways relief and capital gains relief given to the individual for all the affected losses must not exceed the cap for that tax year.
(4) The cap for any tax year is £25,000.
(5) The Treasury may by order amend the sum for the time being specified in subsection (4).
(6) The restriction under this section does not apply to so much of any affected loss as derives from qualifying film expenditure (see section 103D).
(7) The restriction under this section does not affect the giving of sideways relief for a loss made in a trade against the profits of that trade.
(8) In this section “trade” does not include a trade which consists of the underwriting business of a member of Lloyd's (within the meaning of section 184 of FA 1993).
(2) The amendment made by sub-paragraph (1) has effect in relation to any loss made by an individual in a trade in the tax year 2007-08 or any subsequent tax year.
(3) But, in the case of a loss made by an individual in a trade in a tax year the basis period for which begins before 2nd March 2007 (a “straddling basis period”), the amount of that loss for the purposes of section 103C of ITA 2007 is—
(a) the amount of sideways relief and capital gains relief which (after applying the restrictions under the other provisions of Chapter 3 of Part 4 of that Act) may be given to the individual for that loss, less
(b) the amount (if any) of the pre-announcement loss.
(4) “The pre-announcement loss” is determined as follows.
(5) Calculate the profits or losses of the straddling basis period, but without regard to capital allowances and qualifying film expenditure (within the meaning of section 103D of ITA 2007).
(6) If that calculation produces a loss and the individual has made a contribution of an amount as capital to the firm or LLP in question—
(a) on or before the start of the straddling basis period, or
(b) after the start of that period but before 2nd March 2007,
apportion the loss produced by that calculation to the part of the straddling basis period which begins with the relevant date and falls before 2nd March 2007 in proportion to the number of days in that part.
(7) Calculate so much of the loss of the straddling basis period as derives from relevant pre-announcement capital expenditure.
(8) The pre-announcement loss is the sum of—
(a) the amount of the loss apportioned under sub-paragraph (6) (if any), and
(b) so much of the loss of the straddling basis period (if any) as derives from relevant pre-announcement capital expenditure.
(9) In sub-paragraph (6) “the relevant date” means—
(a) in any case where a contribution was made on or before the start of the straddling basis period, the start of that period, and
(b) in any other case, the date on which the contribution was made or, if more than one contribution was made, the date on which the first contribution was made.
(10) For the purposes of this paragraph the amount of the loss of the straddling basis period that derives from relevant pre-announcement capital expenditure is determined on a just and reasonable basis.
(11) In this paragraph “relevant pre-announcement capital expenditure” means—
(a) any capital allowance in respect of expenditure paid before 2nd March 2007, and
(b) any capital allowance in respect of expenditure paid on or after that date pursuant to an unconditional obligation in a contract made before that date,
and for this purpose “an unconditional obligation” means an obligation which may not be varied or extinguished by the exercise of any right conferred on the firm or LLP in question (whether or not under the contract).
(12) For the purposes of this paragraph—
(a) an amount of money is not to be taken as contributed as capital to a firm or LLP until the money is paid to the firm or LLP, and
(b) a right or other asset is not to be taken as contributed as capital to a firm or LLP until it is transferred to the firm or LLP.
(13) Section 62 of ITA 2007 (partners: losses of a tax year etc) applies for the purposes of this paragraph as it applies for the purposes of Chapter 3 of Part 4 of that Act.
Disregard of contributions made for purpose of accessing sideways relief and capital gains relief
2 (1) In ITA 2007, before section 114 insert—
Exclusion of amounts in calculating contribution to the firm or LLP
Exclusion of amounts contributed to access relief
113A (1) An amount which an individual contributes to a firm as capital is to be excluded in calculating the individual's contribution to the firm for the purposes of section 104 or 110 if the contribution was made for a prohibited purpose (but see subsection (4)).
(2) If—
(a) an individual carries on a trade as a member of an LLP at a time in a tax year,
(b) the individual does not devote a significant amount of time to the trade in the relevant period for that year, and
(c) the individual contributes an amount to the LLP as capital at any time in that year,
that amount is to be excluded in calculating the individual's contribution to the LLP for the purposes of section 107 if the contribution was made for a prohibited purpose (but see subsection (4)).
(3) For the purposes of this section a contribution is made for a prohibited purpose if the main purpose, or one of the main purposes, of making the contribution is the obtaining of a reduction in tax liability by means of sideways relief or capital gains relief.
(4) This section has no effect in relation to the application of any restriction under section 104, 107 or 110 to any loss that derives wholly from qualifying film expenditure.
(2) The amendment made by sub-paragraph (1) has effect in relation to any amount contributed to a firm or LLP as capital on or after 2nd March 2007 (but see sub-paragraph (4)).
