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Finance Act 2007

Type Public General Act

Publication 2007-07-19

Last updated 2025-04-24

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(da) a surrender made as part of a retirement-benefit activities compliance exercise, (db) a surrender of a prospective entitlement to pension death benefits within section 167(1) or lump sum death benefits within section 168(1) (or both) made in order to comply with the Employment Equality (Age) Regulations 2006 or Employment Equality (Age) Regulations (Northern Ireland) 2006 (or any regulations amending or replacing them),

(3) In subsection (10), for “An” substitute “ For the purposes of this section an ”.

(4) After that subsection insert—

(10A) For the purposes of this section a surrender relating to an arrangement under the pension scheme (“the old arrangement”) is made as part of a retirement-benefit activities compliance exercise if— (a) it is made in connection with the making of an arrangement under another pension scheme relating to the member (“the new arrangement”), (b) the old arrangement and the new arrangement relate to the same employment, (c) both the rights surrendered and the rights conferred under the new arrangement consist of or include a prospective entitlement to pension death benefits within section 167(1) or lump sum death benefits within section 168(1) (or both), (d) the surrender and the making of the new arrangement constitute or form part of a transaction the purpose of which is to secure that the activities of the pension scheme are limited to retirement-benefit activities within the meaning of section 255 of the Pensions Act 2004 or Article 232 of the Pensions (Northern Ireland) Order 2005, and (e) the rights surrendered and the rights conferred under the new arrangement are not significantly different.

Scheme pensions where ill-health condition met

7

(1) Schedule 28 (pension rules) is amended as follows.

(2) In paragraph 2(4) (scheme pensions: cases where cessation or reduction of pension is permitted), for paragraph (a) substitute—

(a) the reduction of the pension if the member became entitled to it by reason of the ill-health condition being met,

(3) In paragraph 2A(2) (certain reductions not permitted if part of avoidance arrangements), for “the rate of which is reduced in accordance with paragraph (b) of sub-paragraph (4) of paragraph 2 but” substitute “ which is reduced in accordance with paragraph (a) of sub-paragraph (4) of paragraph 2, or the rate of which is reduced in accordance with paragraph (b) of that sub-paragraph, and ”.

Unsecured and dependants' unsecured pensions: reference periods

8

(1) Schedule 28 (pension rules) is amended as follows.

(2) In paragraph 10 (reference periods for unsecured pensions), for sub-paragraph (1) substitute—

(1) Subject as follows, the period of five unsecured pension years beginning with the first unsecured pension year, and each succeeding period of five unsecured pension years, is a “reference period”. (1A) Sub-paragraph (1B) applies if, at any time during a reference period (“the current reference period”), the member notifies the scheme administrator that the member wishes a new reference period to begin on the next day that is an anniversary of the reference date in relation to the current reference period. (1B) The scheme administrator may determine— (a) that the current reference period is to end immediately before that day (so that sub-paragraph (1) no longer applies), and (b) that (subject to any further operation of this sub-paragraph) the period of five unsecured pension years beginning with that day, and each succeeding period of five unsecured pension years, is to be a reference period. (1C) The first day of each reference period is, in relation to that period, “the reference date”.

(3) In paragraph 24 (reference periods for dependants' unsecured pensions), for sub-paragraph (1) substitute—

(1) Subject as follows, the period of five unsecured pension years beginning with the first unsecured pension year, and each succeeding period of five unsecured pension years, is a “reference period”. (1A) Sub-paragraph (1B) applies if, at any time during a reference period (“the current reference period”), the dependant notifies the scheme administrator that the dependant wishes a new reference period to begin on the next day that is an anniversary of the reference date in relation to the current reference period. (1B) The scheme administrator may determine— (a) that the current reference period is to end immediately before that day (so that sub-paragraph (1) no longer applies), and (b) that (subject to any further operation of this sub-paragraph) the period of five unsecured pension years beginning with that day, and each succeeding period of five unsecured pension years, is to be a reference period. (1C) The first day of each reference period is, in relation to that period, “the reference date”.

Pension commencement lump sums

9

In section 166(2)(a) (when person becomes entitled to pension commencement lump sum), after “paid” insert “ (or, if the person dies before becoming entitled to the pension in connection with which it was anticipated it would be paid, immediately before death) ”.

10

In section 219(7) (multiple benefit crystallisation events occurring by reason of payment of lump sum death benefits treated as occurring immediately before death), insert at the end “ but immediately after any benefit crystallisation event occurring immediately before the individual's death by virtue of section 166(2). ”

11

(1) Schedule 29 (authorised lump sums) is amended as follows.

(2) In paragraph 1(1) (conditions to be met if lump sum is to be pension commencement lump sum)—

(a) for paragraph (a) substitute—

(a) the member becomes entitled to it before reaching the age of 75, (aa) the member becomes entitled to it in connection with becoming entitled to a relevant pension (or dies after becoming entitled to it but before becoming entitled to the relevant pension in connection with which it was anticipated that the member would become entitled to it)

(b) in paragraph (c), for “of three months beginning with” substitute “ beginning six months before, and ending one year after, ”, and

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) In paragraph 2 (“permitted maximum”), after sub-paragraph (5) insert—

(5A) But if the member dies before becoming entitled to the relevant pension in connection with which it was anticipated that the member would become entitled to the lump sum, the permitted maximum is the available portion of the member's lump sum allowance.

Winding-up lump sums

12

(1) Paragraph 10 of Schedule 29 (winding-up lump sums) is amended as follows.

(2) In sub-paragraph (1)(c), for “the member's employer” substitute “ any person by whom the member is employed at the time when the lump sum is paid, and who has made contributions under the pension scheme in respect of the member within the period of five years ending with the day on which it is paid, ”.

(3) In sub-paragraph (3)—

(a) for “are that the employer” substitute “ referred to in paragraph (c) of sub-paragraph (1) are that the person mentioned in that paragraph ”, and

(b) omit paragraph (a).

Lump sum death benefits

13

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Taxable property held by investment-regulated pension schemes: indirect holdings in REITs

14

(1) Schedule 29A (taxable property held by investment-regulated pension schemes) is amended as follows.

(2) In paragraph 20(1)(b) (indirect holdings: introduction to exception for REITs), for “paragraph 22 makes” substitute “ paragraphs 22, 24 and 25 make ”.

(3) In paragraph 22 (REITs)—

(a) in sub-paragraph (1), after paragraph (b) insert— “ and paragraph 24 applies to the pension scheme's interest in the vehicle. ”, and

(b) omit sub-paragraph (2).

(4) In paragraph 24(1) (conditions applying for paragraph 23), for “paragraph 23” substitute “ paragraphs 22 and 23 ”.

(5) In paragraph 25(2) (provisions supplementing paragraph 24), for “23(1)” substitute “ 22 or 23 ”.

Transitional provision: primary protection

15

In paragraph 11D of Schedule 36 (lump sum death benefits to be taken into account as part of individual's pre-commencement rights only if paid under policy not significantly varied since 5th April 2006), after sub-paragraph (2) insert—

(2A) A variation of the terms of a policy of life insurance made in order to comply with the Employment Equality (Age) Regulations 2006 or Employment Equality (Age) Regulations (Northern Ireland) 2006 (or any regulations amending or replacing them) is to be ignored for the purposes of sub-paragraph (2). (2B) Where a policy of life insurance held on 5th April 2006 for the purposes of an occupational pension scheme is surrendered and a new one is taken out— (a) as part of a retirement-benefit activities compliance exercise, or (b) to comply with the Employment Equality (Age) Regulations 2006 or Employment Equality (Age) Regulations (Northern Ireland) 2006 (or any regulations amending or replacing them), the new policy is to be treated for the purposes of sub-paragraph (2) as if it were the same as the old. (2C) For this purpose a policy of life insurance is surrendered and a new one is taken out as part of a retirement-benefit activities compliance exercise if— (a) the surrender of the old policy and taking out of the new policy constitute or form part of a transaction the purpose of which is to secure that the activities of the pension scheme are limited to retirement-benefit activities within the meaning of section 255 of the Pensions Act 2004 or Article 232 of the Pensions (Northern Ireland) Order 2005, and (b) the rights under the old policy and the new policy are not significantly different.

Transitional provision: enhanced protection

16

Schedule 36 (transitional provision) is amended as follows.

17

(1) Paragraph 12 (when enhanced protection ceases) is amended as follows.

(2) In paragraph (c) of sub-paragraph (2), for “solely for the purposes of a permitted transfer” substitute “ in permitted circumstances ”.

