Finance (No. 3) Act 2010

Amendment of Chapter 8 (the “tested expense amount” and “tested income amount”)

25

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

Amendments of Chapter 9 (the “available amount”)

26

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

27

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

28

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

Amendments of Chapter 10 (other interpretative provisions)

29

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

30

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

31

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

32

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

33

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

Amendment of transitional provision

34

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

Amendments of index of defined expressions

35

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

Commencement

36

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

Election to defer the application of some of the amendments made by this Schedule

37

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

SCHEDULE 6

Introductory

1

Chapter 4 of Part 5 of CTA 2010 (claims for group relief) is amended as follows.

Ability to claim group relief where link company established in the EEA

2

In section 129 (overview of Chapter), in subsection (2), for “Sections 130 to 134” substitute “ Sections 130 to 134A ”.

3

In section 130(2) (group relief claims on amounts surrenderable under Chapter 2), in Requirement 3—

• (a) in paragraph (c), for “section 133(1), (3) and (4)” substitute “ section 133(1) and (3) to (8) ”, and

• (b) in paragraph (d), for “section 133(2), (3) and (4)” substitute “ section 133(2) to (8) ”.

4

• (1) Section 133 (conditions to be met for consortium claims for group relief) is amended as follows.

• (2) In subsection (1)—

• (a) omit the “and” at the end of paragraph (e), and

• (b) for paragraph (f) substitute—

(f) the surrendering company and the claimant company are both UK related, and (g) the link company is UK related or established in the EEA.

• (3) In subsection (2)—

• (a) omit the “and” at the end of paragraph (e), and

• (b) for paragraph (f) substitute—

(f) the surrendering company and the claimant company are both UK related, and (g) the link company is UK related or established in the EEA.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

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

6

• (1) Section 146 (maximum amount of group relief in consortium claims) is amended as follows.

• (2) In subsection (3)—

• (a) omit the “and” at the end of paragraph (a), and

• (b) after that paragraph insert—

(aa) assuming that the link company was UK related, and

.

• (3) In subsection (6), at the end insert “ , assuming that the link company was UK related. ”

• (4) In subsection (8)—

• (a) omit the “and” at the end of the definition of “consortium claim”, and

• (b) at the end insert

, and UK related”, in relation to a company, has the meaning given by section 134.

Limitations on group relief based on proportion of voting power held by company

7

• (1) Section 143 (which makes provision limiting the amount of group relief that is available in cases where the surrendering company is owned by a consortium) is amended as follows.

• (2) In subsection (3)—

• (a) omit the “and” at the end of paragraph (b), and

• (b) at the end of paragraph (c) insert

, and (d) the proportion of the voting power in the surrendering company that is directly possessed by the claimant company.

• (3) In subsection (4)(a), for “paragraphs (a) to (c)” substitute “ paragraphs (a) to (d) ”.

8

• (1) Section 144 (which makes provision limiting the amount of group relief that is available in cases where the claimant company is owned by a consortium) is amended as follows.

• (2) In subsection (3)—

• (a) omit the “and” at the end of paragraph (b), and

• (b) at the end of paragraph (c) insert

, and (d) the proportion of the voting power in the claimant company that is directly possessed by the surrendering company.

• (3) In subsection (4)(a), for “paragraphs (a) to (c)” substitute “ paragraphs (a) to (d) ”.

Limitations on group relief where arrangements preventing control are in place

9

After section 146 insert—

(146A) (1) This section applies if— (a) the claimant company makes a claim for group relief based on consortium condition 1, (b) it is the surrendering company that is owned by the consortium, and (c) during any part of the overlapping period, arrangements within subsection (3) are in place which enable a person to prevent the claimant company, either alone or together with one or more other companies that are members of the consortium, from controlling the surrendering company. (2) This section also applies if— (a) the claimant company makes a claim for group relief based on consortium condition 2, and (b) during any part of the overlapping period, arrangements within subsection (3) are in place which enable a person to prevent the link company, either alone or together with one or more other companies that are members of the consortium, from controlling the surrendering company. (3) Arrangements are within this subsection if— (a) the company, either alone or together with one or more other companies that are members of the consortium, would control the surrendering company, but for the existence of the arrangements, and (b) the arrangements form part of a scheme the main purpose, or one of the main purposes, of which is to enable the claimant company to obtain a tax advantage under this Chapter. (4) The group relief to be given on the claim is to be determined as if the surrenderable amount for the overlapping period were 50% of what it would be but for this section (see section 139(2) to determine the surrenderable amount for the overlapping period). (5) In this section “the overlapping period” is to be read in accordance with section 142. (6) Section 1139 (“tax advantage”) applies for the purposes of this section. (146B) (1) This section applies if— (a) the claimant company makes a claim for group relief based on consortium condition 1, (b) it is the claimant company that is owned by the consortium, and (c) during any part of the overlapping period, arrangements within subsection (3) are in place which enable a person to prevent the surrendering company, either alone or together with one or more other companies that are members of the consortium, from controlling the claimant company. (2) This section also applies if— (a) the claimant company makes a claim for group relief based on consortium condition 3, and (b) during any part of the overlapping period, arrangements within subsection (3) are in place which enable a person to prevent the link company, either alone or together with one or more other companies that are members of the consortium, from controlling the claimant company. (3) Arrangements are within this subsection if— (a) the company, either alone or together with one or more other companies that are members of the consortium, would control the claimant company, but for the existence of the arrangements, and (b) the arrangements form part of a scheme the main purpose, or one of the main purposes, of which is to enable the claimant company to obtain a tax advantage under this Chapter. (4) The group relief to be given on the claim is to be determined as if the claimant company's total profits for the overlapping period were 50% of what they would be but for this section (see section 140(2) to determine the total profits for the overlapping period). (5) In this section “the overlapping period” is to be read in accordance with section 142. (6) Section 1139 (“tax advantage”) applies for the purposes of this section.

Commencement

10

The amendments made by this Schedule have effect in relation to accounting periods beginning on or after 12 July 2010.

SCHEDULE 7

1

CAA 2001 is amended as follows.

2

In section 39 (first-year allowances available for certain types of qualifying expenditure only), at the appropriate place in the list insert—

section 45DA	expenditure on zero-emission goods vehicles,

.

3

After section 45D insert—

(45DA) (1) Expenditure is first-year qualifying expenditure if— (a) it is incurred in the period of 5 years beginning with the relevant date, (b) it is incurred on the provision of a zero-emission goods vehicle, (c) the vehicle is unused and not second-hand, (d) the vehicle is registered, and (e) the expenditure is not excluded by section 46 (general exclusions). (2) For the purposes of subsection (1)(d) it does not matter whether the vehicle is first registered before or after the expenditure is incurred. (3) In this section— - “goods vehicle” means a mechanically propelled road vehicle which is of a design primarily suited for the conveyance of goods or burden of any description; - “the relevant date” means— 1. in the case of expenditure incurred by a person within the charge to corporation tax, 1 April 2010, and 2. in the case of expenditure incurred by a person within the charge to income tax, 6 April 2010; - “zero-emission goods vehicle” means a goods vehicle which cannot in any circumstances emit CO₂ by being driven. (4) The Treasury may by order amend this Chapter so as to provide for specified descriptions of vehicles to be treated, or not to be treated, as goods vehicles for the purposes of this section. (5) This section is subject to section 45DB. (45DB) (1) Expenditure incurred by a person is not first-year qualifying expenditure under section 45DA if it is within subsection (2), (4) or (6). (2) Expenditure is within this subsection if, at the time a claim is made under section 3 for a section 45DA allowance in respect of the expenditure, the person who incurred the expenditure is, or forms part of, an undertaking within subsection (3). (3) An undertaking is within this subsection if one or both of the following conditions are met— (a) it is reasonable to assume that the undertaking would be regarded as a firm in difficulty for the purposes of the Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty (2004/C 244/02); (b) the undertaking is subject to an outstanding recovery order made by virtue of Article 108(2) of the Treaty on the Functioning of the European Union (Commission Decision declaring aid illegal and incompatible with the common market). (4) Expenditure is within this subsection if it is incurred for the purposes of a qualifying activity— (a) in the fishery or aquaculture sector, as covered by Council Regulation (EC) No 104/2000, or (b) relating to the management of waste of undertakings. (5) In subsection (4)(b) the reference to waste of undertakings does not include waste of the person who incurred the expenditure or of any other person forming part of the same undertaking as that person. (6) Expenditure is within this subsection to the extent that it is taken into account for the purposes of a relevant grant, or relevant payment, made towards that expenditure. (7) A grant or payment is relevant if it is— (a) a notified State aid, other than an allowance under this Part, or (b) a grant or subsidy, other than a notified State aid, which the Treasury by order declares to be relevant for the purposes of the withholding of a section 45DA allowance. (8) If a relevant grant or relevant payment towards the expenditure is made after the making of a section 45DA allowance, the allowance is to be withdrawn to that extent. (9) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (8). (10) Any such assessment or adjustment is not out of time if it is made within 3 years of the end of the chargeable period in which the grant or payment was made. (11) In this section— - “General Block Exemption Regulation” means Commission Regulation (EC) No. 800/2008 (General block exemption Regulation); - “management” and “waste” have the meaning given by Article 1 of Directive 2006/12/EC of the European Parliament and of the Council; - “notified State aid” means a State aid notified to and approved by the European Commission; - “section 45DA allowance” means a first year allowance in respect of expenditure that is first-year qualifying expenditure under section 45DA; - “undertaking” means— 1. an autonomous enterprise, or 2. an enterprise (not within paragraph (a)) and its partner enterprises (if any) and its linked enterprises (if any), (12) The Treasury may by order make such provision amending this section as appears to them appropriate for the purpose of giving effect to any future amendments of or instrument replacing— (a) the General Block Exemption Regulation, (b) the Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty (2004/C 244/02), (c) Council Regulation (EC) No 104/2000, (d) Directive 2006/12/EC of the European Parliament and of the Council, or (e) the Treaty on the Functioning of the European Union.

