Finance Act 2018

(16) (1) This paragraph applies where— (a) a lease is granted as mentioned in sub-paragraph (1)(a) of paragraph 2 and the conditions in sub-paragraph (2) of that paragraph are met but no election is made for tax to be charged in accordance with that paragraph, (b) a lease is granted as mentioned in sub-paragraph (1)(a) of paragraph 4 and the conditions in sub-paragraph (2) of that paragraph are met but no election is made for tax to be charged in accordance with that paragraph, (c) paragraph 4A applies in relation to the acquisition of an interest (but the acquisition is not exempt from charge by virtue of sub-paragraph (2) of that paragraph), (d) a shared ownership trust is declared but no election is made for tax to be charged in accordance with paragraph 9, or (e) an equity-acquisition payment is made under a shared ownership trust (but the equity-acquisition payment, and the consequential increase in the purchaser's beneficial interest, are not exempt from charge by virtue of paragraph 10). (2) Schedule 6ZA (relief for first-time buyers) does not apply in relation to— (a) the acquisition of the lease, (b) the acquisition of the interest, (c) the declaration of the shared ownership trust, or (d) the equity-acquisition payment and the consequential increase in the purchaser's beneficial interest.

• (6) The following provisions (which are spent provisions relating to first-time buyers) are repealed—

• (a) section 57AA of FA 2003,

• (b) section 73CA of that Act,

• (c) section 110(6) of that Act,

• (d) paragraph 15 of Schedule 9 to that Act, and

• (e) section 6 of FA 2010.

• (7) In Schedule 2 to the Wales Act 2014 (amendments relating to the disapplication of UK stamp duty land tax in relation to Wales), after paragraph 9 insert—

(9A) (1) Paragraph 6 of Schedule 6ZA (relief for first-time buyers: definition of “first-time buyer”) is amended as follows. (2) In sub-paragraph (1)(b)— (a) after “acquired” insert — (i) (b) at the end insert or (ii) an interest of a kind mentioned in section 117(2) in a dwelling situated in Wales, (3) In sub-paragraph (2) after “lease” insert “ or, in the case of a dwelling situated in Wales, a term of years absolute ”.

• (8) The amendments made by subsections (1) to (5) have effect in relation to any land transaction of which the effective date is or is after 22 November 2017.

Landfill tax

Landfill tax: disposals not made at landfill sites, etc

42

• (1) Schedule 12 makes provision about landfill tax, including provision for disposals of material elsewhere than at landfill sites to be chargeable.

• (2) That Schedule has effect only in relation to disposals made in England or Northern Ireland.

Excise duties

Air passenger duty: rates of duty from 1 April 2019

43

• (1) Chapter 4 of Part 1 of FA 1994 (air passenger duty) is amended as follows.

• (2) In section 30(4A)(b) as amended by F(No.2)A 2017 (rate for long haul departures not from Northern Ireland: travel not in sole or lowest class, and higher rate does not apply), for “£156” substitute “ £172 ”.

• (3) In section 30(4E)(d) (higher rate for long haul departures not from Northern Ireland is six times standard-class long haul rate), for “six” substitute “ 6.6 ”.

• (4) In section 30A(5A)(c)(ii) (higher rate for long haul departures from Northern Ireland if not set by Act of the Northern Ireland Assembly is six times standard-class rate for long haul departures from Northern Ireland), for “six” substitute “ 6.6 ”.

• (5) The amendments made by this section have effect in relation to the carriage of passengers beginning on or after 1 April 2019.

VED: rates for light passenger vehicles, light goods vehicles, motorcycles etc

44

• (1) Schedule 1 to VERA 1994 (annual rates of duty) is amended as follows.

• (2) In paragraph 1 (general rate)—

• (a) in sub-paragraph (2) (vehicle not covered elsewhere in Schedule with engine cylinder capacity exceeding 1,549cc), for “£245” substitute “ £255 ”, and

• (b) in sub-paragraph (2A) (vehicle not covered elsewhere in Schedule with engine cylinder capacity not exceeding 1,549cc), for “£150” substitute “ £155 ”.

• (3) In paragraph 1B (rates for light passenger vehicles registered before 1 April 2017)—

• (a) for the Table substitute—

CO₂ emissions figure	CO₂ emissions figure	Rate	Rate
(1)	(2)	(3)	(4)
Exceeding	Not exceeding	Reduced rate	Standard rate
g/km	g/km	£	£
100	110	10	20
110	120	20	30
120	130	110	120
130	140	130	140
140	150	145	155
150	165	185	195
165	175	220	230
175	185	240	250
185	200	280	290
200	225	305	315
225	255	530	540
255		545	555

;

• (b) in the sentence immediately following the Table, for paragraphs (a) and (b) substitute—

(a) in column (3), in the last two rows, “305” were substituted for “530” and “ 545 ”, and (b) in column (4), in the last two rows, “315” were substituted for “540” and “ 555 ”.

• (4) For paragraph 1GC (rates on first licence for light passenger vehicles registered on or after 1 April 2017) substitute—

(1GC) (1) This paragraph applies for the purpose of determining the rate at which vehicle excise duty is to be paid on the first vehicle licence for a vehicle to which this Part of this Schedule applies. (2) If the vehicle is not a higher rate diesel vehicle, the annual rate of duty applicable to the vehicle is determined in accordance with Table 1 by reference to— (a) the applicable CO₂ emissions figure, and (b) whether the vehicle qualifies for the reduced rate of duty or is liable to the standard rate of duty. (3) If the vehicle is a higher rate diesel vehicle, the annual rate of duty applicable to the vehicle is determined in accordance with Table 2 by reference to the applicable CO₂ emissions figure.