(3) After that sub-paragraph insert—

(2A) An arrangement is made in permitted circumstances if it is made— (a) for the purposes of a permitted transfer, (b) as part of a retirement-benefit activities compliance exercise, or (c) as part of an age-equality compliance exercise. (2B) For the purposes of sub-paragraph (2A)(b) an arrangement (“the new arrangement”) relating to an individual is made as part of a retirement-benefit activities compliance exercise if— (a) it is made in connection with the cancellation of rights under another arrangement relating to the individual (“the old arrangement”), (b) the old arrangement and the new arrangement relate to the same employment, (c) there is a prospective entitlement to pension death benefits within section 167(1) or lump sum death benefits within section 168(1) (or both) under both the old arrangement and the new arrangement, (d) the making of the new arrangement and the cancellation of the old arrangement constitute or form part of a transaction the purpose of which is to secure that the activities of the pension scheme under which the arrangement is made are limited to retirement-benefit activities within the meaning of section 255 of the Pensions Act 2004 or Article 232 of the Pensions (Northern Ireland) Order 2005, and (e) the rights cancelled under the old arrangement and the rights conferred under the new arrangement are not significantly different. (2C) For the purposes of sub-paragraph (2A)(c) an arrangement (“the new arrangement”) is made as part of an age-equality compliance exercise if— (a) it is made in connection with the cancellation of rights under another arrangement relating to the individual (“the old arrangement”), (b) the old arrangement and the new arrangement relate to the same employment, (c) there is a prospective entitlement to pension death benefits within section 167(1) or lump sum death benefits within section 168(1) (or both) under both the old arrangement and the new arrangement, and (d) the new arrangement is made, and the old arrangement cancelled, in order to comply with the Employment Equality (Age) Regulations 2006 or Employment Equality (Age) Regulations (Northern Ireland) 2006 (or any regulations amending or replacing them).

(4) In sub-paragraph (7)—

(a) omit paragraph (a),

(b) in paragraph (b), omit “held for the purposes of, or representing accrued rights under, the arrangement”, and

(5) In paragraph (a) of sub-paragraph (8), omit—

(a) “, or two or more money purchase arrangements that are not cash balance arrangements,”, and

(b) “or” at the end.

(6) After paragraph (b) of that sub-paragraph insert—

(c) where the arrangement is a cash balance arrangement or a defined benefits arrangement relating to a present or former employment, they are transferred in connection with a relevant business transfer so as to become held for the purposes of, or to represent rights under, a cash balance arrangement or defined benefits arrangement made under a registered pension scheme or recognised overseas pension scheme, or (d) where the arrangement (“the old arrangement”) is a cash balance arrangement or a defined benefits arrangement, they are transferred as part of a retirement-benefit activities compliance exercise so as to become held for the purposes of, or to represent rights under, a cash balance arrangement or defined benefits arrangement (“the new arrangement”) relating to the same employment as the old arrangement and made under a registered pension scheme or recognised overseas pension scheme.

(7) After that sub-paragraph insert—

(8A) For the purposes of sub-paragraph (8)(c) “relevant business transfer” means a transfer of an undertaking or a business (or part of an undertaking or a business) from one person to another— (a) which involves the transfer of at least 20 employees, and (b) in the case of which, if the transferor and the transferee are bodies corporate, they would not be treated as members of the same group for the purposes of Chapter 4 of Part 10 of ICTA. (8B) For the purposes of sub-paragraph (8)(d) sums or assets held for the purposes of, or representing accrued rights under, the old arrangement are transferred as part of a retirement-benefit activities compliance exercise if— (a) there is a prospective entitlement to pension death benefits within section 167(1) or lump sum death benefits within section 168(1) (or both) under both the old arrangement and the new arrangement, and (b) the transfer constitutes or forms part of a transaction the purpose of which is to secure that the activities of the pension scheme under which the old arrangement was made are limited to retirement-benefit activities within the meaning of section 255 of the Pensions Act 2004 or Article 232 of the Pensions (Northern Ireland) Order 2005.

(8) In sub-paragraph (9)—

(a) in paragraph (a), omit “, or each of the arrangements,” and “and” at the end,

(b) in paragraph (b), after “(8)(b)” insert “ or (d) ” and after “15” insert “ to 17 ”, and

and (c) if the transfer is a permitted transfer by virtue of sub-paragraph (8)(c), this paragraph (and paragraphs 13, 15 to 17 and 17A(3)) apply as if the arrangement to which the transfer is made were the same as that from which it is made and (if the employment is transferred) as if the employment with the transferee were the employment with the transferor.

(9) After that sub-paragraph insert—

(10) The Treasury may by order amend sub-paragraph (8) (and make other amendments consequential on any amendment of that sub-paragraph).

18

In paragraph 14 (relevant contributions), after sub-paragraph (3) insert—

(3A) A variation of the terms of a policy made in order to comply with the Employment Equality (Age) Regulations 2006 or Employment Equality (Age) Regulations (Northern Ireland) 2006 (or any regulations amending or replacing them) is to be ignored for the purposes of sub-paragraph (3). (3B) Where a policy of insurance on the life of the individual issued, or issued in respect of insurances made, before 6th April 2006 is surrendered and a new one is taken out— (a) as part of a retirement-benefit activities compliance exercise, or (b) as part of an age-equality compliance exercise. the new policy is to be treated for the purposes of sub-paragraph (3) as if it were the same as the old. (3C) For the purposes of sub-paragraph (3B)(a) a policy is surrendered, and a new policy of life insurance is taken out, as part of a retirement-benefit activities compliance exercise if— (a) the surrender of the old policy and the taking out of the new policy constitute or form part of a transaction the purpose of which is to secure that the activities of the pension scheme under which the arrangement is made are limited to retirement-benefit activities within the meaning of section 255 of the Pensions Act 2004 or Article 232 of the Pensions (Northern Ireland) Order 2005, and (b) the rights under the old policy and the new policy are not significantly different. (3D) For the purposes of sub-paragraph (3B)(b) a policy is surrendered, and a new policy of life insurance is taken out, as part of an age-equality compliance exercise if— (a) the old policy is surrendered, and the new policy is taken out, in order to comply with the Employment Equality (Age) Regulations 2006 or Employment Equality (Age) Regulations (Northern Ireland) 2006 (or any regulations amending or replacing them), and (b) any significant difference between the rights under the old policy and the rights under the new policy is attributable to the need to comply with those Regulations (or any regulations amending or replacing them).

19

(1) Paragraph 15 (relevant benefit accrual) is amended as follows.

(2) In sub-paragraph (2), after “arrangement” (in both places) insert “ which are transferred ”.

(3) In sub-paragraph (7), for “15 and 16” substitute “ 16 and 17 ”.

Inheritance tax: lump sum death benefits

20

In section 58 of IHTA 1984 (settlements: “relevant property”), after subsection (2) insert—

(2A) For the purposes of subsection (1)(d) above— (a) property applied to pay lump sum death benefits within section 168(1) of the Finance Act 2004 in respect of a member of a registered pension scheme is to be taken to be held for the purposes of the scheme from the time of the member's death until the payment is made, and (b) property applied to pay lump sum death benefits in respect of a member of a section 615(3) scheme is to be taken to be so held if the benefits are paid within the period of two years beginning with the earlier of the day on which the member's death was first known to the trustees or other persons having the control of the fund and the day on which they could first reasonably be expected to have known of it.

Benefits under employer-financed retirement benefits schemes

21

In section 393B of ITEPA 2003 (employer-financed retirement benefits schemes: relevant benefits), after subsection (4) insert—

(4A) Regulations under subsection (3)(d) may include provision having effect in relation to times before they are made.

Consequential amendments

22

(1) In section 167(2) of FA 2004 (meaning of “pension death benefit”), for ““Pension” substitute “ “In this Part “pension ”.

(2) In section 280(2) of that Act (index of expressions), insert at the appropriate place—

pension death benefit	section 167(2)

23

(1) In section 1(1) of the Pension Schemes Act 1993 (c. 48) (categories of pension schemes), in paragraph (b) of the definition of “personal pension scheme”, omit “any of the paragraphs of”.

(2) In section 1(1) of the Pension Schemes (Northern Ireland) Act 1993 (c. 49) (categories of pension schemes), in paragraph (b) of the definition of “personal pension scheme”, omit “any of the paragraphs of”.

Commencement

24

(1) The amendments made by paragraphs 2 to 4 and 23 are deemed to have come into force on 6th April 2007.

(2) The amendment made by paragraph 5 has effect in relation to payments made on or after 6th April 2007.

(3) The amendments made by paragraphs 6, 7(2), 9 to 11, 15 to 19 and 22 are deemed always to have had effect.

(4) The amendment made by paragraph 7(3) has effect in relation to reductions occurring on or after 6th April 2007.

(5) The amendments made by paragraph 8 have effect in relation to notifications given on or after 6th December 2006.

(6) The amendments made by paragraph 12 have effect in relation to lump sums paid on or after 6th April 2006.

(7) The amendments made by paragraph 13 have effect in relation to deaths occurring on or after 6th April 2006.

(8) The amendments made by paragraph 14 are deemed to have come into force on 1st January 2007.

(9) The amendment made by paragraph 20 has effect in relation to lump sum death benefits paid on or after 6th April 2006.

SCHEDULE 21

Intermediaries

1

(1) Section 80A of FA 1986 (exemption from stamp duty: sales to intermediaries) is amended as follows.