4

In section 46 (general exclusions applying to first-year qualifying expenditure), in subsection (1), at the appropriate place in the list insert—

section 45DA	(expenditure on zero-emission goods vehicles),

.

5

• (1) Section 52 (first-year allowances) is amended as follows.

• (2) In subsection (3), at the appropriate place in the Table insert—

Expenditure qualifying under section 45DA (expenditure on zero-emission goods vehicles)	100%

• (3) In subsection (5)—

• (a) omit the “and” at the end of the entry for section 210, and

• (b) after that entry insert—

section 212T (cap on first-year allowances: zero-emission goods vehicles), and

.

6

After section 212S insert—

(212T) (1) A section 45DA allowance is not available in respect of expenditure (“the current expenditure”) incurred by a person (“the investor”)— (a) if section 45DA allowances have previously been made in respect of undertaking expenditure of 85 million euros, or (b) (where paragraph (a) does not apply) if, and to the extent that, the aggregate of— (i) the undertaking expenditure in respect of which section 45DA allowances have previously been made, and (ii) the current expenditure, exceeds 85 million euros. (2) “Undertaking expenditure” means— (a) expenditure incurred by the investor, (b) if the investor is a partnership, expenditure incurred (at any time) by a person who is a partner enterprise forming part of the investor at the time the current expenditure is incurred, and (c) if the investor and one or more other persons together form, or have at any time formed, an undertaking, expenditure which is— (i) incurred by that undertaking, or (ii) incurred by any of those other persons at a relevant time. (3) Expenditure is incurred by a person at a “relevant time” if it is incurred— (a) at a time when the investor and the person are part of the same undertaking, or (b) at a time before the investor and the person became part of the same undertaking (or, if they became part of the same undertaking on more than one occasion, before the last time). (4) For the purposes of subsection (1), expenditure incurred in a currency other than the euro is to be converted into its equivalent in euros using the spot rate of exchange for the day on which the expenditure is incurred. (5) The Treasury may by regulations increase the amount specified in subsection (1)(a) and (b). (6) In this section— - “section 45DA allowance” means a first-year allowance in respect of expenditure that is first-year qualifying expenditure under section 45DA; - “undertaking” means— 1. an autonomous enterprise, or 2. an enterprise (not within paragraph (a)) and its partner enterprises (if any) and its linked enterprises (if any), and “enterprise”, “autonomous enterprise”, “partner enterprise” and “linked enterprise” have the meaning given by Annex 1 to the Commission Regulation (EC) No. 800/2008 (General block exemption Regulation).

7

The amendments made by this Schedule have effect—

• (a) for the purposes of corporation tax, for chargeable periods ending on or after 1 April 2010, and

• (b) for the purposes of income tax, for chargeable periods ending on or after 6 April 2010.

SCHEDULE 8

Input tax

1

• (1) Section 24 of VATA 1994 (input tax and output tax) is amended as follows.

• (2) Omit subsection (3) (accommodation used for domestic purposes by company director etc).

• (3) In subsection (5) (goods or services used partly for business purposes), for the words after “other purposes” substitute

— (a) VAT on supplies, acquisitions and importations shall be apportioned so that so much as is referable to the taxable person's business purposes is counted as that person's input tax, and (b) the remainder of that VAT (“the non-business VAT”) shall count as that person's input tax only to the extent (if any) provided for by regulations under subsection (6)(e).

• (4) After that subsection insert—

(5A) For the purposes of subsections (1) and (5), a relevant asset held for the purposes of a business carried on or to be carried on by a taxable person is not, in any circumstances, to be regarded as used or to be used for the purposes of the business if, and to the extent that, it is used or to be used for that person's private use or the private use of that person's staff. (5B) In subsection (5A) “relevant asset” means— (a) any interest in land, (b) any building or part of a building, (c) any civil engineering work or part of such a work, (d) any goods incorporated or to be incorporated in a building or civil engineering work (whether by being installed as fixtures or fittings or otherwise), (e) any ship, boat or other vessel, or (f) any aircraft.

• (5) In subsection (6) (powers to make regulations), after paragraph (d) insert—

(e) in cases where an apportionment is made under subsection (5), for the non-business VAT to be counted as the taxable person's input tax for the purposes of any provision made by or under section 26 in such circumstances, to such extent and subject to such conditions as may be prescribed.

• (6) After that subsection insert—

(6A) Regulations under subsection (6) may contain such supplementary, incidental, consequential and transitional provisions as appear to the Commissioners to be necessary or expedient.

• (7) Omit subsection (7) (definition of “director” etc).

• (8) The amendments made by sub-paragraphs (2), (4) and (7) come into force on 1 January 2011 and apply in relation to VAT incurred by a taxable person on or after that date.

• (9) For the purposes of sub-paragraph (8), the VAT “incurred” by a person in respect of an asset is—

• (a) VAT on the supply to the person of the asset,

• (b) VAT on the supply to the person of any goods or services the expenditure on which constitutes expenditure related to the asset,

• (c) VAT on the acquisition by the person from another member State of the asset or anything comprised in it, and

• (d) VAT paid or payable by the person on the importation of the asset or anything comprised in it from a place outside the member States;

and VAT within paragraphs (a) to (d) is incurred at the time of the supply, acquisition or importation in question.

2

In section 26 of VATA 1994 (input tax allowable under section 25), in subsection (4) for “and supplementary” substitute “ , supplementary, consequential and transitional ”.

Non-business use of certain assets not to be treated as supply of services

3

• (1) In paragraph 5 of Schedule 4 to VATA 1994 (matters to be treated as supply of goods or services), after sub-paragraph (4) (non-business use of business asset treated as supply of services) insert—

(4A) Sub-paragraph (4) does not apply (despite paragraph 9(1)) to— (a) any interest in land, (b) any building or part of a building, (c) any civil engineering work or part of such a work, (d) any goods incorporated or to be incorporated in a building or civil engineering work (whether by being installed as fixtures or fittings or otherwise), (e) any ship, boat or other vessel, or (f) any aircraft.

• (2) This paragraph comes into force on 1 January 2011.

• (3) This paragraph does not apply in relation to an asset in respect of which the person in question or any of that person's predecessors incurred VAT before 1 January 2011.

• (4) But, where VAT is incurred by such a person before that date in respect of the asset, VAT incurred by such a person on or after that date in respect of the asset is not to be treated as referable to that person's business purposes by virtue of paragraph 5(4) and (6) of Schedule 4 to VATA 1994 if, and to the extent that, the asset is used or to be used for that person's private use or the private use of that person's staff, or more generally for purposes other than those of that person's business.

• (5) For the purposes of this paragraph—

• “asset” means anything falling within any of paragraphs (a) to (f) of paragraph 5(4A) of Schedule 4 to VATA 1994 (as inserted by sub-paragraph (1) above);

• “the person in question” means the person carrying on the business referred to in paragraph 5(4) of that Schedule;

• “predecessor” has the same meaning as in paragraph 5 of that Schedule;

and references to the VAT “incurred” by a person in respect of an asset are to be construed in accordance with paragraph 1(9).

Output tax charge where credit attributable to purported paragraph 5(4) supply

4

• (1) Sub-paragraph (2) applies where—

• (a) a person carrying on a business or any of that person's predecessors has been allowed credit under sections 25 and 26 of VATA 1994 for input tax on the basis that the input tax is attributable to a thing done or to be done which is or would be a paragraph 5(4) supply,

• (b) some or all of that credit was allowed before 22 January 2010,

• (c) disregarding sub-paragraph (2), the thing done or to be done is not or would not be a paragraph 5(4) supply, and

• (d) the credit allowed as mentioned in paragraph (a) is not reversed in full.

• (2) The thing done or to be done is to be treated for the purposes of VATA 1994 as if it were or would be a paragraph 5(4) supply.

• (3) But sub-paragraph (2) does not confer on the person allowed credit as mentioned in sub-paragraph (1)(a) any entitlement to that credit under sections 25 and 26 of that Act.

• (4) For the purposes of sub-paragraph (1) credit for input tax is “allowed” under sections 25 and 26 of VATA 1994 to the extent that the credit is claimed, and the claim is satisfied by one or more of the following—

• (a) the deduction of input tax under section 25(2) of that Act from any output tax that is due to the Commissioners;

• (b) a payment by the Commissioners in respect of the credit under section 25(3) of that Act;

• (c) the setting off of the credit against a sum payable to the Commissioners, whether under section 81(3) of that Act or section 130 of FA 2008 or otherwise.

• (5) In this paragraph—

• “paragraph 5(4) supply” means a supply under paragraph 5(4) of Schedule 4 to VATA 1994 (goods held or used for the purposes of a business which are put to private use etc);

• “predecessor” has the same meaning as in paragraph 5 of that Schedule.