CO₂ emissions figure	CO₂ emissions figure	Rate	Rate
(1)	(2)	(3)	(4)
Exceeding	Not exceeding	Reduced rate	Standard rate
g/km	g/km	£	£
0	50		10
50	75	15	25
75	90	95	105
90	100	115	125
100	110	135	145
110	130	155	165
130	150	195	205
150	170	505	515
170	190	820	830
190	225	1230	1240
225	255	1750	1760
255	-	2060	2070
CO₂ emissions figure	CO₂ emissions figure	Rate
---	---	---
(1)	(2)	(3)
Exceeding	Not exceeding	Rate
g/km	g/km	£
0	50	25
50	75	105
75	90	125
90	100	145
100	110	165
110	130	205
130	150	515
150	170	830
170	190	1240
190	225	1760
225	255	2070
255	-	2070

(4) For the purposes of this paragraph a vehicle is a higher rate diesel vehicle if it is constructed so as to be propelled by diesel and it does not meet the Euro 6d emissions standard. (5) A vehicle meets the Euro 6d emissions standard only if it is first registered on the basis of an EU certificate of conformity which indicates that the exhaust emission level is Euro 6d (and it does not meet that standard if it is first registered on the basis of an EU certificate of conformity which indicates that that level is Euro 6d-TEMP). (6) “Diesel” means any diesel fuel within Article 2 of Directive 98/70/EC of the European Parliament and of the Council.

• (5) In paragraph 1J (rates for light goods vehicles) in paragraph (a) for “£240” substitute “ £250 ”.

• (6) In paragraph 2(1) (rates for motorcycles)—

• (a) in paragraph (a), for “£18” substitute “ £19 ”,

• (b) in paragraph (b), for “£41” substitute “ £42 ”,

• (c) in paragraph (c), for “£62” substitute “ £64 ”, and

• (d) in paragraph (d), for “£85” substitute “ £88 ”.

• (7) The amendments made by this section have effect in relation to licences taken out on or after 1 April 2018.

Tobacco products duty: rates

45

• (1) TPDA 1979 is amended as follows.

• (2) For the table in Schedule 1 substitute—

1 Cigarettes	An amount equal to the higher of—16.5% of the retail price plus £217.23 per thousand cigarettes, or£280.15 per thousand cigarettes.
2 Cigars	£270.96 per kilogram
3 Hand-rolling tobacco	£221.18 per kilogram
4 Other smoking tobacco and chewing tobacco	£119.13 per kilogram

• (3) The amendment made by this section is treated as having come into force at 6pm on 22 November 2017.

PART 3 — Miscellaneous and final

Customs enforcement powers

Power to enter premises and inspect goods

46

• (1) Section 24 of FA 1994 (power to enter premises and inspect goods) is amended as follows.

• (2) The existing text becomes subsection (1).

• (3) In that subsection—

• (a) at the beginning insert “ This section applies ”;

• (b) omit the words after paragraph (b).

• (4) After that subsection insert—

(2) The officer may at any reasonable time enter and inspect the premises. (3) The officer may inspect, examine and take account of any goods found on the premises. (4) The officer may require a relevant person to provide any assistance that is reasonable for the purpose of exercising the power in subsection (3). (5) For example, the officer may require a relevant person to move, open or unpack goods and containers. (6) The officer may, for the purpose of exercising the power in subsection (3)— (a) move, open, or unpack goods and containers; (b) search containers and anything in them; (c) mark goods and containers. (7) The Commissioners are not to bear any costs incurred by a relevant person in complying with a requirement under subsection (4). (8) But the Commissioners are to bear the costs of anything done by the officer under subsection (6). (9) In this section “relevant person” means— (a) the person to whom this Chapter applies; (b) the occupier of the premises; (c) a person who has (or appears to have) possession or control of the goods; (d) a person who is (or appears to be) acting on behalf of a person within any of paragraphs (a) to (c). (10) Section 159(2) of the Customs and Excise Management Act 1979 (examinations of goods to be at a place appointed by the Commissioners) does not apply to an examination under subsection (3).

Power to search vehicles or vessels

47

In section 163 of CEMA 1979 (power to search vehicles or vessels), after subsection (1) insert—

(1A) The officer, constable or member may use reasonable force if necessary for the purpose of exercising the power in subsection (1).

Updating of statutory references

CO2 emissions figures etc

48

• (1) Schedule 1 to VERA 1994 (annual rates of duty) is amended in accordance with subsections (2) to (5).

• (2) In paragraph 1A(2) (meaning of “light passenger vehicle”), at the end insert “ or, as the case may be, within Category M1 of Annex II to Directive 2007/46/EC (vehicle designed and constructed primarily for the carriage of passengers and comprising no more than 8 seats in addition to the driver's seat) ”.

• (3) In paragraph 1G(1) (meaning of “EU certificate of conformity”), for “issued by a manufacturer under any provision of the law of a Member State implementing Article 6 of Council Directive 70/156/EEC, as amended” substitute “ within the meaning of Council Directive 70/156/EEC or Directive 2007/46/EC of the European Parliament and of the Council of 5 September 2007 ”.

• (4) In paragraph 1GA (vehicles to which Part 1AA applies etc)—

• (a) in sub-paragraph (2), for “has the meaning given by paragraph 1A(2)” substitute “ means a vehicle within Category M1 of Annex II to Directive 2007/46/EC (vehicle designed and constructed primarily for the carriage of passengers and comprising no more than 8 seats in addition to the driver's seat) ”,

• (b) omit sub-paragraph (3)(a),

• (c) for sub-paragraph (3)(d) substitute—

(d) paragraph 1G(2) (meaning of “UK approval certificate”).