(2) For subsections (1) to (3) substitute—

(1) Stamp duty shall not be chargeable on an instrument transferring stock of a particular kind on sale to a person or the person's nominee if— (a) the person is a member of a regulated market on which stock of that kind is regularly traded; and (b) the person is an intermediary and is recognised as such by the market in accordance with arrangements approved by the Commissioners. (1A) Stamp duty shall not be chargeable on an instrument transferring stock of a particular kind on sale to a person or the person's nominee if— (a) the person is a member of a multilateral trading facility, or a recognised foreign exchange, on which stock of that kind is regularly traded; (b) the person is an intermediary and is recognised as such by the facility or exchange in accordance with arrangements approved by the Commissioners; and (c) the sale is effected on the facility or exchange. (1B) Stamp duty shall not be chargeable on an instrument transferring stock of a particular kind on sale to a person or the person's nominee if— (a) the person is an intermediary who is approved for the purposes of this section by the Commissioners; and (b) stock of that kind is regularly traded on a regulated market. (1C) Stamp duty shall not be chargeable on an instrument transferring stock of a particular kind on sale to a person or the person's nominee if— (a) the person is an intermediary who is approved for the purposes of this section by the Commissioners; (b) stock of that kind is regularly traded on a multilateral trading facility or a recognised foreign exchange; and (c) the sale is effected on the facility or exchange. (2) Stamp duty shall not be chargeable on an instrument transferring stock of a particular kind on sale to a person or the person's nominee if— (a) the person is a member of a regulated market, a multilateral trading facility or a recognised foreign options exchange; (b) options to buy or sell stock of that kind are regularly traded on, and are listed by or quoted on, that market, facility or exchange; (c) the person is an options intermediary and is recognised as such by that market, facility or exchange in accordance with arrangements approved by the Commissioners; and (d) stock of that kind is regularly traded on a regulated market. (2A) Stamp duty shall not be chargeable on an instrument transferring stock of a particular kind on sale to a person or the person's nominee if— (a) the person is a member of a regulated market, a multilateral trading facility or a recognised foreign options exchange; (b) options to buy or sell stock of that kind are regularly traded on, and are listed by or quoted on, that market, facility or exchange; (c) the person is an options intermediary and is recognised as such by that market, facility or exchange in accordance with arrangements approved by the Commissioners; and (d) the sale is effected on a relevant qualifying exchange on which stock of that kind is regularly traded or is effected on a relevant qualifying exchange pursuant to the exercise of a relevant option and options to buy or sell stock of that kind are regularly traded on, and are listed by or quoted on, that exchange; and in paragraph (d) “relevant qualifying exchange” means a multilateral trading facility, a recognised foreign options exchange or a recognised foreign exchange. (2B) Stamp duty shall not be chargeable on an instrument transferring stock of a particular kind on sale to a person or the person's nominee if— (a) the person is an options intermediary who is approved for the purposes of this section by the Commissioners; (b) options to buy or sell stock of that kind are regularly traded on, and are listed by or quoted on, a regulated market, a multilateral trading facility or a recognised foreign options exchange; and (c) stock of that kind is regularly traded on a regulated market. (2C) Stamp duty shall not be chargeable on an instrument transferring stock of a particular kind on sale to a person or the person's nominee if— (a) the person is an options intermediary who is approved for the purposes of this section by the Commissioners; (b) options to buy or sell stock of that kind are regularly traded on, and are listed by or quoted on, a regulated market, a multilateral trading facility or a recognised foreign options exchange; and (c) the sale is effected on a relevant qualifying exchange on which stock of that kind is regularly traded or is effected on a relevant qualifying exchange pursuant to the exercise of a relevant option and options to buy or sell stock of that kind are regularly traded on, and are listed by or quoted on, that exchange; and in paragraph (c) “relevant qualifying exchange” means a multilateral trading facility, a recognised foreign options exchange or a recognised foreign exchange.

(3) In subsection (6) (meaning of sale being on an exchange)—

(a) after “effected on” insert “ a facility or ”,

(b) for “subsection (1) or (2) above” substitute “ this section ”, and

(4) After that subsection insert—

(6A) The Commissioners may approve a person for the purposes of this section only if the person is authorised under the law of an EEA State to provide any of the investment services or activities listed in Section A 2 or 3 of Annex I to the Directive (execution of orders on behalf of clients and dealing on own account), whether or not the person is authorised under the Directive.

(5) The amendments made by this paragraph have effect in relation to any instrument executed on or after 1st November 2007.

2

(1) Section 80B of FA 1986 (exemption from stamp duty on sales to intermediaries: supplementary) is amended as follows.

(2) In subsection (2)—

(a) after the definition of “collective investment scheme” insert—

“the Directive” means Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments, as amended from time to time;

(b) omit the definition of “EEA exchange”, and

(c) in the definition of “EEA State”, for “means a State which” substitute “ , in relation to any time, means a State which at that time is a member State or any other State which at that time ” and insert at the end “ (as modified or supplemented from time to time) ”.

(3) After that subsection insert—

(2A) Each of the following expressions— - “multilateral trading facility”, and - “regulated market”, has the same meaning in section 80A above as it has for the purposes of the Directive.

(4) After subsection (5) insert—

(5A) The Treasury may by regulations amend section 80A above and this section (as they have effect for the time being) in order to extend the exemption from duty under that section.

(5) In subsection (7) (power for regulations to provide for stamp duty to be chargeable at a rate not exceeding 0.1%), for “subsection (1) or (2)” substitute “ any of subsections (1) to (2C) ”.

(6) The amendments made by this paragraph have effect in relation to any instrument executed on or after 1st November 2007.

3

(1) Section 88A of FA 1986 (exemption from SDRT: sales to intermediaries) is amended as follows.

(2) For subsections (1) to (3) substitute—

(1) Section 87 above shall not apply as regards an agreement to transfer securities of a particular kind to B or B's nominee if— (a) B is a member of a regulated market on which securities of that kind are regularly traded; and (b) B is an intermediary and is recognised as such by the market in accordance with arrangements approved by the Commissioners for Her Majesty's Revenue and Customs (“the Commissioners”). (1A) Section 87 above shall not apply as regards an agreement to transfer securities of a particular kind to B or B's nominee if— (a) B is a member of a multilateral trading facility, or a recognised foreign exchange, on which securities of that kind are regularly traded; (b) B is an intermediary and is recognised as such by the facility or exchange in accordance with arrangements approved by the Commissioners; and (c) the agreement is effected on the facility or exchange. (1B) Section 87 above shall not apply as regards an agreement to transfer securities of a particular kind to B or B's nominee if— (a) B is an intermediary who is approved for the purposes of this section by the Commissioners; and (b) securities of that kind are regularly traded on a regulated market. (1C) Section 87 above shall not apply as regards an agreement to transfer securities of a particular kind to B or B's nominee if— (a) B is an intermediary who is approved for the purposes of this section by the Commissioners; (b) securities of that kind are regularly traded on a multilateral trading facility or a recognised foreign exchange; and (c) the agreement is effected on the facility or exchange. (2) Section 87 above shall not apply as regards an agreement to transfer securities of a particular kind to B or B's nominee if— (a) B is a member of a regulated market, a multilateral trading facility or a recognised foreign options exchange; (b) options to buy or sell securities of that kind are regularly traded on, and are listed by or quoted on, that market, facility or exchange; (c) B is an options intermediary and is recognised as such by that market, facility or exchange in accordance with arrangements approved by the Commissioners; and (d) securities of that kind are regularly traded on a regulated market. (2A) Section 87 above shall not apply as regards an agreement to transfer securities of a particular kind to B or B's nominee if— (a) B is a member of a regulated market, a multilateral trading facility or a recognised foreign options exchange; (b) options to buy or sell securities of that kind are regularly traded on, and are listed by or quoted on, that market, facility or exchange; (c) B is an options intermediary and is recognised as such by that market, facility or exchange in accordance with arrangements approved by the Commissioners; and (d) the agreement is effected on a relevant qualifying exchange on which securities of that kind are regularly traded or is effected on a relevant qualifying exchange pursuant to the exercise of a relevant option and options to buy or sell securities of that kind are regularly traded on, and are listed by or quoted on, that exchange; and in paragraph (d) “relevant qualifying exchange” means a multilateral trading facility, a recognised foreign options exchange or a recognised foreign exchange. (2B) Section 87 above shall not apply as regards an agreement to transfer securities of a particular kind to B or B's nominee if— (a) B is an options intermediary who is approved for the purposes of this section by the Commissioners; (b) options to buy or sell securities of that kind are regularly traded on, and are listed by or quoted on, a regulated market, a multilateral trading facility or a recognised foreign options exchange; and (c) securities of that kind are regularly traded on a regulated market. (2C) Section 87 above shall not apply as regards an agreement to transfer securities of a particular kind to B or B's nominee if— (a) B is an options intermediary who is approved for the purposes of this section by the Commissioners; (b) options to buy or sell securities of that kind are regularly traded on, and are listed by or quoted on, a regulated market, a multilateral trading facility or a recognised foreign options exchange; and (c) the agreement is effected on a relevant qualifying exchange on which securities of that kind are regularly traded or is effected on a relevant qualifying exchange pursuant to the exercise of a relevant option and options to buy or sell securities of that kind are regularly traded on, and are listed by or quoted on, that exchange; and in paragraph (c) “relevant qualifying exchange” means a multilateral trading facility, a recognised foreign options exchange or a recognised foreign exchange.

