Legalize / United Kingdom / Public General Act

Finance Act 2008

Type Public General Act

Publication 2008-07-21

Last updated 2025-05-01

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(a) for “Sub-paragraphs (4) to (6) of paragraph 6 (preservation of information by means approved by the Commissioners) apply” substitute “ Sub-paragraph (4) of paragraph 6 (preservation of information) applies ”, and

(b) for “they apply” substitute “ it applies ”.

FA 1998

7

Schedule 18 to FA 1998 (company tax returns) is amended as follows.

8

(1) Paragraph 21 (duty to keep and preserve records) is amended as follows.

(2) In sub-paragraph (2), for the words from “for six years” to the end substitute “ until the end of the relevant day. ”

(3) After that sub-paragraph insert—

(2A) In this paragraph “relevant day” means— (a) the sixth anniversary of the end of the period for which the company may be required to deliver a company tax return, or (b) such earlier day as may be specified in writing by the Commissioners for Her Majesty's Revenue and Customs (and different days may be specified for different cases).

(4) In sub-paragraph (3), for “that six year period” substitute “ the relevant day ”.

(5) In sub-paragraph (4), for “that six year period” substitute “ the relevant day ”.

(6) After sub-paragraph (5) insert—

(5A) The Commissioners for Her Majesty's Revenue and Customs may by regulations— (a) provide that the records required to be kept and preserved under this paragraph include, or do not include, records specified in the regulations, and (b) provide that those records include supporting documents so specified. (5B) Regulations under this paragraph may— (a) make different provision for different cases, and (b) make provision by reference to things specified in a notice published by the Commissioners for Her Majesty's Revenue and Customs in accordance with the regulations (and not withdrawn by a subsequent notice).

(7) In sub-paragraph (6), omit the first sentence.

9

(1) Paragraph 22 (preservation of information instead of original records) is amended as follows.

(2) For sub-paragraph (1) substitute—

(1) The duty under paragraph 21 to preserve records may be discharged— (a) by preserving them in any form and by any means, or (b) by preserving the information contained in them in any form and by any means, subject to sub-paragraph (3) and any conditions or exceptions specified in writing by the Commissioners for Her Majesty's Revenue and Customs.

(3) Omit sub-paragraph (2).

(4) In sub-paragraph (3), for “The records excluded from sub-paragraph (1) are” substitute “ Sub-paragraph (1)(b) does not apply in the case of the following kinds of records ”.

(5) Accordingly, in the heading before that paragraph, for “instead of original records” substitute “ etc ”.

Consequential provisions

10

In section 13(6) of FA 1999 (VAT and gold)—

(a) for “(6)” substitute “ (4) ”,

(b) after “above” insert “ , and to records kept in pursuance of such regulations, ”, and

11

In consequence of the amendments made by paragraph 2 omit—

(a) section 105(4)(b) of FA 1995, and

(b) section 124(2) and (6) of FA 1996.

SCHEDULE 38

Amendments of Part 7 of FA 2004

1

Part 7 of FA 2004 (disclosure of tax avoidance schemes) is amended as follows.

2

(1) Section 308 (duties of promoter) is amended as follows.

(2) In subsection (1)—

(a) for “The promoter” substitute “ A person who is a promoter in relation to a notifiable proposal ”, and

(b) for “any” substitute “ the ”.

(3) In subsection (2)(a), for “a” substitute “ the ”.

(4) In subsection (3)—

(a) for “The promoter” substitute “ A person who is a promoter in relation to notifiable arrangements ”, and

(b) for “any notifiable” substitute “ the notifiable ”.

(5) For subsection (4) substitute—

(4) Subsection (4A) applies where a person complies with subsection (1) in relation to a notifiable proposal for arrangements and another person is— (a) also a promoter in relation to the notifiable proposal or is a promoter in relation to a notifiable proposal for arrangements which are substantially the same as the proposed arrangements (whether they relate to the same or different parties), or (b) a promoter in relation to notifiable arrangements implementing the notifiable proposal or notifiable arrangements which are substantially the same as notifiable arrangements implementing the notifiable proposal (whether they relate to the same or different parties). (4A) Any duty of the other person under subsection (1) or (3) in relation to the notifiable proposal or notifiable arrangements is discharged if— (a) the person who complied with subsection (1) has notified the identity and address of the other person to HMRC or the other person holds the reference number allocated to the proposed notifiable arrangements under section 311, and (b) the other person holds the information provided to HMRC in compliance with subsection (1). (4B) Subsection (4C) applies where a person complies with subsection (3) in relation to notifiable arrangements and another person is— (a) a promoter in relation to a notifiable proposal for arrangements which are substantially the same as the notifiable arrangements (whether they relate to the same or different parties), or (b) also a promoter in relation to the notifiable arrangements or notifiable arrangements which are substantially the same (whether they relate to the same or different parties). (4C) Any duty of the other person under subsection (1) or (3) in relation to the notifiable proposal or notifiable arrangements is discharged if— (a) the person who complied with subsection (3) has notified the identity and address of the other person to HMRC or the other person holds the reference number allocated to the notifiable arrangements under section 311, and (b) the other person holds the information provided to HMRC in compliance with subsection (3).

3

In section 311(1) (arrangements to be given reference number)—

(a) after “complies” insert “ or purports to comply ”,

(b) omit “may within 30 days”,

(d) for “notify the person of that number” substitute

must notify that number to the person and (where the person is one who has complied or purported to comply with section 308(1) or (3)) to any other person— (i) who is a promoter in relation to the notifiable proposal (or arrangements implementing the notifiable proposal) or the notifiable arrangements (or proposal implemented by the notifiable arrangements), and (ii) whose identity and address has been notified to HMRC by the person.

4

For section 312 substitute—

(312) (1) This section applies where a person who is a promoter in relation to notifiable arrangements is providing (or has provided) services to any person (“the client”) in connection with the notifiable arrangements. (2) The promoter must, within 30 days after the relevant date, provide the client with prescribed information relating to any reference number (or, if more than one, any one reference number) that has been notified to the promoter (whether by HMRC or any other person) in relation to— (a) the notifiable arrangements, or (b) any arrangements substantially the same as the notifiable arrangements (whether involving the same or different parties). (3) In subsection (2) “the relevant date” means the later of— (a) the date on which the promoter becomes aware of any transaction which forms part of the notifiable arrangements, and (b) the date on which the reference number is notified to the promoter. (4) But where the conditions in subsection (5) are met the duty imposed on the promoter under subsection (2) to provide the client with information in relation to notifiable arrangements is discharged. (5) Those conditions are that — (a) the promoter is also a promoter in relation to a notifiable proposal and provides services to the client in connection with them both, (b) the notifiable proposal and the notifiable arrangements are substantially the same, and (c) the promoter has provided to the client, in a form and manner specified by HMRC, prescribed information relating to the reference number that has been notified to the promoter in relation to the proposed notifiable arrangements. (6) HMRC may give notice that, in relation to notifiable arrangements specified in the notice, promoters are not under the duty under subsection (2) after the date specified in the notice. (312A) (1) This section applies where a person (a “client”) to whom a person who is a promoter in relation to notifiable arrangements or a notifiable proposal is providing (or has provided) services in connection with the notifiable arrangements or notifiable proposal receives prescribed information relating to the reference number allocated to the notifiable arrangements or proposed notifiable arrangements. (2) The client must, within the prescribed period, provide prescribed information relating to the reference number to any other person— (a) who the client might reasonably be expected to know is or is likely to be a party to the arrangements or proposed arrangements, and (b) who might reasonably be expected to gain a tax advantage in relation to any relevant tax by reason of the arrangements or proposed arrangements. (3) For the purposes of subsection (1) a tax is a “relevant tax” in relation to arrangements or arrangements proposed in a proposal of any description if it is prescribed in relation to arrangements or proposals of that description by regulations under section 306. (4) HMRC may give notice that, in relation to notifiable arrangements or a notifiable proposal specified in the notice, persons are not under the duty under subsection (2) after the date specified in the notice. (5) The duty under subsection (2) does not apply in prescribed circumstances.