, and

• (d) after sub-paragraph (3) insert—

(4) References in this Part of this Schedule to an “EU certificate of conformity” are to a certificate of conformity within the meaning of Directive 2007/46/EC. (5) Sub-paragraphs (3) and (4) of paragraph 1A of this Schedule (meaning of “the applicable CO₂ emissions figure”) apply for the purposes of this Part of this Schedule as they apply for the purposes of Part 1A of this Schedule, but— (a) any reference to an EU certificate of conformity in paragraph 1A(3) or (4) is to be construed in accordance with sub-paragraph (4) of this paragraph, and (b) for the purpose of determining the applicable CO₂ emissions figure, ignore any WLTP (worldwide harmonised light-duty vehicles test procedures) values specified in an EU certificate of conformity.

• (5) In paragraph 1H(2) (meaning of “light goods vehicle”), at the end insert “ or, as the case may be, within Category N1 of Annex II to Directive 2007/46/EC (vehicle designed and constructed primarily for the carriage of goods and having a maximum mass not exceeding 3.5 tonnes) ”.

• (6) In Schedule 2 to VERA 1994 (exempt vehicles), in paragraph 25(4)(b), for “Schedule)” substitute “ Schedule as read with paragraph 1GA(5) of that Schedule) ”.

• (7) The amendments made by subsections (2) to (6) have effect in relation to licences taken out on or after 29 November 2017.

• (8) ITEPA 2003 is amended in accordance with subsections (9) to (11).

• (9) In section 136 (car with a CO₂ emissions figure: post-September 1999 registration)—

• (a) after subsection (2) insert—

(2A) For the purpose of determining the car's CO₂ emissions figure, ignore any WLTP (worldwide harmonised light-duty vehicles test procedures) values specified in an EC certificate of conformity.

, and

• (b) in subsection (3), for “This” substitute “ Subsection (2) ”.

• (10) In section 137 (car with a CO₂ emissions figure: bi-fuel cars)—

• (a) after subsection (2) insert—

(2A) For the purpose of determining the car's CO₂ emissions figure, ignore any WLTP (worldwide harmonised light-duty vehicles test procedures) values specified in an EC certificate of conformity.

, and

• (b) in subsection (3), for “This” substitute “ Subsection (2) ”.

• (11) In section 171(1) (minor definitions: general)—

• (a) in the definition of “EC certificate of conformity”, for “issued by a manufacturer under any provision of the law of a Member State implementing Article 6 of Council Directive 70/156/EEC, as amended” substitute “ within the meaning of Council Directive 70/156/EEC or Directive 2007/46/EC of the European Parliament and of the Council of 5 September 2007 ”, and

• (b) in the definition of “EC type-approval certificate”, for “Council Directive 70/156/EEC, as amended” substitute “ Council Directive 70/156/EEC or an EC type-approval certificate within the meaning of Council Directive 2007/46/EC ”.

• (12) The amendments made by subsections (9) to (11) have effect for the tax year 2017-18 and subsequent tax years.

Final

Interpretation

49

In this Act the following abbreviations are references to the following Acts.

Short title

50

This Act may be cited as the Finance Act 2018.

SCHEDULE 1

PART 1 — Arrangements relating to earnings charged to tax

1

In section 554A of ITEPA 2003 (employment income provided through third parties: application of Chapter 2 of Part 7A), after subsection (5) insert—

(5A) Subsections (5B) and (5C) apply where— (a) a payment to a person other than A, or to A as a trustee, is of earnings from A's employment with B, and (b) the earnings are, in whole or part, charged to tax under the employment income Parts otherwise than by virtue of this Part, and for this purpose it does not matter whether all or some only or none of the tax is paid (but see sections 554Z5 and 554Z11B). (5B) For the purposes of subsection (5C), an arrangement is a “redirected-earnings arrangement” if it (wholly or partly) covers or relates to redirected earnings; and for the purposes of this subsection and subsection (5C) “redirected earnings” means— (a) the payment mentioned in subsection (5A)(a), or (b) any sum or other property which (directly or indirectly)— (i) represents, or (ii) is derived from, that payment. (5C) The circumstances mentioned in subsection (5A)— (a) do not prevent a redirected-earnings arrangement being within subsection (1)(b), and (b) do not prevent rewards or recognition or loans being in connection with A's employment with B for the purposes of subsection (1)(c) where there is use of redirected earnings for the provision of the whole, or part, of the rewards or recognition or loans.

PART 2 — Close companies

Application of Chapter 2 of Part 7A to ITEPA 2003

2

In Part 7A of ITEPA 2003 (employment income provided through third parties), after section 554A (application of Chapter 2) insert—