• (6) This paragraph is to be treated as having always had effect.

SCHEDULE 9

Part 1 — Corporation tax

Amendments of sections 101 to 104

1

FA 2009 is amended as follows.

2

In section 101 (late payment interest on sums due to HMRC), omit subsection (2)(a).

3

• (1) Section 102 (repayment interest on sums to be paid by HMRC) is amended as follows.

• (2) Omit subsection (2)(a).

• (3) In subsection (4), before paragraph (a) insert—

(za) Part A1 makes special provision as to the amount of corporation tax on which repayment interest is calculated,

.

4

After section 103 insert—

(103A) Schedule 54A makes special provision as to certain amounts of late payment interest and repayment interest.

5

In section 104(1), for “103” substitute “ 103A (and Schedules 53 to 54A) ”.

Amendments of Schedule 53

6

Schedule 53 to FA 2009 (late payment interest) is amended as follows.

7

In Part 1 (special provision as to amount carrying late payment interest), after paragraph 2 insert—

(2A) (1) This paragraph applies where— (a) a company has profits arising in an accounting period (“the earlier period”), (b) there is for a later accounting period (“the later period”) a non-trading deficit on the company's loan relationships, (c) as a result of a claim under section 389(1) or 459(1)(b) of CTA 2009, the whole or part of the deficit for the later period is set off against the profits of the earlier period, and (d) if the claim had not been made, there would be an amount or an additional amount of corporation tax for the earlier period which would carry late payment interest. (2) For the purposes of section 101, the amount mentioned in sub-paragraph (1)(d) is to be taken to be an amount that is due and payable as corporation tax for the earlier period. (3) But late payment interest which is payable by virtue of sub-paragraph (2) runs only until the day following the expiry of 9 months from the end of the later period. (2B) (1) This paragraph applies where— (a) a company has profits arising in an accounting period (“the earlier period”), (b) the company incurs a loss in a later accounting period (“the later period”), (c) on a claim under section 37 of CTA 2010, the whole or any part of the loss incurred in the later period has been set off (whether under section 37 or 42 of that Act) for the purposes of corporation tax against the profits of the earlier period, (d) the earlier period does not fall wholly within the period of 12 months immediately preceding the later period, and (e) if the claim had not been made, there would be an amount or additional amount of corporation tax for the earlier period which would carry late payment interest. (2) For the purposes of section 101, the amount mentioned in sub-paragraph (1)(e) is to be taken to be an amount that is due and payable as corporation tax for the earlier period. (3) But late payment interest which is payable by virtue of sub-paragraph (2) runs only until the day following the expiry of 9 months from the end of the later period. (2C) (1) This paragraph applies where— (a) a company is liable to corporation tax for an accounting period (“the earlier period”), (b) in a later accounting period of the company (“the later period”), an excess arises as described in section 72 of TIOPA 2010 (amounts of unrelieved foreign tax), (c) on a claim under section 77 of that Act, credit for the whole or any part of the excess is allowed against corporation tax in respect of the earlier period, and (d) if the claim had not been made, there would be an amount or additional amount of corporation tax for the earlier period which would carry late payment interest. (2) For the purposes of section 101, the amount mentioned in sub-paragraph (1)(d) is to be taken to be an amount that is due and payable as corporation tax for the earlier period. (3) But late payment interest which is payable by virtue of sub-paragraph (2) runs only until the day following the expiry of 9 months from the end of the later period. (4) This paragraph does not apply where paragraph 2D applies. (2D) (1) This paragraph applies where— (a) a company carrying on a trade has profits (of whatever description) arising in an accounting period (“the middle period”), (b) the company incurs a loss in a later accounting period (“the later period”), (c) on a claim under section 37 of CTA 2010, the whole or any part of the loss incurred in the later period has been set off (whether under section 37 or 42 of that Act) for the purposes of corporation tax against the profits of the middle period, (d) the middle period does not fall wholly within the period of 12 months immediately preceding the later period, (e) as a result of the claim under section 37, an excess or increased excess arises in the middle period as described in section 72 of TIOPA 2010 (amounts of unrelieved foreign tax), (f) on a claim under section 77 of that Act, credit for the whole or any part of the excess is allowed against corporation tax in respect of an accounting period before the middle period (“the earlier period”), and (g) if the claim had not been made, there would be an amount or additional amount of corporation tax for the earlier period which would carry late payment interest. (2) For the purposes of section 101, the amount mentioned in sub-paragraph (1)(g) is to be taken to be an amount that is due and payable as corporation tax for the earlier period. (3) But late payment interest which is payable by virtue of sub-paragraph (2) runs only until the day following the expiry of 9 months from the end of the later period.

8

In Part 2 (special provision as to late payment interest start date), after paragraph 6 insert—

(6A) (1) This paragraph applies to any amount of corporation tax assessed or treated as assessed by virtue of any of the following provisions (which enable unpaid corporation tax assessed on a company to be assessed on other persons in certain circumstances)— (a) section 137(4), 139(7) or 190 of TCGA 1992, (b) paragraph 75A(2) of Schedule 18 to FA 1998, (c) section 795(2) of CTA 2009, and (d) Chapter 7 of Part 22 of CTA 2010. (2) The late payment interest start date in respect of that amount is the date when it became due and payable by the company.

Amendments of Schedule 54

9

Schedule 54 to FA 2009 (repayment interest) is amended as follows.

10

Insert at the beginning—

(A1) (1) This paragraph applies where— (a) a company has profits arising in an accounting period (“the earlier period”), (b) there is for a later accounting period (“the later period”) a non-trading deficit on the company's loan relationships, (c) as a result of a claim under section 389(1) , 459(1)(b) or 463B(1)(b) of CTA 2009, the whole or part of the deficit for the later period is set off against the profits of the earlier period, and (d) a repayment falls to be made of corporation tax for the earlier period or of income tax in respect of a payment received by the company in that period. (2) So much of the repayment mentioned in sub-paragraph (1)(d) as falls to be made as a result of the claim under section 389(1) , 459(1)(b) or 463B(1)(b) does not carry repayment interest. (3) But sub-paragraph (2) does not apply (and, accordingly, the amount mentioned in that sub-paragraph carries repayment interest) after the expiry of 9 months from the end of the later period. (A2) (1) This paragraph applies where— (a) a company carrying on a trade has profits (of whatever description) arising in an accounting period (“the earlier period”), (b) the company incurs a loss in a later accounting period (“the later period”), (c) on a claim under section 37 of CTA 2010, the whole or any part of the loss incurred in the later period has been set off (whether under section 37 or 42 of that Act) for the purposes of corporation tax against the profits of the earlier period, (d) the earlier period does not fall wholly within the period of 12 months immediately preceding the later period, and (e) a repayment falls to be made of corporation tax paid for the earlier period or of income tax in respect of a payment received by the company in that period. (2) So much of the repayment mentioned in sub-paragraph (1)(e) as falls to be made as a result of the claim under section 37 does not carry repayment interest. (3) But sub-paragraph (2) does not apply (and, accordingly, the amount mentioned in that sub-paragraph carries repayment interest) after the expiry of 9 months from the end of the later period. (A2A) (1) This paragraph applies where— (a) a company has profits arising in an accounting period (“the earlier period”), (b) the company ceases to carry on a trade in a later accounting period (“the later period”), (c) on a claim under section 45F of CTA 2010 (terminal losses), the whole or any part of a loss incurred in the trade has been set off for the purposes of corporation tax against the profits of the earlier period, (d) the earlier period does not fall wholly within the period of 12 months immediately preceding the later period, and (e) a repayment falls to be made of corporation tax paid for the earlier period or of income tax in respect of a payment received by the company in that period. (2) So much of the repayment mentioned in sub-paragraph (1)(e) as falls to be made as a result of the claim under section 45F does not carry repayment interest. (3) But sub-paragraph (2) does not apply (and, accordingly, the amount mentioned in that sub-paragraph carries repayment interest) after the expiry of 9 months from the end of the later period. (A3) (1) This paragraph applies where— (a) a company is liable to corporation tax for an accounting period (“the earlier period”), (b) in a later accounting period of the company (“the later period”), an excess arises as described in section 72 of TIOPA 2010 (amounts of unrelieved foreign tax), (c) on a claim under section 77 of that Act, credit for the whole or any part of the excess is allowed against corporation tax in respect of the earlier period, and (d) a repayment falls to be made of corporation tax paid for the earlier period or of income tax in respect of a payment received by the company in that period. (2) So much of the repayment mentioned in sub-paragraph (1)(d) as falls to be made as a result of the claim under section 77 does not carry repayment interest. (3) But sub-paragraph (2) does not apply (and, accordingly, the amount mentioned in that sub-paragraph carries repayment interest) after the expiry of 9 months from the end of the later period. (4) This paragraph does not apply where paragraph A4 or A5 applies. (A4) (1) This paragraph applies where— (a) a company carrying on a trade has profits (of whatever description) arising in an accounting period (“the middle period”), (b) the company incurs a loss in a later accounting period (“the later period”), (c) on a claim under section 37 of CTA 2010, the whole or any part of the loss incurred in the later period has been set off (whether under section 37 or 42 of that Act) for the purposes of corporation tax against the profits of the middle period, (d) the middle period does not fall wholly within the period of 12 months immediately preceding the later period, (e) as a result of the claim under section 37, an excess or increased excess arises in the middle period as described in section 72 of TIOPA 2010 (amounts of unrelieved foreign tax), (f) on a claim under section 77 of that Act, credit for the whole or any part of the excess is allowed against corporation tax in respect of an accounting period before the middle period (“the earlier period”), and (g) a repayment falls to be made of corporation tax paid for the earlier period or of income tax in respect of a payment received by the company in that period. (2) So much of the repayment mentioned in sub-paragraph (1)(g) as falls to be made as a result of the claim under section 77 does not carry repayment interest. (3) But sub-paragraph (2) does not apply (and, accordingly, the amount mentioned in that sub-paragraph carries repayment interest) after the expiry of 9 months from the end of the later period. (A5) (1) This paragraph applies where— (a) a company has profits arising in an accounting period (“the middle period”), (b) the company ceases to carry on a trade in a later accounting period (“the later period”), (c) on a claim under section 45F of CTA 2010 (terminal losses), the whole or any part of a loss incurred in the trade has been set off for the purposes of corporation tax against the profits of the middle period, (d) the middle period does not fall wholly within the period of 12 months immediately preceding the later period, (e) as a result of the claim under section 45F, an excess or increased excess arises in the middle period as described in section 72 of TIOPA 2010 (amounts of unrelieved foreign tax), (f) on a claim under section 77 of that Act, credit for the whole or any part of the excess is allowed against corporation tax in respect of an accounting period before the middle period (“the earlier period”) and, (g) a repayment falls to be made of corporation tax paid for the earlier period or of income tax in respect of a payment received by the company in that period. (2) So much of the repayment mentioned in sub-paragraph (1)(g) as falls to be made as a result of the claim under section 77 does not carry repayment interest. (3) But sub-paragraph (2) does not apply (and, accordingly, the amount mentioned in that sub-paragraph carries repayment interest) after the expiry of 9 months from the end of the later period.