(3) In subsection (6) (meaning of sale being on an exchange)—

(a) after “effected on” insert “ a facility or ”,

(b) for “subsection (1) or (2) above” substitute “ this section ”, and

(4) After that subsection insert—

(6A) The Commissioners may approve a person for the purposes of this section only if the person is authorised under the law of an EEA State to provide any of the investment services or activities listed in Section A 2 or 3 of Annex I to the Directive (execution of orders on behalf of clients and dealing on own account), whether or not the person is authorised under the Directive.

(5) The amendments made by this paragraph have effect in relation to any agreement to transfer securities—

(a) in a case where the agreement is conditional, if the condition is satisfied on or after 1st November 2007, and

(b) in any other case, if the agreement is made on or after that date.

4

(1) Section 88B of FA 1986 (exemption from SDRT on sales to intermediaries: supplementary) is amended as follows.

(2) In subsection (2)—

(a) after the definition of “collective investment scheme” insert—

“the Directive” means Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments, as amended from time to time;

(b) omit the definition of “EEA exchange”, and

(c) in the definition of “EEA State”, for “means a State which” substitute “ , in relation to any time, means a State which at that time is a member State or any other State which at that time ” and insert at the end “ (as modified or supplemented from time to time) ”.

(3) After that subsection insert—

(2A) Each of the following expressions— - “multilateral trading facility”, and - “regulated market”, has the same meaning in section 88A above as it has for the purposes of the Directive.

(4) After subsection (3) insert—

(3A) The Treasury may by regulations amend section 88A above and this section (as they have effect for the time being) in order to extend the exemption from tax under that section.

(5) In subsection (5) (power for regulations to provide for SDRT to be chargeable at a rate not exceeding 0.1%), for “subsection (1) or (2)” substitute “ any of subsections (1) to (2C) ”.

(6) In subsection (7) (regulations exercisable by statutory instrument and subject to annulment), for “(4)” substitute “ (3A) ”.

(7) The amendments made by this paragraph have effect in relation to any agreement to transfer securities—

(a) in a case where the agreement is conditional, if the condition is satisfied on or after 1st November 2007, and

(b) in any other case, if the agreement is made on or after that date.

Repurchases and stock lending

5

(1) Section 80C of FA 1986 (exemption from stamp duty: repurchases and stock lending) is amended as follows.

(2) In subsection (1) (application of section), after “conditions set out in subsection” insert “ (2A) or ”.

(3) After subsection (2) insert—

(2A) The conditions in this subsection are— (a) that A or B is authorised under the law of an EEA State to provide any of the investment services or activities listed in Section A 2 or 3 of Annex I to the Directive (execution of orders on behalf of clients and dealing on own account) in relation to stock of the kind concerned, whether or not A or B is authorised under the Directive; and (b) that stock of the kind concerned is regularly traded on a regulated market.

(4) In subsection (3) (conditions for exemption)—

(a) after “The conditions” insert “ in this subsection ”,

(b) for “an EEA exchange” substitute “ a regulated market, a multilateral trading facility ”, and

(5) In subsection (6) (meaning of arrangement being on an exchange)—

(a) after “effected on” insert “ a market, a facility or ”, and

(b) for “the exchange” (in each place) substitute “ the market, facility or exchange ”.

(6) In subsection (7)—

(a) after “In this section—” insert—

“the Directive” has the meaning given in section 80B(2) above; “EEA State” has the meaning given in section 80B(2) above;

, and

(b) omit the definition of “EEA exchange” (together with the “and” at the end of it).

(7) After that subsection insert—

(7A) Each of the following expressions— - “multilateral trading facility”, and - “regulated market”, has the same meaning in this section as it has for the purposes of the Directive.

(8) The amendments made by this paragraph have effect in relation to any instrument executed on or after 1st November 2007.

6

(1) Section 89AA of FA 1986 (exemption from SDRT: repurchases and stock lending) is amended as follows.

(2) In subsection (1) (application of section), after “conditions set out in subsection” insert “ (2A) or ”.

(3) After subsection (2) insert—

(2A) The conditions in this subsection are— (a) that P or Q is authorised under the law of an EEA State to provide any of the investment services or activities listed in Section A 2 or 3 of Annex I to the Directive (execution of orders on behalf of clients and dealing on own account) in relation to securities of the kind concerned, whether or not P or Q is authorised under the Directive; and (b) that securities of the kind concerned are regularly traded on a regulated market.

(4) In subsection (3) (conditions for exemption)—

(a) after “The conditions” insert “ in this subsection ”,

(b) for “an EEA exchange” substitute “ a regulated market, a multilateral trading facility ”, and

(5) In subsection (5) (meaning of arrangement being on an exchange)—

(a) after “effected on” insert “ a market, a facility or ”, and

(b) for “the exchange” (in each place) substitute “ the market, facility or exchange ”.

(6) In subsection (6)—

(a) after “In this section—” insert—

“the Directive” has the meaning given in section 88B(2) above; “EEA State” has the meaning given in section 88B(2) above;

, and

(b) omit the definition of “EEA exchange”.

(7) After that subsection insert—

(6A) Each of the following expressions— - “multilateral trading facility”, and - “regulated market”, has the same meaning in this section as it has for the purposes of the Directive.

(8) The amendments made by this paragraph have effect in relation to any agreement to transfer securities—

(a) in a case where the agreement is conditional, if the condition is satisfied on or after 1st November 2007, and

(b) in any other case, if the agreement is made on or after that date.

Exemptions from stamp duty and SDRT in cases involving recognised investment exchanges

7

(1) In section 116 of FA 1991 (stamp duty: investment exchanges and clearing houses), subsection (4) is amended as follows.

(2) After “In this section—” insert—

(aa) “the Directive” means Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments, as amended from time to time,

(3) In paragraph (b) (definition of “recognised investment exchange”), after “2000” insert “ , a regulated market within the meaning of the Directive or a multilateral trading facility within the meaning of the Directive ”.

Consequential repeal

8

(1) In F(No.2)A 2005, omit section 50 (power to extend stamp duty and SDRT exemptions to recognised exchanges).

(2) This paragraph comes into force on 1st November 2007.

SCHEDULE 22

Part 1 — Amendments

1

In section 20D(1) of TMA 1970, for “sections 20A, 20BA and 20C” substitute “ sections 20A and 20BA ”.

2

In section 67 of the Criminal Justice and Police Act 2001 (c. 16) and the heading of that section, for “customs officers” substitute “ officers of Revenue and Customs ”.

Part 2 — Repeals

3

The provisions listed below are omitted.

4

In TMA 1970—

(a) sections 20C and 20CC (search warrants), and

(b) in the definition of “tax” in section 118 the word “, 20C”.

5

In CEMA 1979—

(a) section 118C(3)(c) (gaming duty), and

(b) the references to “a gaming duty offence” in section 118C(4)(b) and (5).

6

In BGDA 1981—

(a) paragraph 16 of Schedule 1 (general betting duty: search warrants),

(b) paragraph 17 of Schedule 3 (bingo duty: search warrants), and

7

Section 148(4) of FA 1989 (definition of “business” for purposes of section 20C of TMA 1970).

8

In VATA 1994—

(a) section 72(9) (powers of arrest), and

(b) paragraph 10(3) to (6) of Schedule 11 (search warrants).

9

In Schedule 7 to FA 1994 (insurance premium tax)—

(a) paragraph 4(2) to (5) (search warrants), and

(b) paragraph 4(6) and (7) (power of arrest).

10

In Schedule 5 to FA 1996 (landfill tax)—

(a) paragraph 5 (search warrants), and

(b) paragraph 6 (power of arrest).

11

In Schedule 6 to FA 2000 (climate change levy)—

(a) paragraph 97 (power of arrest), and

(b) paragraph 130 (search warrants).

12

In FA 2001 (aggregates levy)—

(a) paragraph 6 of Schedule 6 (power of arrest), and

(b) paragraph 7 of Schedule 7 (search warrants).

13

(1) In the Criminal Justice and Police Act 2001—

(a) section 57(1)(c) (section 20CC of TMA 1970),

(b) section 63(2)(e) (section 20C of TMA 1970), and

(2) In Schedule 1 to that Act—

(a) paragraph 13 (section 20C of TMA 1970),

(b) paragraph 28 (paragraph 17(2) of Schedule 3 to BGDA 1981),

(d) paragraph 57 (paragraph 4(3) of Schedule 7 to FA 1994),

(e) paragraph 58 (paragraph 10(3) of Schedule 11 to VATA 1994),

(f) paragraph 61 (paragraph 5(2) of Schedule 5 to FA 1996), and

(g) paragraph 72 (paragraph 130(2) of Schedule 6 to FA 2000).