(554AA) (1) Chapter 2 applies if— (a) there is an arrangement (“the relevant arrangement”) to which an individual (“A”) is a party or which otherwise (wholly or partly) covers or relates to A, (b) it is reasonable to suppose that, in essence— (i) the relevant arrangement, or (ii) the relevant arrangement so far as it covers or relates to A, is (wholly or partly) a means of providing, or is otherwise concerned (wholly or partly) with the provision of, A-linked payments or benefits or loans, (c) a close company (“B”) enters into a relevant transaction (see section 554AB), (d) it is reasonable to suppose that, in essence— (i) the relevant transaction is entered into (wholly or partly) in pursuance of the relevant arrangement, or (ii) there is some other connection (direct or indirect) between the relevant transaction and the relevant arrangement, (e) at the time B enters into the relevant transaction, or at any earlier time in the 3 years ending with the date of the transaction, A is a director or an employee of B, (f) at the time B enters into the relevant transaction, or at any earlier time in the 3 years ending with the date of the transaction, A has a material interest in B (see section 554AE), (g) a relevant step is taken by a relevant third person, (h) it is reasonable to suppose— (i) that the sum of money or asset which is the subject of the relevant step represents (directly or indirectly), or has arisen or derives from, the sum of money or asset which is the subject of the relevant transaction, or (ii) that the sum of money or asset which is the subject of the relevant transaction represents (directly or indirectly), or has arisen or derives from, the sum of money or asset which is the subject of the relevant step, and (i) there is a time in the relevant period when the main purpose, or one of the main purposes, of operating, implementing, maintaining or terminating the relevant arrangement so far as it covers or relates to— (i) the relevant transaction, and the relevant step so far as related to the relevant transaction, or (ii) the relevant step, and the relevant transaction so far as related to the relevant step, is the avoidance of? income tax, national insurance contributions, corporation tax or a charge to tax under section 455 of CTA 2010. (2) In this section “close company” includes a company that would be a close company but for section 442(a) of CTA 2010 (exclusion of companies not resident in the United Kingdom). (3) For the purposes of subsection (1)(b), a payment or benefit or loan is “A-linked” if— (a) it is being provided to A, or a person chosen by A or within a class of persons chosen by A, (b) it is being provided to a person on A's behalf, or at A's direction or request, or (c) it is being provided to a person linked with A and it is reasonable to suppose that the main reason, or one of the main reasons, for it being provided is that the person is linked with A. (4) For the purposes of subsection (1)(i), the “relevant period” consists of the time of the relevant transaction, the time of the relevant step, the times around each of those two times, and any other times between those two times. (5) Subsections (6) and (7) apply where— (a) a payment to a person other than A, or to A as a trustee, is of earnings from— (i) A's employment with B, or (ii) A's office as a director of B, and (b) the earnings are, in whole or part, charged to tax under the employment income Parts otherwise than by virtue of this Part, and for this purpose it does not matter whether all or some only or none of the tax is paid (but see sections 554Z5 and 554Z11B). (6) For the purposes of subsection (7), an arrangement is a “redirected-earnings arrangement” if it (wholly or partly) covers or relates to redirected earnings; and for the purposes of this subsection and subsection (7) “redirected earnings” means— (a) the payment mentioned in subsection (5)(a), or (b) any sum or other property which (directly or indirectly)— (i) represents, or (ii) is derived from, that payment. (7) The circumstances mentioned in subsection (5)— (a) do not prevent a redirected-earnings arrangement being within subsection (1)(a), (b) do not prevent payments or benefits or loans being A-linked for the purposes of subsection (1)(b) where there is use of redirected earnings for the provision of the whole, or part, of the payments or benefits or loans, and (c) do not prevent the making of the payment mentioned in subsection (5)(a) being entry into a relevant transaction. (8) In this section and in section 554AB “relevant third person” means— (a) A acting as a trustee, (b) B acting as a trustee, or (c) any person other than A or B. (9) See also sections 554AD to 554AF (further interpretation and supplementary provision). (554AB) (1) For the purposes of section 554AA(1), B enters into a relevant transaction if— (a) B enters into a transaction within subsection (2), and (b) the transaction is not an excluded transaction (see section 554AC). (2) B enters into a transaction within this subsection if B— (a) pays a sum of money to a relevant third person (see section 554AA(8)), (b) acquires a right to a payment of a sum of money, or to a transfer of assets, where there is a connection (direct or indirect) between the acquisition of the right and— (i) a payment made, by way of a loan or otherwise, to a relevant third person, or (ii) a transfer of assets to a relevant third person, (c) releases or writes off the whole or a part of— (i) a loan made to a relevant third person, or (ii) an acquired right of the kind mentioned in paragraph (b), (d) transfers an asset to a relevant third person, (e) takes a step by virtue of which a third person acquires an asset within subsection (4), (f) makes available a sum of money or asset for use, or makes it available under an arrangement which permits its use— (i) as security for a loan made or to be made to a relevant third person, or (ii) otherwise as security for the meeting of any liability, or the performance of any undertaking, which a relevant third person has or will have, or (g) grants to a relevant third person a lease of any premises the effective duration of which is likely to exceed 21 years. (3) For the purposes of subsection (2) “loan” includes— (a) any form of credit, and (b) a payment that is purported to be made by way of a loan. (4) The following assets are within this subsection— (a) securities, (b) interests in securities, and (c) securities options, as defined in section 420 for the purposes of Chapters 1 to 5 of Part 7; and in subsection (2)(e) “acquires” is to be read in accordance with section 421B(2)(a). (5) For the purposes of subsection (2)(f)— (a) references to making a sum of money or asset available are references to making it available in any way, however informal, (b) it does not matter if the relevant third person has no legal right to have the sum of money or asset used as mentioned, and (c) it does not matter if the sum of money or asset is not actually used as mentioned. (6) Subsections (7) and (8) apply, for the purposes of subsection (2)(g), for the purpose of determining the likely effective duration of a lease of any premises granted to a relevant third person (“the original lease”). (7) If there are circumstances which make it likely that the original lease will be extended for any period, the effective duration of the original lease is to be determined on the assumption that the original lease will be so extended. (8) Further, if— (a) the relevant third person, A or a person linked with A is, or is likely to become, entitled to a later lease, or the grant of a later lease, of the same premises, or (b) it is otherwise likely that the relevant third person, A or a person linked with A will be granted a later lease of the same premises, the original lease is to be treated as continuing until the end of the later lease (and subsection (7) also applies for the purpose of determining the duration of the later lease). (9) In this section “lease” and “premises” have the same meaning as they have in Chapter 4 of Part 3 of ITTOIA 2005. (554AC) (1) In section 554AB “excluded transaction” means— (a) a distribution made by B, (b) a transaction that— (i) is entered into by B in the ordinary course of B's business, and (ii) is on terms that would have been made between persons not connected with each other dealing at arm's length, or (c) a transaction entered into in order to facilitate the disposal, on terms that would have been made between persons not connected with each other dealing at arm's length, of shares in B. (2) But the distribution or transaction is not an “excluded transaction” if the avoidance of tax is the main purpose, or one of the main purposes, of (as the case may be)— (a) making the distribution, or (b) the transaction. (3) Part 23 of CTA 2010 has effect for determining the meaning of “distribution” in this section as if— (a) section 1000(1) of CTA 2010 included a paragraph specifying any distribution made in a winding up of the company, and (b) sections 1030 to 1030B of that Act were omitted. (554AD) (1) For the purposes of section 554AA(1)(e) “director” means— (a) in relation to a company whose affairs are managed by a board of directors or similar body, a member of that body, (b) in relation to a company whose affairs are managed by a single director or similar person, that director or person, and (c) in relation to a company whose affairs are managed by the members themselves, a member of the company, and includes any person in accordance with whose directions or instructions the directors of the company (as defined in this subsection) are accustomed to act. (2) For the purposes of subsection (1) a person is not to be regarded as a person in accordance with whose directions or instructions the directors of the company are accustomed to act merely because the directors act on advice given by that person in a professional capacity. (3) For the purposes of section 5 as it applies to this Part, a person who is a director within the meaning of subsection (1) is to be treated (where it would not otherwise be the case) as holding an office. (554AE) (1) Section 68 (meaning of “material interest” in a company) applies for the purposes of section 554AA and, subject to subsection (2), does so as it applies for the purposes of the benefits code. (2) In section 68 as it applies for the purposes of section 554AA— (a) each of the following is to be treated as “an associate” of A— (i) a person (“the promoter”) who, for the purposes of Part 5 of FA 2014, is carrying on business as a promoter in relation to the relevant arrangement, and (ii) where the promoter is a company, any company which is an associated company of the promoter; (b) “participator”— (i) in relation to a close company, means a person who is a participator in relation to the company for the purposes of section 455 of CTA 2010 (see sections 454 and 455(5) of that Act), and (ii) in relation to a company which would be a close company if it were a UK resident company, means a person who would be such a participator if the company were a close company. (3) In subsection (2)(a)(ii) “associated company” has the same meaning as it has for the purposes of Part 10 of CTA 2010 (see section 449 of that Act). (554AF) (1) Section 554AA(1) is subject to subsection (2) and sections 554E to 554Y. (2) Chapter 2 does not apply by reason of section 554AA(1) in relation to a relevant step taken on or after A's death if— (a) the relevant step is within section 554B, or (b) the relevant step is within section 554C by virtue of subsection (1)(ab) of that section. (3) In section 554AA(1)(a) and (b) references to A include references to a person linked with A. (4) For the purposes of section 554AA(1)(b) it does not matter if the relevant arrangement does not include details of the steps which will or may be taken in connection with providing, in essence, payments or benefits or loans as mentioned (for example, details of any sums of money or assets which will or may be involved or details of how or when or by whom or in whose favour any step will or may be taken). (5) For the purposes of section 554AA(1)(b) and (d) in particular, all relevant circumstances are to be taken into account in order to get to the essence of the matter.