11

In Part 2 (special provision as to repayment interest start date), after paragraph 9A insert—

(9B) (1) This paragraph applies to— (a) a repayment of income tax which falls to be made in respect of a payment received by a company in an accounting period, and (b) a payment of the whole or part of the tax credit comprised in any franked investment income received by a company in an accounting period. (2) In the case of a repayment or payment to which this paragraph applies, the repayment interest start date is the day after the end of the accounting period in which the payment mentioned in sub-paragraph (1)(a) or the franked investment income mentioned in sub-paragraph (1)(b) was received by the company. (9C) (1) In the case of a repayment of tax made on a claim under section 458(3) of CTA 2010 (relief on repayment of loan made by close company to participator), the repayment interest start date is the later of dates A and B. (2) Date A is— (a) where the loan repayment date is on or after the tax due date, the date 9 months after the end of the accounting period in which the loan repayment date falls, and (b) in any other case, the date 9 months after the end of the accounting period in which the loan date falls. (3) Date B is the date on which the tax which is to be repaid was paid to HMRC. (4) In this paragraph, in relation to a claim under section 458(3) of CTA 2010— - “the loan date” is the date on which the loan or advance giving rise to the charge to tax under section 455 of that Act is made; - “the tax due date” is the date on which tax under that section becomes due (in accordance with subsection (3) of that section) in relation to that loan or advance; - “the loan repayment date” is the date on which the whole or any part of the loan or advance is repaid, released or written off.

New Schedule

12

After Schedule 54 to FA 2009 insert—

Schedule 54A (1) Where each of conditions A to D (see paragraph 2) is met, an amount of repayment interest that— (a) has been paid to a company, but (b) ought not to have been paid (see condition D), may be recovered from the company as if it were late payment interest. (2) (1) This paragraph applies for the purposes of paragraph 1. (2) Condition A is that repayment interest has been paid to the company on— (a) a repayment of corporation tax paid by the company for an accounting period, (b) a payment of first-year tax credit under Schedule A1 to CAA 2001 for an accounting period, (c) a payment of R&D tax credit under Chapter 2 or 7 of Part 13 of CTA 2009 for an accounting period, (d) a payment of land remediation tax credit or life assurance company tax credit under Part 14 of CTA 2009 for an accounting period, or (e) a payment of film tax credit under Chapter 3 of Part 15 of CTA 2009 for an accounting period. (3) Condition B, in a case falling within sub-paragraph (2)(a), is that (whether or not any previous assessment or determination has been made)— (a) an assessment, or an amendment of an assessment, of the amount of corporation tax payable by the company for the accounting period is made, or (b) a determination of that amount is made under paragraph 36 or 37 of Schedule 18 to FA 1998 (which until superseded by a self-assessment under that Schedule has effect as if it were one). (4) Condition B, in a case falling within sub-paragraph (2)(b) to (e), is that an assessment, or an amendment of an assessment, is made to recover an amount of the tax credit in question paid to the company for that accounting period. (5) Condition C is that the change (as a result of condition B being met) in— (a) the company's assessed liability to corporation tax, or (b) the amount of tax credit payable, is not one which in whole or in part corrects an error made by HMRC. (6) In sub-paragraph (5) “error” includes— (a) any computational error, and (b) the allowance of a claim or election which ought not to have been allowed. (7) Condition D is that as a result only of that change (and, in particular, not as a result of any error in the calculation of the interest), it appears to HMRC that some or all of the repayment interest ought not to have been paid. (3) (1) This paragraph applies where— (a) there is a common period in relation to a company (see sub-paragraph (2)), and (b) each of conditions A to C (see paragraph 4) is met. (2) A common period in relation to a company is any period during which— (a) an amount of corporation tax is due and payable by the company in accordance with section 59D of TMA 1970 or regulations made under section 59E of that Act (“the overdue payment”), and (b) an amount which has been paid on account of corporation tax is repayable to the company (“the repayment”). (3) During the common period— (a) the overdue payment does not carry late payment interest or interest under regulations made by virtue of section 59E(2)(g) of TMA 1970 (interest payable to HMRC on amounts of corporation tax due and payable under regulations under that section), and (b) the repayment does not carry repayment interest or interest under regulations made by virtue of section 59E(2)(i) of TMA 1970 (interest payable by HMRC on amounts paid or repaid under regulations under that section). (4) (1) This paragraph applies for the purposes of paragraph 3. (2) Condition A is that the overdue payment and the repayment are in respect of different accounting periods. (3) Condition B is that the overdue payment would (apart from paragraph 3) carry— (a) late payment interest, or (b) interest under regulations made by virtue of section 59E(2)(g) of TMA 1970. (4) Condition C is that the repayment would (apart from paragraph 3) carry— (a) repayment interest, or (b) interest under regulations made by virtue of section 59E(2)(i) of TMA 1970.

Part 2 — Petroleum revenue tax

13

FA 2009 is amended as follows.

14

In section 101 (late payment interest on sums due to HMRC), omit subsection (2)(b).

15

In section 102 (repayment interest on sums to be paid by HMRC), omit subsection (2)(b).

16

Schedule 53 (late payment interest) is amended as follows.

17

After paragraph 11 insert—

(11A) The late payment interest start date in respect of an instalment of petroleum revenue tax payable under paragraph 2 of Schedule 19 to FA 1982 (payment for tax) is the last day of the month in which that instalment is payable. (11B) The late payment interest start date in respect of any other amount of petroleum revenue tax is the date falling two months after the end of the chargeable period in respect of which the amount is due.

18

After paragraph 14 insert—

(14A) (1) An instalment of petroleum revenue tax payable under paragraph 2 of Schedule 19 to FA 1982 (payment for tax) carries late payment interest until the earlier of— (a) the date on which the instalment is paid, and (b) the date falling two months after the end of the chargeable period in respect of which the instalment is due. (2) An instalment which remains unpaid after the date mentioned in sub-paragraph (1)(b) carries interest as an amount payable on account under section 1 of PRTA 1980. (3) For the purposes of determining the date on which an overdue instalment is paid, a payment on account of one or more such instalments is to be attributed, so far as possible, to the earliest month for which an instalment is overdue.

19

In Schedule 54 (repayment interest), after paragraph 12 insert—

(12A) (1) The repayment interest start date in respect of any amount of petroleum revenue tax is the later of— (a) the date falling two months after the end of the chargeable period in respect of which the amount was paid, and (b) the date on which the amount was paid. (2) Sub-paragraph (1) is subject to paragraph 12B (limit on amount of repayment interest carried by certain repayments generated by carry back reliefs). (3) For the purposes of this paragraph any instalment or part of an instalment that becomes repayable is to be regarded, so far as possible, as consisting of the instalment most recently paid. (12B) (1) This paragraph applies where— (a) an assessment for a chargeable period (“the earlier period”) gives effect to relief under section 7(2) or (3) of OTA 1975 for one or more allowable losses accruing in a later chargeable period, and (b) by virtue of that assessment, an amount of tax becomes repayable to the participator in question (whether wholly or partly by reason of giving effect to that relief). (2) The amount of repayment interest carried by the appropriate repayment is not to exceed the difference between— (a) 60% of the amount of the allowable loss or losses which is treated as reducing the assessable profit of the earlier period, and (b) the amount of the appropriate repayment. (3) In this paragraph “the appropriate repayment” means so much of the repayment as is attributable to giving effect to the relief (but this is subject to sub-paragraphs (4) and (5)). (4) Sub-paragraph (5) applies where the assessment (as well as giving effect to the relief mentioned in sub-paragraph (1)) takes account of any other matter, whether a relief or not, which goes— (a) to reduce the assessable profit of the earlier period, or (b) otherwise to reduce the tax payable for that period. (5) The appropriate repayment is to be taken to be the difference between— (a) the total amount of tax repayable by virtue of the assessment, and (b) the amount of tax (if any) which would have been repayable if no account had been taken of that relief. (6) If the earlier period ends on or before 30 June 1993, sub-paragraph (2) has effect as if the percentage specified in paragraph (a) were 85%. (7) In this paragraph references to an assessment include an amendment of an assessment.