5

(1) Section 313 (duty of parties to notifiable arrangements to notify HMRC of number etc) is amended as follows.

(2) In subsection (1)(a), omit “under section 311 by the Board or under section 312 by the promoter”.

(3) In subsection (3)—

(a) for “under subsection (1)” substitute “ made by HMRC ”,

(b) in paragraph (a), for “number and other information” substitute “ information prescribed under subsection (1) ”, and

(c) in paragraph (b), for “number and other information” substitute “ information prescribed under subsection (1) and such other information as is prescribed ”.

(4) Insert at the end—

(5) HMRC may give notice that, in relation to notifiable arrangements specified in the notice, persons are not under the duty under subsection (1) after the date specified in the notice.

6

For section 316 substitute—

(316) (1) HMRC may specify the form and manner in which information required to be provided by any of the information provisions must be provided if the provision is to be complied with. (2) The “information provisions” are sections 308(1) and (3), 309(1), 310, 312(2), 312A(2) and 313(1) and (3).

Amendments of TMA 1970

7

(1) Section 98C of TMA 1970 (penalties for failure to comply with duties under Part 7 of FA 2004) is amended as follows.

(2) In subsection (2)—

(a) in paragraph (d), for “312(1)” substitute “ 312(2) ”, and

(b) after that paragraph (but before the “and”) insert—

(da) section 312A(2) (duty of client to notify parties of reference number),

(3) In subsection (3)—

(a) for “section 313(1)” substitute “ subsection (1) of section 313 ”, and

(b) after “etc.)” insert “ or regulations under subsection (3) of that section ”.

(4) In subsection (4), for “313(1)” (in both places) substitute “ subsection (1) of section 313 or regulations under subsection (3) of that section ”.

SCHEDULE 39

TMA 1970

1

TMA 1970 is amended as follows.

2

In section 28C(5)(a) (time limit for determination of tax where no return delivered and self-assessment superseding determination), for “five years” substitute “ 3 years ”.

3

In section 29(4) (assessment where loss of tax discovered), for “is attributable to fraudulent or negligent conduct on the part of” substitute “ was brought about carelessly or deliberately by ”.

4

In section 30B(5) (amendment of partnership statement where loss of tax discovered), for “is attributable to fraudulent or negligent conduct on the part of” substitute “ was brought about carelessly or deliberately by ”.

5

In section 33(1) (claim for error or mistake), for “not later than five years after the 31st January next following” substitute “ not more than 4 years after the end of ”.

6

In section 33A(2) (error or mistake in partnership return), for “not later than 31st January of Year 6” substitute “ not more than 4 years after the end of the year of assessment in question, or in which the relevant period ends, ”.

7

(1) Section 34 (ordinary time limit for assessments) is amended as follows.

(2) In subsection (1), for “not later than five years after the 31st January next following” substitute “ not more than 4 years after the end of ”.

(3) Accordingly, in the heading, for “six years” substitute “ 4 years ”.

8

In section 35 (time limit: income received after year for which it is assessable), for “within six years after” substitute “ not more than 4 years after the end of ”.

9

(1) Section 36 (fraudulent or negligent conduct) is amended as follows.

(2) For subsection (1) substitute—

(1) An assessment on a person in a case involving a loss of income tax or capital gains tax brought about carelessly by the person may be made at any time not more than 6 years after the end of the year of assessment to which it relates (subject to subsection (1A) and any other provision of the Taxes Acts allowing a longer period). (1A) An assessment on a person in a case involving a loss of income tax or capital gains tax — (a) brought about deliberately by the person, (b) attributable to a failure by the person to comply with an obligation under section 7, or (c) attributable to arrangements in respect of which the person has failed to comply with an obligation under section 309, 310 or 313 of the Finance Act 2004 (obligation of parties to tax avoidance schemes to provide information to Her Majesty's Revenue and Customs), may be made at any time not more than 20 years after the end of the year of assessment to which it relates (subject to any provision of the Taxes Acts allowing a longer period). (1B) In subsections (1) and (1A) references to a loss brought about by the person who is the subject of the assessment include a loss brought about by another person acting on behalf of that person.

(3) In subsection (2)—

(a) for “Where the person in default” substitute “ Where the person mentioned in subsection (1) or (1A) (“the person in default”) ”, and

(b) for “subsection (1) above” substitute “ subsection (1A) or (1B) ”.

(4) In subsection (3), after “(1)” insert “ or (1A) ”.

(5) In subsection (4), for “subsection (1)” substitute “ subsections (1) and (1A) ”.

(6) Accordingly, for the heading substitute “ Loss of tax brought about carelessly or deliberately etc ”.

10

In section 37A (effect of assessment where allowances transferred), for the words from “for the purpose” to “conduct” substitute “ in a case falling within section 36(1) or (1A) ”.

11

(1) Section 40 (assessment on personal representatives) is amended as follows.

(2) In subsection (1), for “beyond the end of the period of three years beginning with the 31st January next following” substitute “ more than 4 years after the end of ”.

(3) In subsection (2)—

(a) for the words from the beginning to “died” substitute “ In a case involving a loss of tax brought about carelessly or deliberately by a person who has died (or another person acting on that person's behalf before that person's death) ”, and

(b) for “before the end of the period of three years beginning with the 31st January next following” substitute “ not more than 4 years after the end of ”.

12

In section 43(1) (time limit for making claims), for “five years after the 31st January next following” substitute “ 4 years after the end of ”.

13

In section 43A(1)(b) (further assessments: claims etc), for the words from “attributable” to the end substitute “ brought about carelessly or deliberately by that person or by someone acting on behalf of that person. ”

14

In section 43C(1)(b) (consequential claims etc), for “attributable to fraudulent or negligent conduct on the part of” substitute “ brought about carelessly or deliberately by ”.