14

Section 36(2) and (3) of the Tax Credits Act 2002 (c. 21) (search warrants).

15

Section 323(3)(e) and (f) of the Proceeds of Crime Act 2002 (c. 29) (approval of applications under section 20C of TMA 1970).

16

Part 7 of Schedule 13 to FA 2003 (stamp duty land tax: search warrants).

17

In CRCA 2005—

(a) section 13(3)(b) and (c) (Commissioners' functions not delegable to officers), and

(b) section 14(2)(b) and (c) (non-delegable functions of Commissioners).

SCHEDULE 23

Criminal Law (Consolidation) (Scotland) Act 1995 (c. 39)

1

Part 3 of the Criminal Law (Consolidation) (Scotland) Act 1995 is amended as follows.

2

The heading to that Part becomes “ Investigation of Revenue and Customs offences ”.

3

At the beginning of that Part insert—

(23A) (1) This Part of this Act applies to the investigation of Revenue and Customs offences. (2) Subject to subsection (3) below, in this Part of this Act, a “Revenue and Customs offence” is an offence which relates to a matter in relation to which Her Majesty's Revenue and Customs have functions other than any matter specified in— (a) section 54(4)(b) or (f) of; or (b) paragraphs 3, 7, 10, 13 to 15, 19 or 24 to 29 of Schedule 1 to, the Commissioners for Revenue and Customs Act 2005 (former Inland Revenue matters). (3) In sections 23B to 23P and 26A of this Act, any reference to a “Revenue and Customs offence” shall be construed as if, in subsection (2) above, there were added at the end the words “and other than any matter relating to the movement of goods which is subject to any prohibition or restriction for the time being in force under or by virtue of any enactment”. (23B) (1) The sheriff may, if satisfied on information on oath given by an authorised officer as to the matters mentioned in subsection (2) below, make an order under subsection (3) below (in this Part, a “production order”). (2) Those matters are— (a) that there are reasonable grounds to suspect that a Revenue and Customs offence has been or is being committed; and (b) that a person (in this Part, a “haver”) specified by the officer has possession or control of a document which may be required as evidence for the purposes of any proceedings in respect of such an offence. (3) A production order is an order requiring the haver, before the expiry of the period specified in the order— (a) to deliver the document to an officer; or (b) to— (i) give an officer access to the document; and (ii) permit the officer to make copies of or remove the document. (4) The period specified in a production order is— (a) the period of 10 working days beginning with the day on which the order is made; or (b) such other period as the sheriff considers appropriate. (5) A sheriff may make a production order in relation to a haver residing or having a place of business in an area of Scotland notwithstanding that it is outside the area of that sheriff and any such order shall, without being backed or endorsed by another sheriff, have effect throughout Scotland. (6) Subject to section 23J of this Act, a production order has effect in spite of any restriction on disclosure of information (however imposed). (7) Without prejudice to section 23D(1) of this Act, failure by a person to comply with a production order may be dealt with as a contempt of court. (8) In subsection (4)(a) above, “working day” means any day other than— (a) a Saturday; (b) a Sunday; or (c) any day which is a public holiday in the area in which the production order is to have effect. (23C) (1) The sheriff may deal with an application for a production order ex parte in chambers. (2) The sheriff may, on the application of a person mentioned in subsection (3) below— (a) vary; or (b) discharge, a production order. (3) The persons referred to in subsection (2) above are— (a) the authorised officer who applied for the production order; (b) a person affected by the order. (4) Without prejudice to section 305 of the Criminal Procedure (Scotland) Act 1995, rules of court made by Act of Adjournal may make provision in relation to— (a) proceedings relating to the making of production orders; and (b) the variation or discharge of such orders. (23D) (1) A person who intentionally— (a) falsifies; (b) conceals; (c) destroys or otherwise disposes of, a document to which this section applies, or who causes or permits any of those acts, commits an offence. (2) This section applies to a document which the person is required, under a production order, to— (a) deliver to an officer; or (b) give an officer access to. (3) A person does not commit an offence if the person acts— (a) with the written permission of— (i) an officer; or (ii) the sheriff who made the order, after the document has been delivered or the officer has had access to it; (b) subject to subsection (4) below, after the expiry of the period of 2 years beginning with the day on which the order is made. (4) Subsection (3)(b) above does not apply where, before the expiry of the period referred to in that paragraph, an officer gives notice in writing to the person that the order has not been complied with to that officer's satisfaction. (5) A person who commits an offence under subsection (1) above is liable— (a) on summary conviction, to imprisonment for a period not exceeding 12 months or to a fine not exceeding the statutory maximum or to both; (b) on conviction on indictment, to imprisonment for a period not exceeding 2 years or to a fine or both. (23E) (1) The sheriff may, if satisfied on information on oath given by an authorised officer as to the matters mentioned in subsection (2) below, grant a warrant under subsection (3) below (in this Part, a “Revenue and Customs warrant”). (2) Those matters are— (a) that there are reasonable grounds to suspect that a Revenue and Customs offence has been or is being committed; and (b) that evidence of that offence is to be found in or on premises specified in the information. (3) A Revenue and Customs warrant is a warrant authorising an officer to— (a) enter, if necessary by force, the premises specified in the information; and (b) search those premises, before the expiry of the period of one month beginning with the day on which the warrant is granted. (4) The sheriff may, when granting a warrant, impose such conditions as the sheriff considers appropriate. (5) An officer who enters premises under the authority of a Revenue and Customs warrant may— (a) subject to any condition imposed under subsection (4) above, take with the officer such other persons (including persons who are not officers) as appear to that officer to be necessary; (b) subject to subsection (6) below, seize and remove any document or other thing found in or on the premises which the officer has reasonable cause to believe may be required as evidence for the purposes of proceedings in respect of the offence mentioned in subsection (2)(a) above; and (c) subject to subsections (6) and (7) below— (i) search or cause to be searched any person found in or on the premises whom the officer has reasonable cause to believe may be in possession of any such document or thing; and (ii) seize and remove any such document or thing found. (6) An officer acting under the authority of a Revenue and Customs warrant may, if the officer considers it appropriate, makes copies of any document or thing found in or on the premises or on any person searched under subsection (5)(c) above. (7) No person may be searched under subsection (5)(c) above except by a person of the same sex. (8) A sheriff may grant a Revenue and Customs warrant in relation to premises situated in an area of Scotland notwithstanding that it is outside the area of that sheriff and any such warrant may, without being backed or endorsed by another sheriff, be executed throughout Scotland in the same way as it may be executed within the sheriffdom of the sheriff who granted it. (9) In this section and in sections 23F to 23H of this Act, “premises” includes any place and, in particular— (a) any vehicle, vessel, aircraft or hovercraft; (b) any offshore installation (within the meaning of section 12(1) of the Mineral Workings (Offshore Installations) Act 1971); and (c) any tent or other movable structure. (23F) (1) This section applies where— (a) a document is removed under a production order; (b) a document or other thing is removed under a Revenue and Customs warrant. (2) An officer who removes any document or thing shall, if requested to do so by a person mentioned in subsection (3) below, provide that person with a record of what that officer removed. (3) The persons referred to in subsection (2) above are— (a) in the case of a document removed under a production order, a haver; (b) in the case of a document or thing removed under a Revenue and Customs warrant— (i) a person who is the occupier of any premises from which the document or thing was removed; or (ii) a person who had possession or control of the document or thing before it was removed. (4) The officer must provide the record within a reasonable time of the request for it. (23G) (1) This section applies where— (a) a document is removed under a production order; (b) a document or other thing is removed under a Revenue and Customs warrant. (2) A person mentioned in subsection (3) below may apply to the officer in overall charge of the investigation to which the order or warrant relates— (a) for access to the document or thing; or (b) for a copy or photograph of it. (3) The persons referred to in subsection (2) above are— (a) in the case of a document removed under a production order— (i) a haver; or (ii) a person acting on behalf of the haver; (b) in the case of a document or thing removed under a Revenue and Customs warrant, a person who had possession or control of the document or thing before it was removed. (4) Unless subsection (5) below applies, the officer in overall charge of the investigation shall— (a) in a case to which subsection (2)(a) above applies, allow the applicant supervised access to the document or thing; or (b) in a case to which subsection (2)(b) above applies— (i) allow the applicant supervised access to the document or thing for the purposes of photographing or copying it; or (ii) photograph or copy the document or thing (or cause it to be so photographed or copied) and provide the applicant with such a photograph or copy within a reasonable time. (5) The officer in overall charge need not comply with subsection (4) above where that officer has reasonable grounds for believing that to do so would prejudice— (a) the investigation; (b) the investigation of a Revenue and Customs offence other than the offence for the purposes of the investigation of which the document or thing was removed; or (c) any criminal proceedings which may be brought as a result of any investigation mentioned in paragraph (a) or (b) above. (6) In subsection (4) above, “supervised access” means access under the supervision of an officer approved by the officer in overall charge of the investigation. (23H) (1) This section applies where— (a) a document is removed under a production order; (b) a document or other thing is removed under a Revenue and Customs warrant. (2) Subject to subsection (3) below, a person who claims that— (a) an officer has failed to comply with the requirements of section 23F(2) or (3) of this Act; or (b) an officer in overall charge of an investigation has failed to comply with the requirements of section 23G(4) of this Act, may apply to the sheriff for an order under subsection (4) below. (3) An application under subsection (2) above— (a) relating to a failure mentioned in subsection (2)(a) above, may be made only by a person who is entitled to make a request under section 23F(2) of this Act; (b) relating to a failure mentioned in subsection (2)(b) above, may be made only by— (i) a haver; (ii) a person acting on behalf of a haver but only where that person applied under section 23G(2) of this Act; (iii) a person who had possession or control of the document or thing before it was removed under a Revenue and Customs warrant. (4) The sheriff may, if satisfied that— (a) the officer has failed to comply with the requirements of section 23F(2) or (3) of this Act; or (b) the officer in overall charge of the investigation has failed to comply with the requirements of section 23G(4) of this Act, order the officer or, as the case may be, the officer in overall charge of the investigation to comply with the requirements within such time and in such manner as the sheriff specifies in the order. (23J) (1) Neither a production order nor a Revenue and Customs warrant authorises the seizure, removal or copying of any documents or other things subject to legal privilege. (2) Subsection (1) above does not apply where the document or thing is held for the purposes of furthering a criminal purpose. (3) In this section— “documents or other things subject to legal privilege” means— 1. communications between a professional legal adviser and the adviser's client; or 2. communications made in connection with or in contemplation of legal proceedings and for the purposes of those proceedings, which would, in legal proceedings, be protected from disclosure by virtue of any rule of law relating to confidentiality of communications. (23K) (1) In sections 23B to 23J of this Act, references to a “document” include— (a) any thing in which information of any description is recorded; and (b) any part of such a thing. (2) Where a production order or a Revenue and Customs warrant applies to a document in electronic or magnetic form, the order or, as the case may be, the warrant requires the person having possession or control of the document to deliver or, as the case may be, give access to the information in a form which is visible and legible and, if the officer executing the order or warrant wishes to remove it, in a form which can be removed. (23L) (1) Section 4 of the Summary Jurisdiction Act 1881 (execution of process of Scottish courts in England and Wales) shall apply to— (a) a production order; and (b) a Revenue and Customs warrant, as it applies to a process mentioned in that section. (2) Section 29 of the Petty Sessions (Ireland) Act 1851 (execution of warrants in Northern Ireland) shall apply to— (a) a production order; and (b) a Revenue and Customs warrant, as it applies to a warrant mentioned in that section. (23M) (1) Where an authorised officer has reasonable grounds for suspecting that a person has committed or is committing, at any place, a Revenue and Customs offence, the officer may require— (a) that person, if found by the officer at that place or at any place where the officer is entitled to be, to give— (i) the information mentioned in subsection (2) below; and (ii) an explanation of the circumstances which have given rise to the officer's suspicion; (b) any other person whom the officer finds at that place or at any place where the officer is entitled to be and who the officer believes has information relating to the offence, to give the information mentioned in subsection (2) below. (2) That information is— (a) the person's name; (b) the person's address; (c) the person's date of birth; (d) the person's place of birth (in such detail as the officer considers necessary or expedient for the purpose of establishing that person's identity); and (e) the person's nationality. (3) The officer may require the person mentioned in paragraph (a) of subsection (1) above to remain with the officer while the officer (any or all)— (a) subject to subsection (4) below, verifies any information mentioned in subsection (2) above given by the person; (b) subject to section (5) below, establishes whether the person may be a person suspected of having committed a Revenue and Customs offence other than the offence in relation to which the officer made the requirement of that person under paragraph (a) of subsection (1) above; (c) notes any explanation proffered by the person. (4) The officer shall exercise the power under paragraph (a) of subsection (3) above only where it appears to the officer that such verification can be obtained quickly. (5) The officer shall exercise the power under paragraph (b) of subsection (3) above only where— (a) the person mentioned in paragraph (a) of subsection (1) above has given a name and address; and (b) it appears to the officer that establishing the matter mentioned in paragraph (b) of subsection (3) above can be achieved quickly. (6) The officer may use reasonable force to ensure that the person mentioned in paragraph (a) of subsection (1) above remains with that officer. (7) The officer shall inform a person, when making a requirement of that person under— (a) paragraph (a) of subsection (1) above, of the officer's suspicion and of the general nature of the offence which the officer suspects that the person has committed or is committing; (b) paragraph (b) of subsection (1) above, of the officer's suspicion, of the general nature of the offence which the officer suspects has been or is being committed and that the reason for the requirement is that the officer believes the person has information relating to the offence; (c) subsection (3) above, why the person is being required to remain with the officer; (d) any of the said subsections, that failure to comply with the requirement may constitute an offence. (23N) (1) An authorised officer may, if the person mentioned in section 23M(1)(a) of this Act gives a name and address, require that person to provide— (a) that person's fingerprints; or (b) a record, created by an approved device, of the skin on that person's fingers. (2) Such fingerprints or record may be used only for the purposes of— (a) verifying the name and address given by the person; (b) establishing whether the person may be a person who is suspected of having committed any other Revenue and Customs offence, and all record of such fingerprints or record shall be destroyed as soon as possible after they have fulfilled those purposes. (3) The officer shall inform a person, when making a requirement of that person under subsection (1) above— (a) of the existence of the power to make the requirement and why the officer proposes to exercise it in the person's case; and (b) that failure to comply with the requirement may constitute an offence. (4) In subsection (1)(b) above, an “approved device” is any device approved by the Scottish Ministers under section 13(8) of the Criminal Procedure (Scotland) Act 1995. (23P) (1) A person mentioned in paragraph (a) of subsection (1) of section 23M of this Act who, having been required— (a) under that subsection to give the information mentioned in subsection (2) of that section; (b) under subsection (3) of that section to remain with an officer; or (c) under subsection (1) of section 23N of this Act to provide that person's fingerprints or a record such as is mentioned in paragraph (b) of that subsection, fails, without reasonable excuse, to do so, shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale. (2) A person mentioned in paragraph (b) of subsection (1) of section 23M of this Act who, having been required under that subsection to give the information mentioned in subsection (2) of that section, fails, without reasonable excuse, to do so, shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 2 on the standard scale. (3) An authorised officer may arrest without warrant any person whom the officer has reasonable grounds for suspecting has committed an offence under subsection (1) or (2) above.