SCHEDULE 10

1

Schedule 55 to FA 2009 (penalty for failure to make returns etc) is amended as follows.

2

• (1) Paragraph 1 (penalty for failure) is amended as follows.

• (2) In sub-paragraph (2), for “13” substitute “ 13J ”.

• (2A) In sub-paragraph (4), in the definition of “filing date”, at the end insert “ (or, in the case of a return mentioned in item 7AA or 7AB of the Table, to the tax authorities to whom the return is required to be delivered) ”.

• (3) The Table is amended as follows.

• (4) After item 7 insert—

7A	Value added tax	Return under regulations under paragraph 2 of Schedule 11 to VATA 1994
7B	Insurance premium tax	Return under regulations under section 54 of FA 1994
7AA	Value added tax	Relevant non-UK return (as defined in paragraph 20(3) of Schedule 3BA to VATA 1994)
7AB	Value added tax	Relevant special scheme return (as defined in paragraph 16(3) of Schedule 3B to VATA 1994)

.

• (5) Insert at the end—

14	Aggregates levy	Return under regulations under section 25 of FA 2001
15	Climate change levy	Return under regulations under paragraph 41 of Schedule 6 to FA 2000
16	Landfill tax	Return under regulations under section 49 of FA 1996
17	Air passenger duty	Return under regulations under section 38 of FA 1994
18	Alcoholic liquor duties	Return under regulations under section 13, 49, 56 or 62 of ALDA 1979
19	Tobacco products duty	Return under regulations under section 7 of TPDA 1979
20	Hydrocarbon oil duties	Return under regulations under section 21 of HODA 1979
21	Excise duties	Return under regulations under section 93 of the Customs and Excise Management Act 1979
22	Excise duties	Return under regulations under section 100G or 100H of the Customs and Excise Management Act 1979
23	General betting duty	Return under regulations under paragraph 2 of Schedule 1 to BGDA 1981
24	Pool betting duty	Return under regulations under paragraph 2A of Schedule 1 to BGDA 1981
25	Bingo duty	Return under regulations under paragraph 9 of Schedule 3 to BGDA 1981
26	Lottery duty	Return under regulations under section 28(2) of FA 1993
27	Gaming duty	Return under directions under paragraph 10 of Schedule 1 to FA 1997
28	Remote gaming duty	Return under regulations under section 26K of BGDA 1981

.

3

For paragraph 2 (amount of penalty for occasional or annual returns) and the italic heading preceding it substitute—

(2) (1) Paragraphs 3 to 6 apply in the case of— (a) a return falling within any of items 1 to 5, 7 and 8 to 13 in the Table, (b) a return falling within any of items 7A, 7B and 14 to 28 which relates to a period of 6 months or more, and (c) a return falling within item 7A which relates to a transitional period for the purposes of the annual accounting scheme. (2) In sub-paragraph (1)(c), a transitional period for the purposes of the annual accounting scheme is a prescribed accounting period (within the meaning of section 25(1) of VATA 1994) which— (a) ends on the day immediately preceding the date indicated by the Commissioners for Her Majesty's Revenue and Customs in a notification of authorisation under regulation 50 of the Value Added Tax Regulations 1995 (S.I. 1995/2518) (admission to annual accounting scheme), or (b) begins on the day immediately following the end of the last period of 12 months for which such an authorisation has effect.

4

• (1) Paragraph 6 (amount of penalty for occasional returns and annual returns) is amended as follows.

• (2) In sub-paragraph (2), after “P” in the first place it occurs insert “ deliberately ”.

• (3) In sub-paragraph (5), for “any other case” substitute “ any case not falling within sub-paragraph (2) ”.

5

• (1) Paragraph 11 (amount of penalty for certain CIS returns after 12 months) is amended as follows.

• (2) In sub-paragraph (2), after “P” in the first place it occurs insert “ deliberately ”.

• (3) In sub-paragraph (5), for “any other case” substitute “ any case not falling within sub-paragraph (2) ”.

6

• (1) Paragraph 12 (amount of penalty for other CIS returns after 12 months) is amended as follows.

• (2) In sub-paragraph (2), after “P” insert “ deliberately ”.

7

After paragraph 13 insert—

(13A) (1) Paragraphs 13B to 13E apply in the case of a return falling within any of items 7A to 7B , 13A , 13B and 14 to 28 in the Table which relates to a period of less than 6 months but more than 2 months. (2) But those paragraphs do not apply in the case of a return mentioned in paragraph 2(1)(c). (13B) (1) P is liable to a penalty under this paragraph of £100. (2) In addition, a penalty period begins to run on the penalty date for the return. (3) The penalty period ends with the day 12 months after the filing date for the return, unless it is extended under paragraph 13C(2)(c) or 13H(2)(c). (13C) (1) This paragraph applies if— (a) a penalty period has begun under paragraph 13B or 13G because P has failed to make a return (“return A”), and (b) before the end of the period, P fails to make another return (“return B”) falling within the same item in the Table as return A. (2) In such a case— (a) paragraph 13B(1) and (2) do not apply to the failure to make return B, but (b) P is liable to a penalty under this paragraph for that failure, and (c) the penalty period that has begun is extended so that it ends with the day 12 months after the filing date for return B. (3) The amount of the penalty under this paragraph is determined by reference to the number of returns that P has failed to make during the penalty period. (4) If the failure to make return B is P's first failure to make a return during the penalty period, P is liable, at the time of the failure, to a penalty of £200. (5) If the failure to make return B is P's second failure to make a return during the penalty period, P is liable, at the time of the failure, to a penalty of £300. (6) If the failure to make return B is P's third or a subsequent failure to make a return during the penalty period, P is liable, at the time of the failure, to a penalty of £400. (7) For the purposes of this paragraph— (a) in accordance with sub-paragraph (1)(b), the references in sub-paragraphs (3) to (6) to a return are references to a return falling within the same item in the Table as returns A and B, and (b) a failure to make a return counts for the purposes of those sub-paragraphs if (but only if) the return relates to a period of less than 6 months. (8) A penalty period may be extended more than once under sub-paragraph (2)(c). (13D) (1) P is liable to a penalty under this paragraph if (and only if) P's failure continues after the end of the period of 6 months beginning with the penalty date. (2) The penalty under this paragraph is the greater of— (a) 5% of any liability to tax which would have been shown in the return in question, and (b) £300. (13E) (1) P is liable to a penalty under this paragraph if (and only if) P's failure continues after the end of the period of 12 months beginning with the penalty date. (2) Where, by failing to make the return, P deliberately withholds information which would enable or assist HMRC to assess P's liability to tax, the penalty under this paragraph is determined in accordance with sub-paragraphs (3) and (4). (3) If the withholding of the information is deliberate and concealed, the penalty is the greater of— (a) 100% of any liability to tax which would have been shown in the return in question, and (b) £300. (4) If the withholding of the information is deliberate but not concealed, the penalty is the greater of— (a) 70% of any liability to tax which would have been shown in the return in question, and (b) £300. (5) In any case not falling within sub-paragraph (2), the penalty under this paragraph is the greater of— (a) 5% of any liability to tax which would have been shown in the return in question, and (b) £300. (13F) (1) Paragraphs 13G to 13J apply in the case of a return falling within any of items 7A, 7B and 14 to 28 in the Table which relates to a period of 2 months or less. (2) But those paragraphs do not apply in the case of a return mentioned in paragraph 2(1)(c). (13G) (1) P is liable to a penalty under this paragraph of £100. (2) In addition, a penalty period begins to run on the penalty date for the return. (3) The penalty period ends with the day 12 months after the filing date for the return, unless it is extended under paragraph 13C(2)(c) or 13H(2)(c). (13H) (1) This paragraph applies if— (a) a penalty period has begun under paragraph 13B or 13G because P has failed to make a return (“return A”), and (b) before the end of the period, P fails to make another return (“return B”) falling within the same item in the Table as return A. (2) In such a case— (a) paragraph 13G(1) and (2) do not apply to the failure to make return B, but (b) P is liable to a penalty under this paragraph for that failure, and (c) the penalty period that has begun is extended so that it ends with the day 12 months after the filing date for return B. (3) The amount of the penalty under this paragraph is determined by reference to the number of returns that P has failed to make during the penalty period. (4) If the failure to make return B is P's first, second, third, fourth or fifth failure to make a return during the penalty period, P is liable, at the time of the failure, to a penalty of £100. (5) If the failure to make return B is P's sixth or a subsequent failure to make a return during the penalty period, P is liable, at the time of the failure, to a penalty of £200. (6) For the purposes of this paragraph— (a) in accordance with sub-paragraph (1)(b), the references in sub-paragraphs (3) to (5) to a return are references to a return falling within the same item in the Table as returns A and B, and (b) a failure to make a return counts for the purposes of those sub-paragraphs if (but only if) the return relates to a period of less than 6 months. (7) A penalty period may be extended more than once under sub-paragraph (2)(c). (13I) (1) P is liable to a penalty under this paragraph if (and only if) P's failure continues after the end of the period of 6 months beginning with the penalty date. (2) The penalty under this paragraph is the greater of— (a) 5% of any liability to tax which would have been shown in the return in question, and (b) £300. (13J) (1) P is liable to a penalty under this paragraph if (and only if) P's failure continues after the end of the period of 12 months beginning with the penalty date. (2) Where, by failing to make the return, P deliberately withholds information which would enable or assist HMRC to assess P's liability to tax, the penalty under this paragraph is determined in accordance with sub-paragraphs (3) and (4). (3) If the withholding of the information is deliberate and concealed, the penalty is the greater of— (a) 100% of any liability to tax which would have been shown in the return in question, and (b) £300. (4) If the withholding of the information is deliberate but not concealed, the penalty is the greater of— (a) 70% of any liability to tax which would have been shown in the return in question, and (b) £300. (5) In any case not falling within sub-paragraph (2), the penalty under this paragraph is the greater of— (a) 5% of any liability to tax which would have been shown in the return in question, and (b) £300.