15

In section 118 (interpretation) insert at the end—

(5) For the purposes of this Act a loss of tax or a situation is brought about carelessly by a person if the person fails to take reasonable care to avoid bringing about that loss or situation. (6) Where— (a) information is provided to Her Majesty's Revenue and Customs, (b) the person who provided the information, or the person on whose behalf the information was provided, discovers some time later that the information was inaccurate, and (c) that person fails to take reasonable steps to inform Her Majesty's Revenue and Customs, any loss of tax or situation brought about by the inaccuracy shall be treated for the purposes of this Act as having been brought about carelessly by that person. (7) In this Act references to a loss of tax or a situation brought about deliberately by a person include a loss of tax or a situation that arises as a result of a deliberate inaccuracy in a document given to Her Majesty's Revenue and Customs by or on behalf of that person.

ICTA

16

ICTA is amended as follows.

17

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

18

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

19

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

20

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

21

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

22

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

23

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

24

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

25

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

26

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

FA 1991

27

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

TCGA 1992

28

TCGA 1992 is amended as follows.

29

In section 203(2) (claims in respect of certain capital losses), for “6 years” substitute “ 4 years ”.

30

In section 253(4A) (claims for relief for loans to traders)—

(a) in paragraph (a), for “on or before the fifth anniversary of the 31st January next following” substitute “ not more than 4 years after the end of ”, and

(b) in paragraph (b), for “6 years” substitute “ 4 years ”.

31

In section 279(5) (claims in respect of delayed remittance of gain from disposal of foreign assets)—

(a) in paragraph (a), for “at any time after the fifth anniversary of the 31st January next following” substitute “ more than 4 years after the end of ”, and

(b) in paragraph (b), for “6 years” substitute “ 4 years ”.

VATA 1994

32

VATA 1994 is amended as follows.

33

In section 33A(4) (refunds of VAT to museums and galleries), for “3 years” substitute “ 4 years ”.

34

(1) Section 77 (assessments: time limits and supplementary assessments) is amended as follows.

(2) In subsection (1)(a) and (b), for “3 years” substitute “ 4 years ”.

(3) For subsection (4) substitute—

(4) In any case falling within subsection (4A), an assessment of a person (“P”), or of an amount payable by P, may be made at any time not more than 20 years after the end of the prescribed accounting period or the importation, acquisition or event giving rise to the penalty, as appropriate (subject to subsection (5)). (4A) Those cases are— (a) a case involving a loss of VAT brought about deliberately by P (or by another person acting on P's behalf), (b) a case in which P has participated in a transaction knowing that it was part of arrangements of any kind (whether or not legally enforceable) intended to bring about a loss of VAT, (c) a case involving a loss of VAT attributable to a failure by P to comply with a notification obligation, and (d) a case involving a loss of VAT attributable to a scheme in respect of which P has failed to comply with an obligation under paragraph 6 of Schedule 11A. (4B) In subsection (4A) the references to a loss of tax brought about deliberately by P or another person include a loss that arises as a result of a deliberate inaccuracy in a document given to Her Majesty's Revenue and Customs by that person. (4C) In subsection (4A)(c) “notification obligation” means an obligation under— (a) paragraph 5, 6, 7 or 14(2) or (3) of Schedule 1, (b) paragraph 3 of Schedule 2, (c) paragraph 3 or 8(2) of Schedule 3, (d) paragraph 3, 4 or 7(2) or (3) of Schedule 3A, or (e) regulations under paragraph 2(4) of Schedule 11.

(4) In subsection (5)—

(a) in paragraph (a), for “3 years” substitute “ 4 years ”, and

(b) omit paragraph (b) and the “and” before it.

35

In section 78(11) (interest in certain cases of official error), for “three years” substitute “ 4 years ”.

36

In section 80(4) (credit for, or repayment of, overstated or overpaid VAT), for “3 years” substitute “ 4 years ”.

FA 1998

37

Schedule 18 to FA 1998 (company tax returns) is amended as follows.

38

In paragraph 36(5) (determination of tax payable if no return delivered), for “five years” substitute “ 3 years ”.

39

In paragraph 37(4) (determination of tax payable if notice complied with in part), for “five years” substitute “ 3 years ”.

40

In paragraph 40(3) (time limit for self-assessment superseding determination), for “five years” substitute “ 3 years ”.

41

(1) Paragraph 43 (fraudulent or negligent conduct) is amended as follows.

(2) For “is attributable to fraudulent or negligent conduct on the part of” substitute “ was brought about carelessly or deliberately by ”.

(3) Accordingly, for the heading before the paragraph substitute “ Loss of tax brought about carelessly or deliberately ”.

42

(1) Paragraph 46 (general time limits for assessments) is amended as follows.

(2) In sub-paragraph (1), for “six years” substitute “ 4 years ”.

(3) For sub-paragraph (2) substitute—

(2) An assessment in a case involving a loss of tax brought about carelessly by the company (or a related person) may be made at any time not more than 6 years after the end of the accounting period to which it relates (subject to sub-paragraph (2A) and to any other provision of the Taxes Acts allowing a longer period). (2A) An assessment in a case involving a loss of tax— (a) brought about deliberately by the company (or a related person), (b) attributable to a failure by the company to comply with an obligation under paragraph 2, or (c) attributable to arrangements in respect of which the company has failed to comply with an obligation under section 309, 310 or 313 of the Finance Act 2004 (obligation of parties to tax avoidance schemes to provide information to Her Majesty's Revenue and Customs), may be made at any time not more than 20 years after the end of the accounting period to which it relates (subject to any provision of the Taxes Acts allowing a longer period). (2B) In this paragraph “related person”, in relation to a company, means— (a) a person acting on behalf of the company, or (b) a person who was a partner of the company at the relevant time.

43

In paragraph 51(1)(c) (relief in case of mistake in return), for “six years” substitute “ 4 years ”.

44

(1) Paragraph 53 (time limit for recovery of excessive payments etc) is amended as follows.

(2) In sub-paragraph (1), for “six year” substitute “ 4 year ”.

(3) In sub-paragraph (2), for “paragraph 46(2) (time limit for assessment in case of fraud or negligence)” substitute “ paragraph 46(2) and (2A) (time limit for assessment in case of loss of tax brought about carelessly or deliberately) ”.

45

In paragraph 55 (general time limit for making claims), for “six years” substitute “ 4 years ”.

46

In paragraph 61(2) (consequential claims etc arising out of certain Revenue amendments or assessments), for “fraudulent or negligent conduct on the part of” substitute “ a loss of tax brought about carelessly or deliberately by ”.

47

(1) Paragraph 65 (consequential claims) is amended as follows.

(2) In sub-paragraph (1), for “fraudulent or negligent conduct on the part of” substitute “ a loss of tax brought about carelessly or deliberately by ”.

(3) Accordingly, in the heading before the paragraph, for “fraud or negligence” substitute “ loss of tax brought about carelessly or deliberately ”.

FA 2002

48

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

ITEPA 2003

49

In section 711(2) (notice requiring officer of Revenue and Customs to give notice requiring tax return), for “5 years” substitute “ 3 years ”.