Double taxation

3

• (1) In section 554Z2 of ITEPA 2003 (value of relevant step to count as employment income), after subsection (1) insert—

(1AA) But subsection (1) is subject to section 554Z2A (close companies).

• (2) After section 554Z2 of ITEPA 2003, insert—

(554Z2A) (1) Section 554Z2(1) does not apply in the case of a relevant step if— (a) this Chapter applies in the case of the relevant step only by reason of section 554AA (close companies), (b) the relevant step is a step within section 554B, 554C or 554D, (c) the relevant step gives rise to a charge to tax under either— (i) section 455 of CTA 2010 by virtue of section 459 of that Act (loans treated as made to participator), or (ii) section 415 of ITTOIA 2005 (release of loan to participator in a close company), and (d) in a case within paragraph (c)(i), either the payment condition or the consent condition is met in relation to the charge under section 455 of CTA 2010. (2) The payment condition is met in relation to a charge to tax under section 455 of CTA 2010 if— (a) the net section 455 charge is paid in full on or before the due date, or (b) the net section 455 charge is nil. (3) The “net section 455 charge” means the amount of the charge to tax under section 455 of CTA 2010 less the amount of section 458 relief from that charge. (4) In subsection (3) “section 458 relief” means relief given under section 458 of that Act— (a) in respect of a repayment made, or a release or writing-off occurring, on or before the due date, and (b) on a claim made on or before the due date. (5) The consent condition is met in relation to a charge to tax under section 455 of CTA 2010 if— (a) the charge to tax is reported, in a company tax return of B's, as required under Schedule 18 to FA 1998 (company tax returns etc), (b) the payment condition is not met in relation to that charge, and (c) an officer of Revenue and Customs considers that section 554Z2(1) should not apply in the case of the relevant step concerned. (6) In this section, references to the “due date” in relation to a charge to tax under section 455 of CTA 2010 are references to the day on which the tax is due and payable (see section 455(3) of CTA 2010).