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

In section 26 (detention in connection with drug smuggling offences), for “a customs office” (in both places) substitute “ an office of Revenue and Customs ”.

7

After that section insert—

(26A) Where an authorised officer has reasonable grounds for suspecting that a Revenue and Customs offence has been or is being committed, the officer may arrest without warrant any person whom the officer has reasonable grounds for suspecting to be guilty of the offence. (26B) (1) In this Part of this Act— - “authorised officer” means an officer acting with the authority (which may be general or specific) of the Commissioners for Her Majesty's Revenue and Customs; - “office of Revenue and Customs” means premises wholly or partly occupied by Her Majesty's Revenue and Customs; and - “officer” means an officer of Revenue and Customs. (2) In any proceedings (whether civil or criminal) under or arising from this Part of this Act, a certificate of the Commissioners for Her Majesty's Revenue and Customs that an officer had authority to exercise a power or function conferred by a provision of this Part shall be conclusive proof of that fact.

Criminal Procedure (Scotland) Act 1995 (c. 46)

8

Section 307 of the Criminal Procedure (Scotland) Act 1995 (interpretation) is amended as follows.

9

In subsection (1), in the definition of “officer of law”, for paragraph (ba) substitute—

(ba) subject to subsection (1A) below, an officer of Revenue and Customs acting with the authority (which may be general or specific) of the Commissioners for Her Majesty's Revenue and Customs;

10

After that subsection insert—

(1A) The inclusion of officers of Revenue and Customs as “officers of law” shall not have effect in relation to any matter specified in— (a) section 54(4)(b) or (f) of; or (b) paragraphs 3, 7, 10, 13 to 15, 19 or 24 to 29 of Schedule 1 to, the Commissioners for Revenue and Customs Act 2005 (former Inland Revenue matters). (1B) In any proceedings (whether civil or criminal) under or arising from this Act, a certificate of the Commissioners for Her Majesty's Revenue and Customs that an officer of Revenue and Customs had the authority to exercise a power or function conferred by a provision of this Act shall be conclusive evidence of that fact.

Criminal Justice and Police Act 2001 (c. 16)

11

The Criminal Justice and Police Act 2001 is amended as follows.