ITTOIA 2005

50

ITTOIA 2005 is amended as follows.

51

In section 301(3) (claims for repayment of tax payable in connection with sale with right to reconveyance), for “6 years” substitute “ 4 years ”.

52

In section 302(3) (claims for repayment of tax payable in connection with sale and leaseback transactions), for “6 years” substitute “ 4 years ”.

53

In section 840A(1) (claims for relief for backdated pensions charged on arising basis) (inserted by Schedule 7 to this Act), for “on or before the fifth anniversary of the normal self-assessment filing date for” substitute “ not more than 4 years after the end of ”.

ITA 2007

54

ITA 2007 is amended as follows.

55

In section 40(1)(a) (election for transfer of blind person's allowance), for “on or before the fifth anniversary of the normal self-assessment filing date for” substitute “ not more than 4 years after the end of ”.

56

In section 46(6)(b) (marriages and civil partnerships on or after 5 December 2005: election specifying person entitled to relief), for “on or before the fifth anniversary of the normal self-assessment filing date for” substitute “ not more than 4 years after the end of ”.

57

In section 53(4)(a) (notice in respect of transfer of unused relief), for “on or before the fifth anniversary of the normal self-assessment filing date for” substitute “ not more than 4 years after the end of ”.

58

In section 155 (claim for loss relief against miscellaneous income), in each of subsections (1) and (2), for “on or before the fifth anniversary of the normal self-assessment filing date for” substitute “ not more than 4 years after the end of ”.

59

(1) Section 237 (EIS relief: time limits for assessments) is amended as follows.

(2) In subsection (1)—

(a) omit “not”, and

(b) for “more than” substitute “ at any time not more than ”.

(3) In subsection (3)—

(a) for “36” substitute “ 36(1A) ”, and

(b) for “(fraudulent or negligent conduct)” substitute “ (loss of tax brought about deliberately etc) ”.

60

In section 372 (withdrawal or reduction of community investment tax relief), insert at the end—

(4) An assessment under this paragraph may be made at any time not more than 6 years after the end of the tax year for which the relief was obtained. (5) Subsection (4) is without prejudice to section 36(1A) of TMA 1970 (loss of tax brought about deliberately etc).

61

In section 668(7) (claim for relief for unremittable transfer proceeds), for “on or before the fifth anniversary of the normal self-assessment filing date for” substitute “ not more than 4 years after the end of ”.

62

In section 669(4) (claim for relief for unremittable transfer proceeds: section 630 profits), for “on or before the fifth anniversary of the normal self-assessment filing date for” substitute “ not more than 4 years after the end of ”.

Consequential amendments

63

In section 178(3) of FA 1993 (stop-loss and quota share insurance)—

(a) in paragraph (a), for “six years” substitute “ 4 years ”, and

(b) in paragraph (b), for “fraudulent or negligent conduct” substitute “ loss of tax brought about carelessly or deliberately ”.

64

In section 225(3)(b) of FA 1994 (stop-loss and quota share insurance), for “fraudulent or negligent conduct” substitute “ loss of tax brought about carelessly or deliberately ”.

65

In consequence of the preceding provisions of this Schedule, omit—

(a) section 149(4)(a)(i) and (ii) of FA 1989,

(b) paragraphs 4 and 6 of Schedule 21 to FA 1996,

(d) paragraph 18 of Schedule 19 to FA 1998, and

(e) section 91(6)(b) of FA 2007.

Saving

66

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

SCHEDULE 40

1

Schedule 24 to FA 2007 (penalties for errors) is amended as follows.

2

(1) Paragraph 1 (error in taxpayer's document) is amended as follows.

(2) In sub-paragraph (2)—

(a) for “P's” substitute “ a ”, and

(b) omit “by P”.

(3) In sub-paragraph (3), for “careless or deliberate (within the meaning of paragraph 3)” substitute “ careless (within the meaning of paragraph 3) or deliberate on P's part ”.

(4) In the Table, after the entry relating to income tax and capital gains tax: accounts in connection with a partnership return insert—

Income tax	Return under section 254 of FA 2004.

(5) In the Table, after the entries relating to VAT insert—

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.
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 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.
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.
Alcoholic liquor duties	Return under regulations under section 13, 49, 56 or 62 of the Alcoholic Liquor Duties Act 1979.
Alcoholic liquor duties	Statement or declaration in connection with a claim for repayment of duty under section 4(4) of FA 1995.
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.

(6) In the Table, in the last entry, in column 1, for “Income tax, capital gains tax, corporation tax or VAT” substitute “ Any of the taxes mentioned above ”.

(7) Insert at the end—

(5) In relation to a return under paragraph 2 of Schedule 2 to the Oil Taxation Act 1975, 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).

3

After that paragraph insert—

(1A) (1) A penalty is payable by a person (T) where— (a) another person (P) gives HMRC a document of a kind listed in the Table in paragraph 1, (b) the document contains a relevant inaccuracy, and (c) the inaccuracy was attributable to T deliberately supplying false information to P (whether directly or indirectly), or to T deliberately withholding information from P, with the intention of the document containing the inaccuracy. (2) A “relevant inaccuracy” is 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 (c) a false or inflated claim to repayment of tax. (3) A penalty is payable under this paragraph in respect of an inaccuracy whether or not P is liable to a penalty under paragraph 1 in respect of the same inaccuracy.

4

(1) Paragraph 2 (under-assessment by HMRC) is amended as follows.

(2) In sub-paragraph (1), for “tax” substitute “ a relevant tax ”.

(3) For sub-paragraph (3) substitute—

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

5

(1) Paragraph 3 (degrees of culpability) is amended as follows

(2) In sub-paragraph (1)—

(a) for “Inaccuracy in” substitute “ For the purposes of a penalty under paragraph 1, inaccuracy in ”, and

(b) after “is deliberate” (in both places) insert “ on P's part ”.

(3) In sub-paragraph (2), after “deliberate” insert “ on P's part ”.

6

In paragraph 4 (standard amount), after sub-paragraph (1) insert—

(1A) The penalty payable under paragraph 1A is 100% of the potential lost revenue.

7

In paragraph 5(1) (potential lost revenue: normal rule), after “document” insert “ (including an inaccuracy attributable to a supply of false information or withholding of information) ”.

8

(1) Paragraph 6 (potential lost revenue: multiple errors) is amended as follows.

(2) In sub-paragraphs (1) and (2), after “penalty” insert “ under paragraph 1 ”.

(3) In sub-paragraph (5), after “calculating” insert “ for the purposes of a penalty under paragraph 1 ”.

9

(1) Paragraph 9 (reductions for disclosure) is amended as follows.

(2) Before sub-paragraph (1) insert—

(A1) Paragraph 10 provides for reductions in penalties under paragraphs 1, 1A and 2 where a person discloses an inaccuracy, a supply of false information or withholding of information, or a failure to disclose an under-assessment.