4

• (1) Schedule 11 to F(No.2)A 2017 (employment income provided through third parties: loans etc outstanding on 5 April 2019) is amended as follows.

• (2) Before paragraph 37 (but after the italic heading preceding that paragraph) insert—

(36A) (1) Sub-paragraphs (2) to (8) apply if— (a) a person (“P”) would, apart from this paragraph, be treated as taking a relevant step by paragraph 1 by reason of a loan made to a relevant person, and (b) the loan gives rise to a charge to tax under section 455 of CTA 2010 by virtue of section 459 of that Act (loans treated as made to participators). (2) In this paragraph “the key date” means the later of— (a) 5 April 2019, and (b) the day on which the tax referred to in sub-paragraph (1)(b) is due and payable (see section 455(3) of CTA 2010). (3) Paragraph 1(2) has effect as if it treated P as taking the relevant step immediately before the end of the key date, but this is subject to sub-paragraphs (4) and (5). (4) Paragraph 1(1) does not apply in the case of the loan if the payment condition is met. (5) Paragraph 1(1) does not apply in the case of the loan if— (a) the payment condition is not met, (b) the charge to tax mentioned in sub-paragraph (1)(b) is reported, in a company tax return of B's, as required under Schedule 18 to FA 1998 (company tax returns etc), and (c) an officer of Revenue and Customs considers that paragraph 1(1) should not apply in the case of the loan. (6) The payment condition is met if— (a) the net section 455 charge is paid in full on or before the key date, or (b) the net section 455 charge is nil. (7) The “net section 455 charge” is the amount of the tax referred to sub-paragraph (1)(b) less the amount of section 458 relief from that tax. (8) In sub-paragraph (7) “section 458 relief” means relief given under section 458 of CTA 2010— (a) in respect of a repayment made, or a release or writing-off occurring, on or before the key date, and (b) on a claim made on or before the key date.

PART 3 — Amendments consequential on Part 2

ITEPA 2003

5

• (1) Part 7A of ITEPA 2003 (employment income provided through third parties) is amended in accordance with this paragraph.

• (2) In the italic heading before section 554A, at the end insert “ : main case ”.

• (3) In the heading of section 554A, at the end insert “ : main case ”.

• (4) In section 554Z(2) (interpretation: “A” and “B”) at the end insert “ or, as the case may be, section 554AA(1) ”.

ITTOIA 2005

6

In section 39(4) of ITTOIA 2005 (meaning of “employee benefit scheme”), for paragraph (a) (but not the “or” following it) substitute—

(a) an arrangement (the “relevant arrangement”) which is— (i) an arrangement within subsection (1)(b) of section 554A of ITEPA 2003 to which subsection (1)(c) of that section applies, or (ii) an arrangement within subsection (1)(b) of section 554AA of ITEPA 2003 to which subsection (1)(c) of that section applies,

.

CTA 2009

7

In section 1291(4) of CTA 2009 (meaning of “employee benefit scheme”), for paragraph (a) (but not the “or” following it) substitute—

(a) an arrangement (the “relevant arrangement”) which is— (i) an arrangement within subsection (1)(b) of section 554A of ITEPA 2003 to which subsection (1)(c) of that section applies, or (ii) an arrangement within subsection (1)(b) of section 554AA of ITEPA 2003 to which subsection (1)(c) of that section applies,

.

F(No.2)A 2017

8

• (1) Schedule 11 to F(No.2)A 2017 (employment income provided through third parties: loans etc outstanding on 5 April 2019) is amended in accordance with this paragraph.

• (2) In paragraph 1 (relevant step)—

• (a) in sub-paragraph (3), for “section 554A(1)(e)(i) and (ii)” substitute “ sections 554A(1)(e)(i) and (ii) and 554AA(1)(h)(i) and (ii) ”;

• (b) in sub-paragraph (6)—

• (i) for “Sub-paragraph (1) is” substitute “ Sub-paragraphs (1) and (2) are ”, and

• (ii) at the end insert “ and paragraph 36A (double taxation: close companies) ”.

PART 4 — Loans etc outstanding on 5 April 2019

Information requirement

9

Schedule 11 to F(No.2)A 2017 (employment income provided through third parties: loans etc outstanding on 5 April 2019) is amended in accordance with this Part.