(3) For this purpose—
(a) an amount of money is not to be taken as contributed as capital to a firm or LLP until the money is paid to the firm or LLP, and
(b) a right or other asset is not to be taken as contributed as capital to a firm or LLP until it is transferred to the firm or LLP.
(4) The amendment made by sub-paragraph (1) has no effect in relation to any amount contributed by an individual on or after 2nd March 2007 if—
(a) the amount is contributed pursuant to an obligation in a contract made before that date, and
(b) the obligation may not be varied or extinguished by the exercise of any right conferred on the individual (whether or not under the contract).
Provision corresponding to paragraphs 1 and 2 for tax year 2006-07
3 (1) ICTA has effect, in relation to any loss made by an individual in a trade in the tax year 2006-07 the basis period for which ends on or after 2nd March 2007, as if provision corresponding to section 103C of ITA 2007 were included in Chapter 7 of Part 4 of ICTA.
(2) Sub-paragraphs (3) to (13) of paragraph 1 apply for the purposes of sub-paragraph (1) above.
(3) ICTA has effect for the tax year 2006-07 as if provision corresponding to section 113A of ITA 2007 were included in that Chapter.
(4) Sub-paragraphs (2) to (4) of paragraph 2 apply for the purposes of sub-paragraph (3) above.
(5) The provisions which are treated by this paragraph as included in Chapter 7 of Part 4 of ICTA have effect as if—
(a) any reference in section 103C of ITA 2007 to sideways relief were to relief under section 380 or 381 of ICTA,
(b) any reference in section 103C of ITA 2007 to capital gains relief in relation to a loss were to the treatment of the loss as an allowable loss by virtue of section 72 of FA 1991,
(c) any reference in section 103C or 113A of ITA 2007 to any provision of Chapter 3 of Part 4 of ITA 2007 were to the corresponding provision of Chapter 7 of Part 4 of ICTA, and
(d) any reference in section 113A of ITA 2007 to a contribution to a firm or an LLP were to a contribution to a trade carried on by the firm or LLP,
and references in paragraphs 1(3) to (13) and 2(2) to (4) to any of those expressions are to be read accordingly.
Consequential amendments
4 ITA 2007 is amended as follows.
5 In section 32 (liability not dealt with in the calculation), for “section 112(5)” substitute “ section 103B(5) ”.
6 In section 82(a) (exploitation of films), for “sections 115 and 116” substitute “ section 115 ”.
7 (1) Section 102 (overview of Chapter 3 of Part 4) is amended as follows.
(2) In subsection (1)—
(a) in paragraph (a), for “104 to 106 and section 114)” substitute “ 103A, 103C to 105, 113A and 114) ”,
(b) in paragraph (b), for “107 to 109 and section 114)” substitute “ 103C, 103D, 107 to 109, 113A and 114) ”, and
(c) in paragraph (c), for “in an early tax year (see sections 110 to 114)” substitute “ (see sections 103B to 103D and 110 to 114) ”.
(3) In subsection (2), for “sections 115 and 116” substitute “ section 115 ”.
8 After section 103 insert—
Meaning of “limited partner”
103A (1) In this Chapter “limited partner” means an individual who carries on a trade—
(a) as a limited partner in a limited partnership registered under the Limited Partnerships Act 1907,
(b) as a partner in a firm who in substance acts as a limited partner in relation to the trade (see subsection (2)), or
(c) while the condition mentioned in subsection (3) is met in relation to the individual.
(2) An individual in substance acts as a limited partner in relation to a trade if the individual—
(a) is not entitled to take part in the management of the trade, and
(b) is entitled to have any liabilities (or those beyond a certain limit) for debts or obligations incurred for the purposes of the trade met or reimbursed by some other person.
(3) The condition referred to in subsection (1)(c) is that—
(a) the individual carries on the trade jointly with other persons,
(b) under the law of a territory outside the United Kingdom, the individual is not entitled to take part in the management of the trade, and
(c) under that law, the individual is not liable beyond a certain limit for debts or obligations incurred for the purposes of the trade.
(4) In the case of an individual who is a limited partner as a result of subsection (1)(c), references in this Chapter to the individual's firm are to be read as references to the relationship between the individual and the other persons mentioned in subsection (3)(a).
Meaning of “non-active partner” etc
103B (1) For the purposes of this Chapter an individual carries on a trade as a non-active partner during a tax year if the individual—
(a) carries on the trade as a partner in a firm at a time during the year,
(b) does not carry on the trade as a limited partner at any time during the year, and
(c) does not devote a significant amount of time to the trade in the relevant period for the year.