(3) In sub-paragraph (1)—

(a) after “an inaccuracy” insert “ , a supply of false information or withholding of information, ”, and

(b) in paragraphs (b) and (c), for “or” substitute “ , the inaccuracy attributable to the supply or false information or withholding of information, or the ”.

(4) In sub-paragraph (2)(a), for “or under-assessment” substitute “ , the supply of false information or withholding of information, or the under-assessment ”.

10

In paragraph 11(1) (special reduction), after “1” insert “ , 1A ”.

11

(1) Paragraph 12 (interaction with other penalties) is amended as follows.

(2) In sub-paragraph (2), for the words after “other penalty” substitute “ incurred by P, or any surcharge for late payment of tax imposed on P, if the amount of the penalty or surcharge is determined by reference to the same tax liability. ”

(3) After sub-paragraph (3) insert—

(4) Where penalties are imposed under paragraphs 1 and 1A in respect of the same inaccuracy, the aggregate of the amounts of the penalties must not exceed 100% of the potential lost revenue.

(4) In the heading before paragraph 12, insert at the end “ and late payment surcharges ”.

12

(1) Paragraph 13 (assessment) is amended as follows.

(2) In sub-paragraph (1)—

(a) for “Where P” substitute “ Where a person ”,

(b) after “1” insert “ , 1A ”, and

(3) After that sub-paragraph insert—

(1A) A penalty under paragraph 1, 1A or 2 must be paid before the end of the period of 30 days beginning with the day on which notification of the penalty is issued.

(4) In sub-paragraph (3)—

(a) after “1” insert “ or 1A ”,

(b) for “within the” substitute “ before the end of the ”, and

(5) In sub-paragraph (4), for the words after “made” substitute

before the end of the period of 12 months beginning with— (a) the end of the appeal period for the assessment of tax which corrected the understatement, or (b) if there is no assessment within paragraph (a), the date on which the understatement is corrected.

13

In paragraph 15 (right of appeal)—

(a) for “P may” (in each place) substitute “ A person may ”, and

(b) for “by P” (in each place) substitute “ by the person ”.

14

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

15

In paragraph 18(3) (agency), after “penalty” insert “ under paragraph 1 or 2 ”.

16

(1) Paragraph 19 (companies: officers' liability) is amended as follows.

(2) In sub-paragraph (1), for the words from “of the company” to “as they” substitute “ of the company, the officer is liable to pay such portion of the penalty (which may be 100%) as HMRC ”.

(3) For sub-paragraph (5) substitute—

(5) Where HMRC have specified a portion of a penalty in a notice given to an officer under sub-paragraph (1)— (a) paragraph 11 applies to the specified portion as to a penalty, (b) the officer must pay the specified portion before the end of the period of 30 days beginning with the day on which the notice is given, (c) paragraph 13(2), (3) and (5) apply as if the notice were an assessment of a penalty, (d) a further notice may be given in respect of a portion of any additional amount assessed in a supplementary assessment in respect of the penalty under paragraph 13(6), (e) paragraphs 15(1) and (2), 16 and 17(1) to (3) and (6) apply as if HMRC had decided that a penalty of the amount of the specified portion is payable by the officer, and (f) paragraph 21 applies as if the officer were liable to a penalty.

17

In paragraph 21 (double jeopardy)—

(a) for “P is” substitute “ A person is ”,

(b) after “1” insert “ , 1A ”, and

18

In paragraph 22 (interpretation: introduction), for “26” substitute “ 27 ”.

19

After paragraph 23 insert—

(23A) “Tax”, without more, includes duty.

20

(1) Paragraph 28 (interpretation) is amended as follows.

(2) In paragraph (c) (meaning of “direct tax”), omit “and” after paragraph (ii) and after paragraph (iii) insert

and (iv) petroleum revenue tax,

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

(4) In paragraph (f), insert at the end “ against tax or to a payment of a corporation tax credit ”.

(5) After that paragraph insert—

(fa) “corporation tax credit” means— (i) an R&D tax credit under Schedule 20 to FA 2000, (ii) a land remediation tax credit or life assurance company tax credit under Schedule 22 to FA 2001, (iii) a tax credit under Schedule 13 to FA 2002 (vaccine research etc), (iv) a film tax credit under Schedule 5 to FA 2006, or (v) a first-year tax credit under Schedule A1 to CAA 2001,

21

In consequence of this Schedule the following provisions are omitted—

(a) paragraphs 8 and 9 of Schedule 2 to OTA 1975,

(b) in section 1(3B) of the Petroleum Revenue Tax Act 1980, “, 8 and 9”,

(i) section 247(1) and (2),

(ii) in section 248, in subsection (1), “account,” and “delivered,” (in both places) and, in subsection (2), “under section 247 above”, and

(iii) section 250(2),

(d) in FA 1994—

(i) section 8, and

(ii) paragraphs 12 and 13 of Schedule 7,

(e) paragraphs 18 to 20 of Schedule 5 to FA 1996,

(f) paragraphs 83ZA(4) and (5), 83F, 83L, 83R and 83X of Schedule 18 to FA 1998,

(g) section 108(2)(a) of FA 1999,

(h) paragraphs 98 to 100 of Schedule 6 to FA 2000,

(i) in Schedule 6 to FA 2001, paragraphs 7 to 9, and in paragraph 9A(5), paragraph (b) and the “or” before it,

(j) section 133(2) to (4) of FA 2002,

(k) in FA 2003—

(i) section 192(8), and

(ii) paragraph 8 of Schedule 10 to FA 2003, and

(l) section 295(4)(a) of FA 2004.

SCHEDULE 41

Failure to notify etc

1

A penalty is payable by a person (P) where P fails to comply with an obligation specified in the Table below (a “relevant obligation”).

Issue of invoice showing VAT by unauthorised person

2

(1) A penalty is payable by a person (P) where P makes an unauthorised issue of an invoice showing VAT.

(2) P makes an unauthorised issue of an invoice showing VAT if P—

(a) is an unauthorised person, and

(b) issues an invoice showing an amount as being value added tax or as including an amount attributable to value added tax.

(3) In sub-paragraph (2)(a) “an unauthorised person” means anyone other than—

(a) a person registered under VATA 1994,

(b) a body corporate treated for the purposes of section 43 of that Act as a member of a group,

(d) a person authorised to issue an invoice under regulations under paragraph 2(12) of Schedule 11 to that Act, or

(e) a person acting on behalf of the Crown.

(4) This paragraph has effect in relation to any invoice which—

(a) for the purposes of any provision made under subsection (3) of section 54 of VATA 1994 shows an amount as included in the consideration for any supply, and

(b) either fails to comply with the requirements of any regulations under that section or is issued by a person who is not for the time being authorised to do so for the purposes of that section,

as if the person issuing the invoice were an unauthorised person and that amount were shown on the invoice as an amount attributable to value added tax.

Putting product to use that attracts higher duty

3

(1) A penalty is payable by a person (“P”) where P does an act which enables HMRC to assess an amount as duty due from P under any of the provisions in the Table below (a “relevant excise provision”).