12

In section 63(2) (powers to obtain hard copies etc of information stored in electronic form), after paragraph (g) insert—

(ga) section 23E(5)(b) (as read with section 23K(2)) of the Criminal Law (Consolidation) (Scotland) Act 1995;

13

In Schedule 1—

(a) in Part 1, after paragraph 59 insert—

(59A) The power of seizure conferred by section 23E(3) of the Criminal Law (Consolidation) (Scotland) Act 1995 (seizure of evidence of Revenue and Customs offences).

, and

(b) in Part 2, after paragraph 81 insert—

(81A) The power of seizure conferred by section 23E(3) (as read with section 23E(5)(c)) of the Criminal Law (Consolidation) (Scotland) Act 1995 (seizure of evidence of Revenue and Customs offences).

14

(1) The amendments made by this Schedule come into force in accordance with provision made by the Treasury by order.

(2) The power to make an order under this paragraph is exercisable by statutory instrument.

SCHEDULE 24

Part 1 — Liability for penalty

Error in taxpayer’s document

1

(1) A penalty is payable by a person (P) where—

(a) P gives HMRC a document of a kind listed in the Table below, and

(b) Conditions 1 and 2 are satisfied.

(2) Condition 1 is that the document contains an inaccuracy which amounts to, or leads to—

(a) an understatement of a liability to tax,

(b) a false or inflated statement of a loss ..., or

(3) Condition 2 is that the inaccuracy was careless (within the meaning of paragraph 3) or deliberate on P’s part.

(4) Where a document contains more than one inaccuracy, a penalty is payable for each inaccuracy.

Tax	Document
Income tax or capital gains tax	Return under section 8 of TMA 1970 (personal return).
Income tax or capital gains tax	Return under section 8A of TMA 1970 (trustee's return).
Income tax or capital gains tax	Return, statement or declaration in connection with a claim for an allowance, deduction or relief.
Income tax or capital gains tax	Accounts in connection with ascertaining liability to tax.
Income tax or capital gains tax	Partnership return.
Income tax or capital gains tax	Statement or declaration in connection with a partnership return.
Income tax or capital gains tax	Accounts in connection with a partnership return.
Apprenticeship levy	Return under regulations under section 105 of FA 2016.
Capital gains tax	Return under Schedule 2 to FA 2019.
Income tax	Return under section 254 of FA 2004.
Income tax	Return for the purposes of PAYE regulations.
Construction industry deductions	Return for the purposes of regulations under section 70(1)(a) of FA 2004 in connection with deductions on account of tax under the Construction Industry Scheme.
Corporation tax	Company tax return under paragraph 3 of Schedule 18 to FA 1998.
Corporation tax	Return, statement or declaration in connection with a claim for an allowance, deduction or relief.
Corporation tax	Accounts in connection with ascertaining liability to tax.
Digital services tax	DST return under paragraph 2 of Schedule 8 to FA 2020.
Multinational top-up tax	Overseas return notification and information provided with it
Multinational top-up tax	Self-assessment return and information provided with it
Multinational top-up tax	Below-threshold notification and information provided with it
Domestic top-up tax	Overseas return notification and information provided with it
Domestic top-up tax	Self-assessment return and information provided with it
Domestic top-up tax	Self-assessment return and information provided with it
VAT	Below-threshold notification and information provided with it
VAT	Return, statement or declaration in connection with a claim.
. . .	. . .
Insurance premium tax	Return under regulations under section 54 of FA 1994.
Insurance premium tax	Return, statement or declaration in connection with a claim.
Inheritance tax	Account under section 216 or 217 of IHTA 1984.
Inheritance tax	Information or document under regulations under section 256 of IHTA 1984.
Inheritance tax	Statement or declaration in connection with a deduction, exemption or relief.
Stamp duty land tax	Return under section 76 of FA 2003.
Stamp duty reserve tax	Return under regulations under section 98 of FA 1986.
Annual tax on enveloped dwellings	Annual tax on enveloped dwellings return.
Annual tax on enveloped dwellings	Return of adjusted chargeable amount.
Petroleum revenue tax	Return under paragraph 2 of Schedule 2 to the Oil Taxation Act 1975.
Petroleum revenue tax	Statement or declaration in connection with a claim under paragraph 13A of Schedule 2 to the Oil Taxation Act 1975.
Petroleum revenue tax	Statement or declaration in connection with a claim under Schedule 5, 6, 7 or 8 to the Oil Taxation Act 1975.
Petroleum revenue tax	Statement under section 1(1)(a) of the Petroleum Revenue Tax Act 1980.
Plastic packaging tax	Return under regulations under section 61 of FA 2021.
Soft drinks industry levy	Return under regulations under section 52 of FA 2017
Aggregates levy	Return under regulations under section 25 of FA 2001.
Climate change levy	Return under regulations under paragraph 41 of Schedule 6 to FA 2000.
Landfill tax	Return under regulations under section 49 of FA 1996.
Air passenger duty	Return under section 38 of FA 1994.
. . .	. . .
Alcohol duty	Statement or declaration in connection with a claim for repayment of duty under section 75 of F(No. 2)A 2023.
Alcohol duty	Return under regulations under section 88 of F(No. 2)A 2023.
Tobacco products duty	Return under regulations under section 7 of the Tobacco Products Duties Act 1979.
Hydrocarbon oil duties	Return under regulations under section 21 of the Hydrocarbon Oil Duties Act 1979.
Excise duties	Return under regulations under section 93 of CEMA 1979.
Excise duties	Return under regulations under section 100G or 100H of CEMA 1979.
Excise duties	Statement or declaration in connection with a claim.
General betting duty	Return under regulations under paragraph 2 of Schedule 1 to BGDA 1981.
Pool betting duty	Return under regulations under paragraph 2A of Schedule 1 to BGDA 1981.
Bingo duty	Return under regulations under paragraph 9 of Schedule 3 to BGDA 1981.
Lottery duty	Return under regulations under section 28(2) of FA 1993.
Gaming duty	Return under directions under paragraph 10 of Schedule 1 to FA 1997.
Remote gaming duty	Return under regulations under section 26K of BGDA 1981.
Machine games duty	Return under regulations under paragraph 18 of Schedule 24 to FA 2012
Any of the taxes mentioned above	Any document which is likely to be relied upon by HMRC to determine, without further inquiry, a question about—P's liability to tax,payments by P by way of or in connection with tax,any other payment by P (including penalties), orrepayments, or any other kind of payment or credit, to P.

(4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) In relation to a return under paragraph 2 of Schedule 2 to the Oil Taxation Act 1975 or a statement or declaration under paragraph 13A of that Schedule, references in this Schedule to P include any person who, after the giving of the return for a taxable field (within the meaning of that Act), becomes the responsible person for the field (within the meaning of that Act).

Under-assessment by HMRC

2

(1) A penalty is payable by a person (P) where—

(a) an assessment issued to P by HMRC understates P's liability to a relevant tax, and

(b) P has failed to take reasonable steps to notify HMRC, within the period of 30 days beginning with the date of the assessment, that it is an under-assessment.

(2) In deciding what steps (if any) were reasonable HMRC must consider—

(a) whether P knew, or should have known, about the under-assessment, and

(b) what steps would have been reasonable to take to notify HMRC.

(3) In sub-paragraph (1) “relevant tax” means any tax mentioned in the Table in paragraph 1.

(4) In this paragraph (and in Part 2 of this Schedule so far as relating to this paragraph)—

(a) “assessment” includes determination, and

(b) accordingly, references to an under-assessment include an under-determination.

Degrees of culpability

3

(1) For the purposes of a penalty under paragraph 1, inaccuracy in a document given by P to HMRC is—

(a) “careless” if the inaccuracy is due to failure by P to take reasonable care,

(b) “deliberate but not concealed” if the inaccuracy is deliberate on P's part but P does not make arrangements to conceal it, and

(c) “deliberate and concealed” if the inaccuracy is deliberate on P's part and P makes arrangements to conceal it (for example, by submitting false evidence in support of an inaccurate figure).

(2) An inaccuracy in a document given by P to HMRC, which was neither careless nor deliberate on P's part when the document was given, is to be treated as careless if P—

(a) discovered the inaccuracy at some later time, and

(b) did not take reasonable steps to inform HMRC.

(3) Paragraph 47 of Schedule 19 to FA 2016 (special measures for persistently unco-operative large businesses) provides for certain inaccuracies to be treated, for the purposes of this Schedule, as being due to a failure by P to take reasonable care.

Part 2 — Amount of penalty

Standard amount

4

(1) This paragraph sets out the penalty payable under paragraph 1.

(2) If the inaccuracy is in category 1, the penalty is—

(a) for careless action, 30% of the potential lost revenue,

(b) for deliberate but not concealed action, 70% of the potential lost revenue, and

(3) If the inaccuracy is in category 2, the penalty is—

(a) for careless action, 45% of the potential lost revenue,

(b) for deliberate but not concealed action, 105% of the potential lost revenue, and

(4) If the inaccuracy is in category 3, the penalty is—

(a) for careless action, 60% of the potential lost revenue,

(b) for deliberate but not concealed action, 140% of the potential lost revenue, and

(5) Paragraph 4A explains the 3 categories of inaccuracy.