(2) For the purposes of this Chapter an individual devotes a significant amount of time to a trade in the relevant period for a tax year if, in that period, the individual spends an average of at least 10 hours a week personally engaged in activities carried on for the purposes of the trade.
(3) For this purpose “the relevant period” means the basis period for the tax year (unless the basis period is shorter than 6 months).
(4) If the basis period for the tax year is shorter than 6 months, “the relevant period” means—
(a) the period of 6 months beginning with the date on which the individual first started to carry on the trade (if the basis period begins with that date), or
(b) the period of 6 months ending with the date on which the individual permanently ceased to carry on the trade (if the basis period ends with that date).
(5) If—
(a) any relief is given on the assumption that the individual devoted or will devote a significant amount of time to the trade in the relevant period for a tax year, but
(b) the individual in fact failed or fails to do so,
the relief is withdrawn by the making of an assessment to income tax under this section.
9 After section 103C (as inserted by paragraph 1(1) above) insert—
Meaning of “qualifying film expenditure”
103D (1) For the purposes of this Chapter expenditure is qualifying film expenditure if—
(a) it is deducted under a relevant film provision for the purposes of the calculation required by section 849 of ITTOIA 2005 (calculation of firm's profits or losses), or
(b) it is incidental expenditure which (although not deducted under a relevant film provision) is incurred in connection with the production of a film, or the acquisition of the original master version of a film, in relation to which expenditure is so deducted.
(2) Expenditure is incidental if it is on management, administration or obtaining finance.
(3) The extent to which expenditure is within subsection (1)(b) is determined on a just and reasonable basis.
(4) For the purposes of this Chapter the amount of any loss that derives from qualifying film expenditure is determined on a just and reasonable basis.
(5) In this section—
“the acquisition of the original master version of a film” has the same meaning as in Chapter 9 of Part 2 of ITTOIA 2005 (see sections 130 and 132 of that Act),
“film” is to be read in accordance with paragraph 1 of Schedule 1 to the Films Act 1985, and
“a relevant film provision” means any one of sections 137 to 140 of ITTOIA 2005 (relief for certified master versions of films).
10 In—
(a) section 104(5) (restriction on reliefs for limited partners),
(b) section 107(2) (restriction on reliefs for members of LLPs),
(c) section 110(1)(a) (restriction on reliefs for non-active partners in early tax years), and
(d) section 115(1)(d) (restrictions on relief for firms exploiting films),
omit “(see section 112)”.
11 In—
(a) section 105(11) (meaning of “contribution to the firm” for purposes of section 104),
(b) section 108(9) (meaning of “contribution to the LLP” for purposes of section 107), and
(c) section 111(12) (meaning of “contribution to the firm” for purposes of section 110),
for the words from “any regulations” to “excluded” substitute “ section 113A and any regulations made under section 114 (exclusion of amounts ”.
12 Omit section 106 (meaning of “limited partner”).
13 In section 112 (meaning of “non-active partner” and “early tax year” etc)—
(a) omit subsections (1) to (5), and
(b) the heading accordingly becomes “ Meaning of “early tax year” ”.
14 Omit the italic-cross heading before section 114 (regulations: exclusion of amounts in calculating contribution to the firm or LLP) and for the heading of that section substitute “ Power to exclude other amounts ”.
15 In section 115 (restrictions on reliefs for firms exploiting films), for subsection (4) substitute—
(4) The restrictions under this section do not apply to so much of the loss (if any) as derives from qualifying film expenditure.
16 Omit section 116 (exclusion from restrictions under section 115: certain film expenditure).
17 In section 792 (partners claiming excess sideways or capital gains relief)—
(a) in subsection (7), for “106” substitute “ 103A ”, and
(b) in subsection (8), for “106(3)(a)” substitute “ 103A(3)(a) ”.
18 In section 809 (individuals in partnership claiming relief for licence-related trading losses: other definitions)—
(a) in subsection (1), for “112” substitute “ 103B ”, and
(b) in subsection (2), for “112(1)(b)” substitute “ 103B(1)(b) ”.
19 In paragraph 148(3)(b) of Schedule 2 (transitionals and savings: tax avoidance)—
(a) for “106” substitute “ 103A ”, and
(b) for “112” substitute “ 103B ”.
20 In Schedule 4 (index of defined expressions)—
(a) in the definition of “limited partner”, for “106” substitute “ 103A ”,
(b) in the definition of “non-active partner”, for “112” substitute “ 103B ”, and
(c) after the definition of “qualifying donation (in Chapter 2 of Part 8)” insert—
qualifying film expenditure (in Chapter 3 of Part 4) | section 103D
.
21 The amendments made by paragraphs 5 to 20 are deemed always to have had effect.