Provision under which assessment may be made	Subject-matter of provision
Part 2 of F(No. 2)A 2023 (alcohol duty), section 53(2)	Unauthorised repackaging of qualifying draught products.
Part 2 of F(No. 2)A 2023 (alcohol duty), section 78 (8)	Spirits: authorised use for certain purposes.
Part 2 of F(No. 2)A 2023 (alcohol duty), section 79 (2)	Spirits: imported goods not for human consumption.
HODA 1979 section 10(3)	Duty-free oil.
HODA 1979 section 13(1A)	Rebated heavy oil.
HODA 1979 section 13AB(1)(a) or (2)(a)	Kerosene.
HODA 1979 section 13AD(2)	Kerosene.
HODA 1979 section 13ZB(1)	Heating oil etc.
HODA 1979 section 14(4)	Light oil for use as furnace oil.
HODA 1979 section 14D(1)	Rebated biodiesel or bioblend.
HODA 1979 section 14F(2) HODA 1979 section 14F(8)	Rebated heavy oil or bioblend. Rebated heavy oil, biodiesel or bioblend
HODA 1979 section 20AAD(5)	Mixtures containing aqua methanol.
HODA 1979 section 23(1B)	Road fuel gas on which no duty paid.
HODA 1979 section 24(4A)	Duty-free and rebated oil.

(2) A penalty is payable by a person (“P”) where P supplies a product knowing that it will be used in a way which enables HMRC to assess an amount as duty due from another person under a relevant excise provision.

Handling goods subject to unpaid excise duty

4

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

(a) after the excise duty point for any goods which are chargeable with a duty of excise, P acquires possession of the goods or is concerned in carrying, removing, depositing, keeping or otherwise dealing with the goods, and

(b) at the time when P acquires possession of the goods or is so concerned, a payment of duty on the goods is outstanding and has not been deferred.

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

(a) after a charge to soft drinks industry levy has arisen in respect of chargeable soft drinks, P acquires possession of them or is concerned with carrying, removing, depositing, keeping or otherwise dealing with them, and

(b) at the time when P acquires possession of the chargeable soft drinks or is so concerned, a payment of soft drinks industry levy in respect of the chargeable soft drinks is due or payable and has not been paid.

(2) In this paragraph—

“excise duty point” has the meaning given by section 1 of F(No.2)A 1992 (and includes any excise duty point created or deemed to be created as a result of provision in regulations under section 45 of the Taxation (Cross-border Trade) Act 2018 (general regulation making power for excise duty purposes etc)), and

“goods” has the meaning given by section 1(1) of CEMA 1979.

“chargeable soft drinks” has the same meaning as in Part 2 of FA 2017.

Degrees of culpability

5

(1) A failure by P to comply with a relevant obligation is—

(a) “deliberate and concealed” if the failure is deliberate and P makes arrangements to conceal the situation giving rise to the obligation, and

(b) “deliberate but not concealed” if the failure is deliberate but P does not make arrangements to conceal the situation giving rise to the obligation.

(2) The making by P of an unauthorised issue of an invoice showing VAT is—

(a) “deliberate and concealed” if it is done deliberately and P makes arrangements to conceal it, and

(b) “deliberate but not concealed” if it is done deliberately but P does not make arrangements to conceal it.

(3) The doing by P of an act which enables HMRC to assess an amount of duty as due from P under a relevant excise provision , or to assess an amount of landfill tax as due from P under section 50A of FA 1996, is—

(a) “deliberate and concealed” if it is done deliberately and P makes arrangements to conceal it, and

(b) “deliberate but not concealed” if it is done deliberately but P does not make arrangements to conceal it.

(4) P's acquiring possession of, or being concerned in dealing with, goods on which a payment of duty is outstanding and has not been deferred or (as the case may be) chargeable soft drinks in respect of which a payment of soft drinks industry levy is due and payable and has not been paid is—

(a) “deliberate and concealed” if it is done deliberately and P makes arrangements to conceal it, and

(b) “deliberate but not concealed” if it is done deliberately but P does not make arrangements to conceal it.

Amount of penalty: standard amount

6

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

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

(a) for a deliberate and concealed failure, 100% of the potential lost revenue,

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

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

(a) for a deliberate and concealed failure, 150% of the potential lost revenue,

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

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

(a) for a deliberate and concealed failure, 200% of the potential lost revenue,

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

(5) Paragraph 6A explains the 3 categories of failure.

Potential lost revenue

7

(1) “The potential lost revenue” in respect of a failure to comply with a relevant obligation is as follows.

(1A) In the case of an obligation under section 7 of TMA 1970 which arises by virtue of subsection (1B) of that section, the potential lost revenue is so much of any income tax or capital gains tax to which P is liable in respect of the tax year in question as is, by reason of the failure to comply with the obligation—

(a) where the period specified in subsection (1C)(b)(ii) of that section applies and ends after the relevant date, unpaid at the end of that period, or

(b) in any other case, unpaid on the relevant date.

(1B) For the purposes of sub-paragraph (1A) the relevant date is—

(a) 31 January following the tax year, or

(b) if, after that date, HMRC refund a payment on account in respect of the tax year to P, the day after the refund is issued.

(2) In the case of a relevant obligation relating to income tax or capital gains tax and a tax year (not falling within sub-paragraph (1A)), the potential lost revenue is so much of any income tax or capital gains tax to which P is liable in respect of the tax year as by reason of the failure is unpaid on 31 January following the tax year.

(3) In the case of a relevant obligation relating to corporation tax and an accounting period, the potential lost revenue is (subject to sub-paragraph (4)) so much of any corporation tax to which P is liable in respect of the accounting period as by reason of the failure is unpaid 12 months after the end of the accounting period.

(4) In computing the amount of that tax no account shall be taken of any relief under section 458 of CTA 2010 (relief in respect of repayment etc of loan) which is deferred under subsection (5) of that section.

(4A) In the case of a relevant obligation relating to diverted profits tax, the potential lost revenue is the amount of diverted profits tax for which P would be liable at the end of the period of 6 months beginning immediately after the accounting period assuming—

(a) a charge to diverted profits tax had been imposed on P on the taxable diverted profits arising to P for the accounting period, and

(b) that tax was required to be paid before the end of that period of 6 months.

(4B) In the case of a relevant obligation relating to digital services tax and an accounting period, the potential lost revenue is so much of any digital services tax payable by members of the group for the accounting period as by reason of the failure is unpaid 12 months after the end of the accounting period.

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) In the case of a relevant obligation relating to value added tax, the potential lost revenue is the amount of the value added tax (if any) for which P is, or but for any exemption from registration would be, liable for the relevant period (see sub-paragraph (7)) ....