10

After paragraph 35 insert—

(35A) (1) Paragraphs 35B and 35C apply if one of the following conditions is met. (2) The first condition is that— (a) a person (“P”) is treated as taking a relevant step within paragraph 1 immediately before the end of 5 April 2019, and (b) Chapter 2 of Part 7A of ITEPA 2003 applies by reason of that relevant step. (3) The second condition is that— (a) a person (“Q”) has made a loan which is an approved fixed term loan on 5 April 2019, (b) if that day were the approved repayment date in relation to the loan— (i) Q would be treated as taking a relevant step within paragraph 1 immediately before the end of that day, and (ii) Chapter 2 of Part 7A of ITEPA 2003 would apply by reason of that relevant step, and (c) A is living immediately before the end of— (i) 30 September 2019, or (ii) if earlier, the approved repayment date. (4) The third condition is that— (a) paragraph 24(1) applies by reference to a loan, or a quasi-loan, made by a person (“S”) to a relevant person (“R”), (b) R makes an application under paragraph 24(1) for S to be treated as mentioned in paragraph 24(1) in relation to the relevant step concerned, (c) a favourable decision is made on the application before 6 April 2019, (d) that decision is not revoked before 6 April 2019, (e) the first condition is not met, and (f) A is living immediately before— (i) the end of 30 September 2019, or (ii) if earlier, the time given by sub-paragraphs (i) and (ii) of paragraph 24(1)(b). (5) The fourth condition is that— (a) none of the first, second and third conditions is met, and (b) if the date specified in paragraph 1(1)(c) and (2)(b) were 16 March 2016 (and if paragraph 1(2)(a), and the words “in any other case” in paragraph 1(2)(b), were omitted)— (i) a person (“T”) would be treated as taking a relevant step within paragraph 1 immediately before the end of 16 March 2016, and (ii) Chapter 2 of Part 7A of ITEPA 2003 would apply by reason of that relevant step (using, for this purpose, the law that would be used to test whether that Chapter applies to a relevant step taken on 5 April 2019), and (c) A is living immediately before the end of 5 April 2019. (6) Paragraph 35C does not apply in a case where one of the first to fourth conditions is met if— (a) a person agrees, with an officer of Revenue and Customs, terms for the discharge of liability for income tax, (b) the terms cover all liability (if any) under Chapter 2 of Part 7A of ITEPA 2003 by reason of any loan-charge relevant step or result in there being no such liability, and (c) the terms are agreed before 1 October 2019. (7) In sub-paragraph (6)(b) “loan-charge relevant step” means (as the case may be)— (a) the relevant step that P is treated as taking, (b) any relevant step within paragraph 1 that Q is, or has yet to be, treated as taking by reference to the approved fixed term loan mentioned in sub-paragraph (3), (c) any relevant step within paragraph 1 that S is, or has yet to be, treated as taking by reference to the loan or quasi-loan mentioned in sub-paragraph (4), or (d) any relevant step within paragraph 1 that T is, or has yet to be, treated as taking by reference to the loan or quasi-loan by reference to which T would be treated as taking the relevant step mentioned in sub-paragraph (5)(b)(i). (35B) (1) In this paragraph “the appropriate third party” means P, Q, S or T (as the case may be: see paragraph 35A). (2) Sub-paragraph (3) applies if the appropriate third party receives a request from A or A's personal representatives for information specified in the request that is reasonably required for the purpose of complying with paragraph 35C in the case concerned. (3) The appropriate third party must provide A or A's personal representatives— (a) with such of the information as is available to the appropriate third party, and (b) if any of the information is not available to the appropriate third party, with a statement confirming that so much of the information as is not provided is information that is not available to the appropriate third party. (4) The information, and any such statement, must be provided promptly and, in any event, before the end of 30 days beginning with date of receipt of the request. (35C) (1) A, or A's personal representatives, must provide the loan charge information (see paragraph 35D(1)) to the Commissioners for Her Majesty's Revenue and Customs. (2) The loan charge information must be provided— (a) after 5 April 2019, and (b) before 1 October 2019. (3) The loan charge information must be provided in such form and manner as may be specified by, or on behalf of, the Commissioners for Her Majesty's Revenue and Customs. (35D) (1) For the purposes of paragraphs 35C and 36, the “loan charge information” consists of— (a) A's name and, if A's personal representatives are providing the information, their names, (b) the address and telephone number, and e-mail address (if any), of each person providing the information, (c) A's national insurance number (if any), (d) the unique taxpayer reference number (if any) allocated to A by HMRC, (e) if the loan or quasi-loan that is or would be the subject of the relevant step mentioned in paragraph 35A(2)(a) or (4)(b) or (5)(b)(i), or the loan mentioned in paragraph 35A(3)(a), is made to someone other than A, the name of the person to whom it is made, (f) B's name, (g) the name of the relevant arrangement, (h) the reference number (if any) allocated to the relevant arrangement by HMRC under section 311 of FA 2004 (disclosure of tax avoidance schemes: arrangements to be given reference number), (i) any other reference number allocated by HMRC in connection with the relevant arrangement or the relevant step, (j) if a person has agreed terms with an officer of Revenue and Customs for the partial discharge of the liability for income tax arising because of the application of Chapter 2 of Part 7A of ITEPA 2003 by reason of the relevant step that P, Q or S is treated as taking, the date of that agreement and the amount of the liability to which it relates, (k) if a loan is or would be the subject of the relevant step mentioned in paragraph 35A(2)(a) or (4)(b) or (5)(b)(i), or in a case within paragraph 35A(3)(a), the loan payment information (see sub-paragraph (2)), and (l) if a quasi-loan is or would be the subject of the relevant step mentioned in paragraph 35A(2)(a) or (4)(b) or (5)(b)(i), the quasi-loan payment information (see sub-paragraph (3)). (2) The “loan payment information”, in relation to a loan, consists of statements of the following— (a) whether the loan is an approved fixed term loan, (b) the initial principal amount of the loan, (c) the amount that has become principal under the loan, otherwise than by capitalisation of interest, in each relevant tax year, (d) the amount of