Potential lost revenue: normal rule

5

(1) “The potential lost revenue” in respect of an inaccuracy in a document (including an inaccuracy attributable to a supply of false information or withholding of information) or a failure to notify an under-assessment is the additional amount due or payable in respect of tax as a result of correcting the inaccuracy or assessment.

(2) The reference in sub-paragraph (1) to the additional amount due or payable includes a reference to—

(a) an amount payable to HMRC having been erroneously paid by way of repayment of tax, and

(b) an amount which would have been repayable by HMRC had the inaccuracy or assessment not been corrected.

(3) In sub-paragraph (1) “tax” includes national insurance contributions.

(4) The following shall be ignored in calculating potential lost revenue under this paragraph—

(za) any CIR alteration, other than a permitted reduction, in respect of the tax period to which the document relates,

(a) group relief, and

(b) any relief under section 458 of CTA 2010 (relief in respect of repayment etc of loan) which is deferred under subsection (5) of that section;

(but this sub-paragraph does not prevent a penalty being charged in respect of an inaccurate claim for relief).

(5) For the purposes of sub-paragraph (4)(za)—

(a) a “CIR alteration” means an alteration made to an amount disallowed, or reactivated, under Part 10 of the Taxation (International and Other Provisions) Act 2010 as a result of the submission of a revised interest restriction return under paragraph 8(4) of Schedule 7A to that Act;

(b) a CIR alteration is a “permitted reduction” if it has the effect of—

(i) reducing the allocated disallowance of a company by no more than the relevant proportion, or

(ii) increasing the allocated reactivation of a company by no more than the relevant proportion.

(i) for the purposes of paragraph (b)(i), the proportion by which the total disallowed amount of the worldwide group for the period is reduced, as a result of the submission of the revised interest restriction return;

(ii) for the purposes of paragraph (b)(ii) the proportion by which the interest reactivation cap of the worldwide group is increased, as a result of the submission of the revised interest restriction return.

(6) In sub-paragraph (5), the following terms have the same meaning as in Part 10 of the Taxation (International and Other Provisions) Act 2010—

“allocated disallowance” (see paragraph 22(2) of Schedule 7A to that Act);

“allocated reactivation” (see paragraph 25(2) of that Schedule);

“total disallowed amount of the worldwide group” and “interest reactivation cap of the worldwide group” (see section 373 of that Act).

Potential lost revenue: multiple errors

6

(1) Where P is liable to a penalty under paragraph 1 in respect of more than one inaccuracy, and the calculation of potential lost revenue under paragraph 5 in respect of each inaccuracy depends on the order in which they are corrected—

(a) careless inaccuracies shall be taken to be corrected before deliberate inaccuracies, and

(b) deliberate but not concealed inaccuracies shall be taken to be corrected before deliberate and concealed inaccuracies.

(2) In calculating potential lost revenue where P is liable to a penalty under paragraph 1 in respect of one or more understatements in one or more documents relating to a tax period, account shall be taken of any overstatement in any document given by P which relates to the same tax period.

(3) In sub-paragraph (2)—

(a) “understatement” means an inaccuracy that satisfies Condition 1 of paragraph 1, and

(b) “overstatement” means an inaccuracy that does not satisfy that condition.

(4) For the purposes of sub-paragraph (2) overstatements shall be set against understatements in the following order—

(a) understatements in respect of which P is not liable to a penalty,

(b) careless understatements,

(d) deliberate and concealed understatements.

(5) In calculating for the purposes of a penalty under paragraph 1 potential lost revenue in respect of a document given by or on behalf of P no account shall be taken of the fact that a potential loss of revenue from P is or may be balanced by a potential over-payment by another person (except to the extent that an enactment requires or permits a person's tax liability to be adjusted by reference to P's).

Potential lost revenue: losses

7

(1) Where an inaccuracy has the result that a loss is wrongly recorded for purposes of direct tax and the loss has been wholly used to reduce the amount due or payable in respect of tax, the potential lost revenue is calculated in accordance with paragraph 5.

(2) Where an inaccuracy has the result that a loss is wrongly recorded for purposes of direct tax and the loss has not been wholly used to reduce the amount due or payable in respect of tax, the potential lost revenue is—

(a) the potential lost revenue calculated in accordance with paragraph 5 in respect of any part of the loss that has been used to reduce the amount due or payable in respect of tax, plus

(b) 10% of any part that has not.

(3) Sub-paragraphs (1) and (2) apply both—

(a) to a case where no loss would have been recorded but for the inaccuracy, and

(b) to a case where a loss of a different amount would have been recorded (but in that case sub-paragraphs (1) and (2) apply only to the difference between the amount recorded and the true amount).

(4) Where an inaccuracy has the effect of creating or increasing an aggregate loss recorded for a group of companies—

(a) the potential lost revenue shall be calculated in accordance with this paragraph, and

(b) in applying paragraph 5 in accordance with sub-paragraphs (1) and (2) above, group relief may be taken into account (despite paragraph 5(4)(a)).

(5) The potential lost revenue in respect of a loss is nil where, because of the nature of the loss or P's circumstances, there is no reasonable prospect of the loss being used to support a claim to reduce a tax liability (of any person).

Potential lost revenue: delayed tax

8

(1) Where an inaccuracy resulted in an amount of tax being declared later than it should have been (“the delayed tax”), the potential lost revenue is—

(a) 5% of the delayed tax for each year of the delay, or

(b) a percentage of the delayed tax, for each separate period of delay of less than a year, equating to 5% per year.

(2) This paragraph does not apply to a case to which paragraph 7 applies.

Reductions for disclosure

9

(A1) Paragraph 10 provides for reductions in penalties—

(a) under paragraph 1 where a person discloses an inaccuracy that involves a domestic matter,

(b) under paragraph 1A where a person discloses a supply of false information or withholding of information, and

(A2) Paragraph 10A provides for reductions in penalties under paragraph 1 where a person discloses an inaccuracy that involves an offshore matter or an offshore transfer.

(A3) Sub-paragraph (1) applies where a person discloses—

(a) an inaccuracy that involves a domestic matter,

(b) a careless inaccuracy that involves an offshore matter,

(d) a failure to disclose an under-assessment.

(1) A person discloses the matter by—

(a) telling HMRC about it,

(b) giving HMRC reasonable help in quantifying the inaccuracy , the inaccuracy attributable to the supply of false information or withholding of information, or the under-assessment, and

(c) allowing HMRC access to records for the purpose of ensuring that the inaccuracy , the inaccuracy attributable to the supply of false information or withholding of information, or the under-assessment is fully corrected.

(1A) Sub-paragraph (1B) applies where a person discloses—

(a) a deliberate inaccuracy (whether concealed or not) that involves an offshore matter, or

(b) an inaccuracy that involves an offshore transfer.

(1B) A person discloses the inaccuracy by—

(a) telling HMRC about it,

(b) giving HMRC reasonable help in quantifying the inaccuracy,

(d) providing HMRC with additional information.

(1C) The Treasury must make regulations setting out what is meant by “additional information” for the purposes of sub-paragraph (1B)(d).

(1D) Regulations under sub-paragraph (1C) are to be made by statutory instrument.

(1E) An instrument containing regulations under sub-paragraph (1C) is subject to annulment in pursuance of a resolution of the House of Commons.

(2) Disclosure—

(a) is “unprompted” if made at a time when the person making it has no reason to believe that HMRC have discovered or are about to discover the inaccuracy , the supply of false information or withholding of information, or the under-assessment, and

(b) otherwise, is “prompted”.

(3) In relation to disclosure “quality” includes timing, nature and extent.

(4) Paragraph 4A(4) to (5) applies to determine whether an inaccuracy involves an offshore matter, an offshore transfer or a domestic matter for the purposes of this paragraph.

10

(1) If a person who would otherwise be liable to a penalty of a percentage shown in column 1 of the Table (a “standard percentage”) has made a disclosure, HMRC must reduce the standard percentage to one that reflects the quality of the disclosure.

(2) But the standard percentage may not be reduced to a percentage that is below the minimum shown for it—

(a) in the case of a prompted disclosure, in column 2 of the Table, and

(b) in the case of an unprompted disclosure, in column 3 of the Table.

Standard %	Minimum % for prompted disclosure	Minimum % for unprompted disclosure
30%	15%	0%
70%	35%	20%
100%	50%	30%

Special reduction

11

(1) If they think it right because of special circumstances, HMRC may reduce a penalty under paragraph 1, 1A or 2.

(2) In sub-paragraph (1) “special circumstances” does not include—

(a) ability to pay, or

(b) the fact that a potential loss of revenue from one taxpayer is balanced by a potential over-payment by another.

(3) In sub-paragraph (1) the reference to reducing a penalty includes a reference to—

(a) staying a penalty, and

(b) agreeing a compromise in relation to proceedings for a penalty.

Interaction with other penalties

12

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