8

In paragraph 14(1) (reductions for disclosure), for “or 11(3) or (4)” substitute “ , 11(3) or (4), 13E(3) or (4) or 13J(3) or (4) ”.

9

In paragraph 15(5) (reductions for disclosure not below certain amounts)—

• (a) for “paragraph 11(3) or (4)” substitute “ sub-paragraph (3) or (4) of any of paragraphs 11, 13E and 13J ”, and

• (b) for “paragraph 11(3)(b) or (4)(b) (as the case may be)” substitute “ paragraph (b) of that sub-paragraph ”.

10

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

11

For paragraph 23(1) (no liability where there is reasonable excuse for failure) substitute—

(1) If P satisfies HMRC or (on appeal) the First-tier Tribunal or Upper Tribunal that there is a reasonable excuse for a failure to make a return— (a) liability to a penalty under any paragraph of this Schedule does not arise in relation to that failure, and (b) the failure does not count for the purposes of paragraphs 13B(2), 13C, 13G(2) and 13H.

SCHEDULE 11

1

Schedule 56 to FA 2009 (penalty for failure to make payments on time) is amended as follows.

2

• (1) Paragraph 1 (penalty for failure) is amended as follows.

• (2) In sub-paragraph (2), for “8” substitute “ 8J ”.

• (3) After sub-paragraph (4) insert—

(5) Sub-paragraph (4) is subject to paragraph 2A.

• (4) The Table is amended as follows.

• (5) In item 2, in column 3, omit “(except an amount falling within item 20)”.

• (6) In item 4, in column 4, for “section 62” substitute “ section 71 ”.

• (7) After item 6 insert—

6A	Value added tax	Amount payable under section 25(1) of VATA 1994 (except an amount falling within item 6B, 13A, 23 or 24)	The date determined—by or under regulations under section 25 of VATA 1994, orin accordance with an order under section 28 of that Act,as the date by which the amount must be paid
6B	Value added tax	Amount payable under section 25(1) of VATA 1994 which is an instalment of an amount due in respect of a period of 9 months or more (“amount A”)	The date on or before which P must pay any balancing payment or other outstanding payment due in respect of amount A
6BA	Value added tax	Amount payable under relevant special scheme return (as defined in paragraph 16(3) of Schedule 3B to VATA 1994) (except an amount falling within item 13A, 13AA, 13AB, 23 or 24)	The date by which the amount must be paid under the law of the member State which has established the special scheme
6BB	Value added tax	Amount payable under relevant non-UK return (as defined in paragraph 20(3) of Schedule 3BA to VATA 1994) (except an amount falling within item 13A, 13AA, 13AB, 23 or 24)	The date by which the amount must be paid under the law of the member State which has established the non-UK special scheme
6C	Insurance premium tax	Amount payable under regulations under section 54 of FA 1994 (except an amount falling within item 13B, 23 or 24)	The date determined by or under regulations under section 54 of FA 1994 as the date by which the amount must be paid

.

• (8) After item 11 insert—

11A	Aggregates levy	Amount payable under regulations under section 25 of FA 2001 (except an amount falling within item 16A, 23 or 24)	The date determined by or under regulations under section 25 of FA 2001 as the date by which the amount must be paid
11B	Climate change levy	Amount payable under regulations under paragraph 41 of Schedule 6 to FA 2000 (except an amount falling within item 16B, 23 or 24)	The date determined by or under regulations under paragraph 41 of Schedule 6 to FA 2000 as the date by which the amount must be paid
11C	Landfill tax	Amount payable under regulations under section 49 of FA 1996 (except an amount falling within item 16C, 23 or 24)	The date determined by or under regulations under section 49 of FA 1996 as the date by which the amount must be paid
11D	Air passenger duty	Amount payable under regulations under section 38 of FA 1994 (except an amount falling within item 17A, 23 or 24)	The date determined by or under regulations under section 38 of FA 1994 as the date by which the amount must be paid
11E	Alcoholic liquor duties	Amount payable under regulations under section 13, 49, 56 or 62 of ALDA 1979 (except an amount falling within item 17A, 23 or 24)	The date determined by or under regulations under section 13, 49, 56 or 62 of ALDA 1979 as the date by which the amount must be paid
11F	Tobacco products duty	Amount payable under regulations under section 7 of TPDA 1979 (except an amount falling within item 17A, 23 or 24)	The date determined by or under regulations under section 7 of TPDA 1979 as the date by which the amount must be paid
11G	Hydrocarbon oil duties	Amount payable under regulations under section 21 or 24 of HODA 1979 (except an amount falling within item 17A, 23 or 24)	The date determined by or under regulations under section 21 or 24 of HODA 1979 as the date by which the amount must be paid
11H	General betting duty	Amount payable under section 5B of BGDA 1981 (except an amount falling within item 17A, 23 or 24)	The date determined—under section 5B of BGDA 1981, orby or under regulations under para-graph 2 of Schedule 1 to that Act,as the date by which the amount must be paid
11I	Pool betting duty	Amount payable under section 8 of BGDA 1981 (except an amount falling within item 17A, 23 or 24)	The date determined—under section 8 of BGDA 1981, orby or under regulations under that section or directions under para-graph 3 of Schedule 1 to that Act,as the date by which the amount must be paid
11J	Bingo duty	Amount payable under regulations under paragraph 9 of Schedule 3 to BGDA 1981 (except an amount falling within item 17A, 23 or 24)	The date determined by or under regulations under paragraph 9 of Schedule 3 to BGDA 1981 as the date by which the amount must be paid
11K	Lottery duty	Amount payable under section 26 of FA 1993 (except an amount falling within item 17A, 23 or 24)	The date determined—by section 26 of FA 1993, orby or under regulations under that section,as the date by which the amount must be paid
11L	Gaming duty	Amount payable under section 12 of FA 1997 (except an amount falling within item 17A, 23 or 24)	The date determined by or under regulations under—section 12 of FA 1997, orparagraph 11 of Schedule 1 to that Act,as the date by which the amount must be paid
11M	Remote gaming duty	Amount payable under section 26I of BGDA 1981 (except an amount falling within item 17A, 23 or 24)	The date determined by or under regulations under section 26I of BGDA 1981 as the date by which the amount must be paid

.

• (9) After item 13 insert—

13A	Value added tax	Amount assessed under section 73(1) of VATA 1994 in the absence of a return	The date by which the amount would have been required to be paid if it had been shown in the return
13AA	Value added tax	Amount assessed under section 73(1) of VATA 1994, by virtue of paragraph 16 of Schedule 3B to that Act, in the absence of a value added tax return (as defined in paragraph 23(1) of that Schedule)	The date by which the amount would have been required to be paid under the law of the member State under whose law the return was required
13AB	Value added tax	Amount assessed under section 73(1) of VATA 1994, by virtue of paragraph 20 of Schedule 3BA to that Act, in the absence of a relevant non-UK return (as defined in paragraph 38(1) of that Schedule)	The date by which the amount would have been required to be paid under the law of the member State under whose law the return was required
13B	Insurance premium tax	Amount assessed under section 56(1) of FA 1994 in the absence of a return	The date by which the amount would have been required to be paid if it had been shown in the return

.

• (10) After item 16 insert—

16A	Aggregates levy	Amount assessed under paragraph 2 or 3 of Schedule 5 to FA 2001 in the absence of a return	The date by which the amount would have been required to be paid if it had been shown in the return
16B	Climate change levy	Amount assessed under paragraph 78 or 79 of Schedule 6 to FA 2000 in the absence of a return	The date by which the amount would have been required to be paid if it had been shown in the return
16C	Landfill tax	Amount assessed under section 50(1) of FA 1996 in the absence of a return	The date by which the amount would have been required to be paid if it had been shown in the return

.

• (11) After item 17 insert—

17A	Tax falling within any of items 11D to 11M	Amount assessed under section 12(1) of FA 1994 in the absence of a return	The date by which the amount would have been required to be paid if it had been shown in the return

.