(7) “The relevant period” is—

(a) in relation to a failure to comply with paragraph 14(2) or (3) of Schedule 1 to VATA 1994 ... or paragraph 7(2) or (3) of Schedule 3A to that Act, the period beginning on the date of the change or alteration concerned and ending on the date on which HMRC received notification of, or otherwise became fully aware of, that change or alteration, and

(b) in relation to a failure to comply with an obligation under any other provision, the period beginning on the date with effect from which P is required in accordance with that provision to be registered and ending on the date on which HMRC received notification of, or otherwise became fully aware of, P's liability to be registered.

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8A) In the case of a relevant obligation under section 47 of FA 1996 (which relates to landfill tax), the potential lost revenue is the amount of tax (if any) for which P is liable for the period—

(a) beginning with the date with effect from which P is required in accordance with that section to be registered or (as the case may be) from which the Commissioners may register P under that section, and

(b) ending with the day on which HMRC received notification of, or otherwise became fully aware of, P's liability to be registered or (as the case may be) the Commissioners' power to register P.

(9) In the case of a relevant obligation under any provision relating to insurance premium tax, plastic packaging tax, aggregates levy, climate change levy ... or air passenger duty, the potential lost revenue is the amount of the tax (if any) for which P is liable for the period—

(a) beginning on the date with effect from which P is required in accordance with that provision to be registered, and

(b) ending on the date on which HMRC received notification of, or otherwise became fully aware of, P's liability to be registered.

(10) In the case of a failure to comply with a relevant obligation relating to any other tax, the potential lost revenue is the amount of any tax which is unpaid by reason of the failure.

8

In the case of the making of an unauthorised issue of an invoice showing VAT, the potential lost revenue is the amount shown on the invoice as value added tax or the amount to be taken as representing value added tax.

9

In the case of—

(a) the doing of an act which enables HMRC to assess an amount of duty as due under a relevant excise provision, or

(b) supplying a product knowing that it will be used in a way which enables HMRC to assess an amount as duty due from another person under a relevant excise provision,

the potential lost revenue is the amount of the duty which may be assessed as due.

10

In the case of acquiring possession of, or being concerned in dealing with, goods the payment of duty on which is outstanding and has not been deferred or (as the case may be) chargeable soft drinks in respect of which a payment of soft drinks industry levy is due and payable and has not been paid, the potential lost revenue is an amount equal to the amount of duty due on the goods.

11

(1) In calculating potential lost revenue in respect of a relevant act or failure on the part of P no account is to 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).

(2) In this Schedule “a relevant act or failure” means—

(a) a failure to comply with a relevant obligation,

(b) the making of an unauthorised issue of an invoice showing VAT,

(c) the doing of an act which enables HMRC to assess an amount of duty as due under a relevant excise provision or supplying a product knowing that it will be used in a way which enables HMRC to assess an amount as duty due from another person under a relevant excise provision, or

(d) acquiring possession of, or being concerned in dealing with, goods the payment of duty on which is outstanding and has not been deferred or (as the case may be) chargeable soft drinks in respect of which a payment of soft drinks industry levy is due and payable and has not been paid.

Reductions for disclosure

12

(1) Paragraph 13 provides for reductions in penalties—

(a) under paragraph 1 where P discloses a relevant failure that involves a domestic matter, and

(b) under paragraphs 2 to 4 where P discloses a relevant act or failure.

(1A) Paragraph 13A provides for reductions in penalties under paragraph 1 where P discloses a relevant failure that involves an offshore matter or an offshore transfer.

(1B) Sub-paragraph (2) applies where P discloses—

(a) a relevant failure that involves a domestic matter,

(b) a non-deliberate relevant failure that involves an offshore matter, or

(2) P discloses the relevant act or failure by—

(a) telling HMRC about it,

(b) giving HMRC reasonable help in quantifying the tax unpaid by reason of it, and

(2A) Sub-paragraph (2B) applies where P discloses—

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

(b) a relevant failure that involves an offshore transfer.

(2B) P discloses the failure by—

(a) telling HMRC about it,

(b) giving HMRC reasonable help in quantifying the tax unpaid by reason of it,

(d) providing HMRC with additional information.

(2C) The Treasury must make regulations setting out what is meant by “additional information” for the purposes of sub-paragraph (2B)(d).

(2D) Regulations under sub-paragraph (2C) are to be made by statutory instrument.

(2E) An instrument containing regulations under sub-paragraph (2C) is subject to annulment in pursuance of a resolution of the House of Commons.

(3) Disclosure of a relevant act or failure—

(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 relevant act or failure, and

(b) otherwise, is “prompted”.

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

(5) Paragraph 6A(4) to (5) applies to determine whether a failure involves an offshore matter, an offshore transfer or a domestic matter for the purposes of this paragraph.

(6) In this paragraph “relevant failure” means a failure to comply with a relevant obligation.

13

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

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

(3) Where the Table shows a different minimum for case A and case B—

(a) the case A minimum applies if—

(i) the penalty is one under paragraph 1, and

(ii) HMRC become aware of the failure less than 12 months after the time when the tax first becomes unpaid by reason of the failure, and

(b) otherwise, the case B minimum applies.

Special reduction

14

(1) If HMRC think it right because of special circumstances, they may reduce a penalty under any of paragraphs 1 to 4.

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

(a) ability to pay, or

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

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

(a) staying a penalty, and

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

Interaction with other penalties and late payment surcharges

15

(1) The amount of a penalty for which P is liable under any of paragraphs 1 to 4 shall be reduced by the amount of any other penalty incurred by P, or any surcharge for late payment of tax imposed on P, if the amount of the penalty or surcharge is determined by reference to the same tax liability.

(1A) In sub-paragraph (1) “any other penalty” does not include a penalty under Part 4 of FA 2014 (penalty where corrective action not taken after follower notice etc) or Schedule 22 to FA 2016 (asset-based penalty).

(2) If P is liable to a penalty under section 9 of FA 1994 in respect of a failure to comply with a relevant obligation, the amount of any penalty payable under paragraph 1 in respect of the failure is to be reduced by the amount of the penalty under that section.

(2A) If P has incurred a penalty under regulations under section 8JA (1) of TPDA 1979 (tracing and security regulations) in respect of conduct for which P is liable to a penalty under paragraph 4(1), the amount of the penalty under paragraph 4(1) is to be reduced by the amount of the penalty under those regulations.

(3) Where penalties are imposed under paragraph 3(1) and (2) in respect of the same act or use, the aggregate of the amounts of the penalties must not exceed 100% of the potential lost revenue.

Assessment

16

(1) Where P becomes liable for a penalty under any of paragraphs 1 to 4 HMRC shall—

(a) assess the penalty,

(b) notify P, and

(2) A penalty under any of paragraphs 1 to 4 must be paid before the end of the period of 30 days beginning with the day on which notification of the penalty is issued.

(3) An assessment—

(a) shall be treated for procedural purposes in the same way as an assessment to tax (except in respect of a matter expressly provided for by this Act),

(b) may be enforced as if it were an assessment to tax, and

(4) An assessment of a penalty under any of paragraphs 1 to 4 must be made before the end of the period of 12 months beginning with—

(a) the end of the appeal period for the assessment of tax unpaid by reason of the relevant act or failure in respect of which the penalty is imposed, or

(b) if there is no such assessment, the date on which the amount of tax unpaid by reason of the relevant act or failure is ascertained.