• (12) Omit item 20.

• (13) In item 23—

• (a) in columns 2 and 3, for “items 1 to 6, 9 or 10” substitute “ items 1 to 6A,6BA, 6BB, 6C, 9, 10 , 11A or 11B to 11M ”, and

• (b) in column 3, for “any of items 18 to 20” substitute “ item 18 or 19 ”.

• (14) In item 24—

• (a) in column 2, for “items 1 to 6, 9 or 10” substitute “ items 1 to 6A,6BA, 6BB, 6C, 9, 10 , 11A or 11B to 11M ”, and

• (b) in column 3, for “any of items 18 to 20” substitute “ item 18 or 19 ”.

3

In paragraph 2 (assessments and determinations in default of return), in paragraph (c), for “10” substitute “ 11M ”.

4

After paragraph 2 insert—

(2A) (1) PAYE regulations may provide that, in relation to specified payments of tax falling within item 2, the penalty date is a specified date later than that determined in accordance with column 4 of the Table. (2) In sub-paragraph (1) “specified” means specified in the regulations.

5

• (1) Paragraph 3 (amount of penalty for occasional amounts and amounts due for periods of 6 months or more) is amended as follows.

• (2) Sub-paragraph (1) is amended as follows.

• (3) In paragraph (a), for “... 3B and 7 to 24” substitute “ ... 3B, 6B, 7 to 11ZA and 12 to 24 ”.

• (4) In paragraph (b)—

• (a) for “item 2 or 4” substitute “ any of items 2, 4, 6A, 6C and 11A to 11M ”, and

• (b) omit the “and” at the end.

• (5) After paragraph (c) insert

, and (d) a payment of tax falling within item 6A which relates to a transitional period for the purposes of the annual accounting scheme.

• (6) After sub-paragraph (1) insert—

(1A) In sub-paragraph (1)(d), a transitional period for the purposes of the annual accounting scheme is a prescribed accounting period (within the meaning of section 25(1) of VATA 1994) which— (a) ends on the day immediately preceding the date indicated by the Commissioners for Her Majesty's Revenue and Customs in a notification of authorisation under regulation 50 of the Value Added Tax Regulations 1995 (S.I. 1995/2518) (admission to annual accounting scheme), or (b) begins on the day immediately following the end of the last period of 12 months for which such an authorisation has effect.

6

For paragraph 6 substitute—

(6) (1) P is liable to a penalty, in relation to each tax, of an amount determined by reference to— (a) the number of defaults that P has made during the tax year (see sub-paragraphs (2) and (3)), and (b) the amount of that tax comprised in the total of those defaults (see sub-paragraphs (4) to (7)). (2) For the purposes of this paragraph, P makes a default when P fails to make one of the following payments (or to pay an amount comprising two or more of those payments) in full on or before the date on which it becomes due and payable— (a) a payment under PAYE regulations; (b) a payment of earnings-related contributions within the meaning of the Social Security (Contributions) Regulations 2001 (S.I. 2001/1004); (c) a payment due under the Income Tax (Construction Industry Scheme) Regulations 2005 (S.I. 2005/2045); (d) a repayment in respect of a student loan due under the Education (Student Loans) (Repayments) Regulations 2009 (S.I. 2009/470) or the Education (Student Loans) (Repayments) Regulations (Northern Ireland) 2000 (S.R. 2000 No. 121). (3) But the first failure during a tax year to make one of those payments (or to pay an amount comprising two or more of those payments) does not count as a default for that tax year. (4) If P makes 1, 2 or 3 defaults during the tax year, the amount of the penalty is 1% of the amount of the tax comprised in the total of those defaults. (5) If P makes 4, 5 or 6 defaults during the tax year, the amount of the penalty is 2% of the amount of the tax comprised in the total of those defaults. (6) If P makes 7, 8 or 9 defaults during the tax year, the amount of the penalty is 3% of the amount of the tax comprised in the total of those defaults. (7) If P makes 10 or more defaults during the tax year, the amount of the penalty is 4% of the amount of the tax comprised in the total of those defaults. (8) For the purposes of this paragraph— (a) the amount of a tax comprised in a default is the amount of that tax comprised in the payment which P fails to make; (b) a default counts for the purposes of sub-paragraphs (4) to (7) even if it is remedied before the end of the tax year. (9) The Treasury may by order made by statutory instrument make such amendments to sub-paragraph (2) as they think fit in consequence of any amendment, revocation or re-enactment of the regulations mentioned in that sub-paragraph.

7

After paragraph 8 insert—

(8A) (1) Paragraphs 8B to 8E apply in the case of a payment of tax falling within any of items 6A,6BA, 6BB, 6C and 11A to 11M in the Table which relates to a period of less than 6 months but more than 2 months. (2) But those paragraphs do not apply in the case of a payment mentioned in paragraph 3(1)(d). (3) Paragraph 8K sets out how payments on account of VAT (item 6A) are to be treated for the purposes of paragraphs 8B to 8E. (8B) (1) A penalty period begins to run on the penalty date for the payment of tax. (2) The penalty period ends with the day 12 months after the date specified in or for the purposes of column 4 for the payment, unless it is extended under paragraph 8C(2)(c) or 8H(2)(c). (8C) (1) This paragraph applies if— (a) a penalty period has begun under paragraph 8B or 8G because P has failed to make a payment (“payment A”), and (b) before the end of the period, P fails to make another payment (“payment B”) falling within the same item in the Table as payment A. (2) In such a case— (a) paragraph 8B(1) does not apply to the failure to make payment B, (b) P is liable to a penalty under this paragraph for that failure, and (c) the penalty period that has begun is extended so that it ends with the day 12 months after the date specified in or for the purposes of column 4 for payment B. (3) The amount of the penalty under this paragraph is determined by reference to the number of defaults that P has made during the penalty period. (4) If the default is P's first default during the penalty period, P is liable, at the time of the default, to a penalty of 2% of the amount of the default. (5) If the default is P's second default during the penalty period, P is liable, at the time of the default, to a penalty of 3% of the amount of the default. (6) If the default is P's third or a subsequent default during the penalty period, P is liable, at the time of the default, to a penalty of 4% of the amount of the default. (7) For the purposes of this paragraph— (a) P makes a default when P fails to pay an amount of tax in full on or before the date on which it becomes due and payable; (b) in accordance with sub-paragraph (1)(b), the references in sub-paragraphs (3) to (6) to a default are references to a default in relation to the tax to which payments A and B relate; (c) a default counts for the purposes of those sub-paragraphs if (but only if) the period to which the payment relates is less than 6 months; (d) the amount of a default is the amount which P fails to pay. (8) A penalty period may be extended more than once under sub-paragraph (2)(c). (8D) If any amount of the tax is unpaid after the end of the period of 6 months beginning with the penalty date, P is liable to a penalty of 5% of that amount. (8E) If any amount of the tax is unpaid after the end of the period of 12 months beginning with the penalty date, P is liable to a penalty of 5% of that amount. (8F) (1) Paragraphs 8G to 8J apply in the case of a payment of tax falling within any of items 6A, 6C and 11A to 11M in the Table which relates to a period of 2 months or less. (2) But those paragraphs do not apply in the case of a payment mentioned in paragraph 3(1)(d). (8G) (1) A penalty period begins to run on the penalty date for the payment of tax. (2) The penalty period ends with the day 12 months after the date specified in or for the purposes of column 4 for the payment, unless it is extended under paragraph 8C(2)(c) or 8H(2)(c). (8H) (1) This paragraph applies if— (a) a penalty period has begun under paragraph 8B or 8G because P has failed to make a payment (“payment A”), and (b) before the end of the period, P fails to make another payment (“payment B”) falling within the same item in the Table as payment A. (2) In such a case— (a) paragraph 8G(1) does not apply to the failure to make payment B, (b) P is liable to a penalty under this paragraph for that failure, and (c) the penalty period that has begun is extended so that it ends with the day 12 months after the date specified in or for the purposes of column 4 for payment B. (3) The amount of the penalty under this paragraph is determined by reference to the number of defaults that P has made during the penalty period. (4) If the default is P's first, second or third default during the penalty period, P is liable, at the time of the default, to a penalty of 1% of the amount of the default. (5) If the default is P's fourth, fifth or sixth default during the penalty period, P is liable, at the time of the default, to a penalty of 2% of the amount of the default. (6) If the default is P's seventh, eighth or ninth default during the penalty period, P is liable, at the time of the default, to a penalty of 3% of the amount of the default. (7) If the default is P's tenth or a subsequent default during the penalty period, P is liable, at the time of the default, to a penalty of 4% of the amount of the default. (8) For the purposes of this paragraph— (a) P makes a default when P fails to pay an amount of tax in full on or before the date on which it becomes due and payable; (b) in accordance with sub-paragraph (1)(b), the references in sub-paragraphs (3) to (7) to a default are references to a default in relation to the tax to which payments A and B relate; (c) a default counts for the purposes of those sub-paragraphs if (but only if) the period to which the payment relates is less than 6 months; (d) the amount of a default is the amount which P fails to pay. (9) A penalty period may be extended more than once under sub-paragraph (2)(c). (8I) If any amount of the tax is unpaid after the end of the period of 6 months beginning with the penalty date, P is liable to a penalty of 5% of that amount. (8J) If any amount of the tax is unpaid after the end of the period of 12 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.