(5) In sub-paragraph (4)(a) “appeal period” means the period during which—

(a) an appeal could be brought, or

(b) an appeal that has been brought has not been determined or withdrawn.

(6) Subject to sub-paragraph (4), a supplementary assessment may be made in respect of a penalty if an earlier assessment operated by reference to an underestimate of potential lost revenue.

(7) The references in this paragraph to “an assessment to tax” are, in relation to a penalty under paragraph 2, a demand for recovery.

Appeal

17

(1) P may appeal against a decision of HMRC that a penalty is payable by P.

(2) P may appeal against a decision of HMRC as to the amount of a penalty payable by P.

18

(1) An appeal shall be treated in the same way as an appeal against an assessment to the tax concerned (including by the application of any provision about bringing the appeal by notice to HMRC, about HMRC review of the decision or about determination of the appeal by the First-tier Tribunal or the Upper Tribunal).

(2) Sub-paragraph (1) does not apply—

(a) so as to require P to pay a penalty before an appeal against the assessment of the penalty is determined, or

(b) in respect of any other matter expressly provided for by this Act.

19

(1) On an appeal under paragraph 17(1) the tribunal may affirm or cancel HMRC's decision.

(2) On an appeal under paragraph 17(2) the tribunal may—

(a) affirm HMRC's decision, or

(b) substitute for HMRC's decision another decision that HMRC had power to make.

(3) If the tribunal substitutes its decision for HMRC's, the tribunal may rely on paragraph 14—

(a) to the same extent as HMRC (which may mean applying the same percentage reduction as HMRC to a different starting point), or

(b) to a different extent, but only if the tribunal thinks that HMRC's decision in respect of the application of paragraph 14 was flawed.

(4) In sub-paragraph (3)(b) “flawed” means flawed when considered in the light of the principles applicable in proceedings for judicial review.

(5) In this paragraph, “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 18(1)).

Reasonable excuse

20

(1) Liability to a penalty under any of paragraphs 1, 2, 3(1) and 4 does not arise in relation to an act or failure which is not deliberate if P satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that there is a reasonable excuse for the act or failure.

(2) For the purposes of sub-paragraph (1)—

(a) an insufficiency of funds is not a reasonable excuse unless attributable to events outside P's control,

(b) where P relies on any other person to do anything, that is not a reasonable excuse unless P took reasonable care to avoid the relevant act or failure, and

(c) where P had a reasonable excuse for the relevant act or failure but the excuse has ceased, P is to be treated as having continued to have the excuse if the relevant act or failure is remedied without unreasonable delay after the excuse ceased.

Agency

21

(1) In paragraph 1 the reference to a failure by P includes a failure by a person who acts on P's behalf; but P is not liable to a penalty in respect of any failure by P's agent where P satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that P took reasonable care to avoid the failure.

(2) In paragraph 2 the reference to the making by P of an unauthorised issue of an invoice showing VAT includes the making of such an unauthorised issue by a person who acts on P's behalf; but P is not liable to a penalty in respect of any action by P's agent where P satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that P took reasonable care to avoid it.

(3) In paragraph 3(1) the reference to the doing by P of an act which enables HMRC to assess an amount as duty due from P under a relevant excise provision includes the doing of such an act by a person who acts on P's behalf; but P is not liable to a penalty in respect of any action by P's agent where P satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that P took reasonable care to avoid it.

(4) In paragraph 4(1) the reference to P acquiring possession of, or being concerned in dealing with, goods the payment of duty on which is outstanding and has not been deferred includes a person who acts on P's behalf doing so; but P is not liable to a penalty in respect of any action by P's agent where P satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that P took reasonable care to avoid it.

(5) In paragraph 4(1A) the reference to P acquiring possession of, or being concerned in dealing with, chargeable soft drinks in respect of which a payment of soft drinks industry levy is payable but has not been paid includes a person who acts on P's behalf in doing so; but P is not liable to a penalty in respect of any action by P's agent where P satisfies HMRC or (on appeal) the First-tier Tribunal that P took reasonable care to avoid it.

Companies: officers' liability

22

(1) Where a penalty under any of paragraphs 1, 2, 3(1) and 4 is payable by a company for a deliberate act or failure which was attributable to an officer of the company, the officer is liable to pay such portion of the penalty (which may be 100%) as HMRC may specify by written notice to the officer.

(2) Sub-paragraph (1) does not allow HMRC to recover more than 100% of a penalty.

(3) In the application of sub-paragraph (1) to a body corporate other than a limited liability partnership “officer” means—

(a) a director (including a shadow director within the meaning of section 251 of the Companies Act 2006 (c. 46)), ...

(aa) a manager, and

(b) a secretary.

(3A) In the application of sub-paragraph (1) to a limited liability partnership, “officer” means a member.

(4) In the application of sub-paragraph (1) in any other case “officer” means—

(a) a director,

(b) a manager,

(d) any other person managing or purporting to manage any of the company's affairs.

(5) Where HMRC have specified a portion of a penalty in a notice given to an officer under sub-paragraph (1)—

(a) paragraph 14 applies to the specified portion as to a penalty,

(b) the officer must pay the specified portion before the end of the period of 30 days beginning with the day on which the notice is given,

(d) a further notice may be given in respect of a portion of any additional amount assessed in a supplementary assessment in respect of the penalty under paragraph 16(6),

(e) paragraphs 17 to 19 apply as if HMRC had decided that a penalty of the amount of the specified portion is payable by the officer, and

(f) paragraph 23 applies as if the officer were liable to a penalty.

(6) In this paragraph “company” means any body corporate or unincorporated association, but does not include a partnership, a local authority or a local authority association.

Double jeopardy

23

P is not liable to a penalty under any of paragraphs 1 to 4 in respect of a failure or action in respect of which P has been convicted of an offence.

Interpretation

24

(1) This paragraph applies for the construction of this Schedule

(2) “HMRC” means Her Majesty's Revenue and Customs.

(3) “Tax”, without more, includes duty.

(4) An expression used in relation to value added tax has the same meaning as in VATA 1994.

Consequential repeals

25

In consequence of this Schedule the following provisions are omitted—

(a) in TMA 1970—

(i) section 7(8), and

(ii) in the table in section 98, in the second column, the entry relating to section 55 of FA 2004,

(b) section 170A of CEMA 1979,

Reading this document does not replace reading the official text published on legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. We assume no responsibility for any inaccuracies arising from the conversion of the original CLML XML to this format.

This text is published under legislation.gov.uk's own terms of reuse, not a Legalize or public-domain licence. legislation.gov.uk
Open Government Licence v3.0 (attribution required)
© Crown and database right. Derived from content available under the Open Government Licence v3.0 from legislation.gov.uk.