8

After paragraph 8J insert—

(8K) (1) Where P is required, by virtue of an order under section 28 of VATA 1994, to make any payment on account of VAT— (a) each payment is to be treated for the purposes of this Schedule as relating to the prescribed accounting period in respect of which it is to be paid (and not as relating to the interval between the dates on which payments on account are required to be made), and (b) the amount of tax unpaid in respect of the prescribed accounting period is the total of the amounts produced by paragraphs (a) and (b) of sub-paragraph (3). (2) In determining that total— (a) if there is more than one amount of POAD or POAT, those amounts are to be added together, and (b) if the amount produced by sub-paragraph (3)(b) is less than zero, that amount is to be disregarded. (3) The amounts are— (a) $POAD-POAT$ (b) $BPD-BPT$ (4) In this paragraph— - POAD is the amount of any payment on account due in respect of the prescribed accounting period, - POAT is the amount of any payment on account paid on time (that is, on or before the date on which it was required to be made), - BPD (which is the balancing payment due in respect of the prescribed accounting period) is equal to - BPT (which is the amount paid on time in satisfaction of any liability to pay BPD) is equal to (5) In sub-paragraph (4)— - PAPD is the amount of VAT due in respect of the prescribed accounting period, - PAPP is the total amount paid, on or before the last day on which P is required to make payments in respect of that period, in satisfaction of any liability to pay PAPD, and - POAP is the total amount paid, on or before that day (but whether or not paid on time), in satisfaction of any liability to pay POAD.

9

• (1) Paragraph 11 (assessment) is amended as follows.

• (2) In sub-paragraph (4), for “unpaid tax” substitute “ tax which was due or payable ”.

• (3) After sub-paragraph (4) insert—

(4A) A replacement assessment may be made in respect of a penalty if an earlier assessment operated by reference to an overestimate of an amount of tax which was due or payable.

10

For paragraph 16(1) (no liability where there is reasonable excuse for failure) substitute—

(1) If P satisfies HMRC or (on appeal) the First-tier Tribunal or Upper Tribunal that there is a reasonable excuse for a failure to make a payment— (a) liability to a penalty under any paragraph of this Schedule does not arise in relation to that failure, and (b) the failure does not count as a default for the purposes of paragraphs 6, 8B, 8C, 8G and 8H.

SCHEDULE 12

Part 1 — Stamp duty land tax

1

Part 4 of FA 2003 (stamp duty land tax) is amended as follows.

New provisions relating to overpaid tax

2

In Schedule 10 (returns, enquiries, assessments and appeals), for paragraph 34 and the italic heading preceding it substitute—

(34) (1) This paragraph applies where— (a) a person has paid an amount by way of tax but believes that the tax was not due, or (b) a person has been assessed as liable to pay an amount by way of tax, or there has been a determination to that effect, but the person believes that the tax is not due. (2) The person may make a claim to the Commissioners for Her Majesty's Revenue and Customs for repayment or discharge of the amount. (3) Paragraph 34A makes provision about cases in which the Commissioners for Her Majesty's Revenue and Customs are not liable to give effect to a claim under this paragraph. (4) The following make further provision about making and giving effect to claims under this paragraph— (a) paragraphs 34B to 34D, and (b) Schedule 11A. (5) Paragraph 34E makes provision about the application of this paragraph and paragraphs 34A to 34D to amounts paid under contract settlements. (6) The Commissioners for Her Majesty's Revenue and Customs are not liable to give relief in respect of a case described in sub-paragraph (1)(a) or (b) except as provided— (a) by this Schedule and Schedule 11A (following a claim under this paragraph), or (b) by or under another provision of this Part of this Act. (7) For the purposes of this paragraph and paragraphs 34A to 34E, an amount paid by one person on behalf of another is treated as paid by the other person. (34A) (1) The Commissioners for Her Majesty's Revenue and Customs are not liable to give effect to a claim under paragraph 34 if or to the extent that the claim falls within a case described in this paragraph. (2) Case A is where the amount paid, or liable to be paid, is excessive by reason of— (a) a mistake in a claim or election, or (b) a mistake consisting of making or giving, or failing to make or give, a claim or election. (3) Case B is where the claimant is or will be able to seek relief by taking other steps under this Part of this Act. (4) Case C is where the claimant— (a) could have sought relief by taking such steps within a period that has now expired, and (b) knew, or ought reasonably to have known, before the end of that period that such relief was available. (5) Case D is where the claim is made on grounds that— (a) have been put to a court or tribunal in the course of an appeal by the claimant relating to the amount paid or liable to be paid, or (b) have been put to Her Majesty's Revenue and Customs in the course of an appeal by the claimant relating to that amount that is treated as having been determined by a tribunal (by virtue of paragraph 37 (settling of appeals by agreement)). (6) Case E is where the claimant knew, or ought reasonably to have known, of the grounds for the claim before the latest of the following— (a) the date on which an appeal by the claimant relating to the amount paid, or liable to be paid, in the course of which the ground could have been put forward (a “relevant appeal”) was determined by a court or tribunal (or is treated as having been so determined), (b) the date on which the claimant withdrew a relevant appeal to a court or tribunal, and (c) the end of the period in which the claimant was entitled to make a relevant appeal to a court or tribunal. (7) Case F is where the amount in question was paid or is liable to be paid— (a) in consequence of proceedings enforcing the payment of that amount brought against the claimant by Her Majesty's Revenue and Customs, or (b) in accordance with an agreement between the claimant and Her Majesty's Revenue and Customs settling such proceedings. (8) Case G is where— (a) the amount paid, or liable to be paid, is excessive by reason of a mistake in calculating the claimant's liability to tax, and (b) liability was calculated in accordance with the practice generally prevailing at the time. (34B) (1) A claim under paragraph 34 may not be made more than 4 years after the effective date of the transaction. (2) A claim under paragraph 34 may not be made by being included in a land transaction return. (34C) (1) This paragraph applies where an amount is paid, or is liable to be paid, in respect of a land transaction entered into as purchaser by or on behalf of the members of a partnership (within the meaning of Schedule 15). (2) Paragraphs 6 and 8 of Schedule 15 do not apply to a claim under paragraph 34 in respect of the amount. (3) A claim under paragraph 34 in respect of the amount— (a) may be made by a relevant person who has been nominated to make the claim by all of the relevant persons, and (b) may not be made by any other person. (4) In relation to such a claim, references in paragraph 34A to the claimant are to any of the relevant persons. (5) The relevant persons are— (a) any person who was a partner in the partnership at the effective date of the transaction, and (b) the personal representative of such a person. (34D) (1) This paragraph applies where— (a) a claim is made under paragraph 34, (b) the grounds for giving effect to the claim also provide grounds for a discovery assessment on the claimant in respect of any land transaction, and (c) such an assessment could be made but for a relevant restriction. (2) The reference to the claimant in subsection (1)(b) includes— (a) in relation to a claim for an amount paid or liable to be paid in respect of a land transaction entered into as purchaser by or on behalf of the members of a partnership (within the meaning of Schedule 15), a responsible partner within the meaning of paragraph 6(2) of Schedule 15; (b) in relation to a claim for an amount paid or liable to be paid in respect of a land transaction entered into by trustees of a settlement (within the meaning of Schedule 16), a responsible trustee within the meaning of paragraph 5(3) of Schedule 16. (3) The following are relevant restrictions— (a) the restrictions in paragraph 30, and (b) the expiry of a time limit for making a discovery assessment. (4) Where this paragraph applies— (a) the relevant restrictions are to be disregarded, and (b) the discovery assessment is not out of time if it is made before the final determination of the claim. (5) A claim is not finally determined until it, or the amount to which it relates, can no longer be varied (whether on appeal or otherwise). (34E) (1) In paragraph 34(1)(a) the reference to an amount paid by a person by way of tax includes an amount paid by a person under a contract settlement in connection with tax believed to be due. (2) Sub-paragraphs (3) to (6) apply if the person who paid the amount under the contract settlement (“the payer”) and the person from whom the tax was due (“the taxpayer”) are not the same person. (3) In relation to a claim under paragraph 34 in respect of that amount— (a) the references to the claimant in paragraph 34A(5) to (7) (Cases D, E and F) have effect as if they included the taxpayer, (b) the reference to the claimant in paragraph 34A(8) (Case G) has effect as if it were a reference to the taxpayer, (c) the reference to the claimant in paragraph 34D(1)(b) has effect as if it were a reference to the taxpayer, and (d) references to tax in Schedule 11A (as it applies to a claim under paragraph 34) include such an amount. (4) Sub-paragraph (5) applies where the grounds for giving effect to a claim by the payer in respect of the amount also provide grounds for a discovery assessment on the taxpayer in respect of any land transaction. (5) The Commissioners for Her Majesty's Revenue and Customs may set any amount repayable to the payer by virtue of the claim against any amount payable by the taxpayer by virtue of the assessment. (6) The obligations of the Commissioners for Her Majesty's Revenue and Customs and the taxpayer are discharged to the extent of any set-off under sub-paragraph (5). (7) “Contract settlement” means an agreement made in connection with any person's liability to make a payment to the Commissioners for Her Majesty's Revenue and Customs under or by virtue of an enactment.

Consequential amendments

3

In section 113 (functions conferred on “the Inland Revenue”), omit subsection (3)(b)(ii).

4