principal under the loan repaid in each relevant tax year, ignoring any repayments not in money made on or after 17 March 2016, (e) the details of any repayment that is to be disregarded under paragraph 4, (f) the amount of principal under the loan that has been released or written off in each relevant tax year, and (g) whether the liability for income tax arising because of the application of Chapter 2 of Part 7A of ITEPA 2003, or section 188 of that Act, by reason of the release or writing-off has been paid. (3) The “quasi-loan payment information”, in relation to a quasi-loan, consists of statements of the following— (a) the amount equal to the value of the acquired debt, (b) the amount equal to the value of the additional debts acquired in each relevant tax year, (c) the amount by which the initial debt amount has been reduced by way of repayment in each relevant tax year, ignoring any repayments not in money made on or after 17 March 2016, (d) where the acquired debt or an additional debt is a right to a transfer of assets, and the assets have been transferred, the amount of the market value of the assets at the time of the transfer, (e) the details of any repayment that is to be disregarded under paragraph 12, (f) the amount by which the initial debt amount has been reduced by release or writing off in each relevant tax year, and (g) whether the liability for income tax arising because of the application of Chapter 2 of Part 7A of ITEPA 2003, or section 188 of that Act, by reason of the release or writing-off has been paid. (4) In this paragraph “relevant tax year” in relation to a loan, or a quasi-loan, means— (a) the tax year in which the loan or quasi-loan was made, and (b) each subsequent tax year. (5) In sub-paragraph (3), “acquired debt”, “additional debt” and “initial debt amount” have the same meaning as in paragraph 11. (6) In this paragraph and in paragraphs 35G to 35J, “HMRC” means Her Majesty's Revenue and Customs. (35E) The Commissioners for Her Majesty's Revenue and Customs may by regulations amend paragraph 35D so as to— (a) add, remove or amend an entry in a list of information, and (b) make incidental provision. (35F) (1) A person who fails to comply with paragraph 35C is liable to a penalty of £300. (2) Sub-paragraph (3) applies if the failure continues after the date on which a penalty is imposed under sub-paragraph (1) in respect of the failure. (3) The person is liable to a further penalty or penalties not exceeding £60 for each subsequent day, up to a maximum of 90 days, on which the failure continues. (35G) (1) This paragraph applies if— (a) in complying with the duty under paragraph 35C, a person provides inaccurate information, and (b) condition A, B or C is met. (2) Condition A is that the inaccuracy is careless or deliberate. (3) An inaccuracy is careless if it is due to a failure by the person to take reasonable care. (4) Condition B is that the person knows of the inaccuracy at the time the information is provided but does not inform HMRC at that time. (5) Condition C is that the person— (a) discovers the inaccuracy some time later, and (b) fails to take reasonable steps to inform HMRC. (6) The person is liable to a penalty not exceeding £3000. (7) Where the information contains more than one inaccuracy, a penalty is payable for each inaccuracy. (35H) (1) Liability to a penalty under paragraph 35F does not arise if the person satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that there is a reasonable excuse for the failure. (2) For the purposes of this paragraph— (a) an insufficiency of funds is not a reasonable excuse unless attributable to events outside the person's control, (b) where the person relies on any other person to do anything, that is not a reasonable excuse unless the first person took reasonable care to avoid the failure, and (c) where the person had a reasonable excuse for the failure but the excuse has ceased, the person is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased. (35I) (1) Where a person becomes liable for a penalty under paragraph 35F or 35G— (a) HMRC may assess the penalty, and (b) if they do so, they must notify the person. (2) An assessment of a penalty under paragraph 35F must be made before 1 October 2021. (3) An assessment of a penalty under paragraph 35G must be made before 1 October 2023. (35J) (1) A person may appeal against any of the following decisions of an officer of Revenue and Customs— (a) a decision that a penalty is payable by that person under paragraph 35F or 35G, or (b) a decision as to the amount of such a penalty. (2) Notice of an appeal under this paragraph must be given— (a) in writing, (b) before the end of the period of 30 days beginning with the date on which the notification under paragraph 35I was issued, and (c) to HMRC. (3) Notice of an appeal under this paragraph must state the grounds of appeal. (4) On an appeal under sub-paragraph (1)(a) that is notified to the tribunal, the tribunal may confirm or cancel the decision. (5) On an appeal under sub-paragraph (1)(b) that is notified to the tribunal, the tribunal may— (a) confirm the decision, or (b) substitute for the decision another decision that the officer of Revenue and Customs had power to make. (35K) (1) A penalty under paragraph 35F or 35G must be paid— (a) before the end of the period of 30 days beginning with the date on which the notification under paragraph 35I was issued, or (b) if a notice of an appeal against the penalty is given, before the end of the period of 30 days beginning with the date on which the appeal is determined or withdrawn. (2) A penalty under paragraph 35F or 35G may be enforced as if it were income tax charged in an assessment and due and payable.

11

• (1) Paragraph 36 (duty to provide loan balance information to B) is amended in accordance with this paragraph.

• (2) In sub-paragraph (2) for “loan balance information” substitute “ loan charge information (see paragraph 35D) ”.

• (3) Omit sub-paragraphs (3), (5) and (6).

• (4) In the italic heading preceding paragraph 36, for “balance” substitute “ charge ”.

PAYE: employee of non-UK employer

12

• (1) Section 689 of ITEPA 2003 (PAYE: employee of non-UK employer) is amended in accordance with this paragraph.

• (2) In subsection (4), in the words before paragraph (a), after “employee,” insert “ and if the case is not within subsection (4A), ”.

• (3) After subsection (4) insert—

(4A) A case is within this subsection if— (a) the section concerned is section 687A or 695A (employment income under Part 7A), and (b) the relevant step concerned is within paragraph 1 of Schedule 11 to F(No. 2)A 2017 (loans etc outstanding on 5 April 2019). (And this section does not apply in a case within this subsection.)

PART 5 — Commencement

13

The amendment made by paragraph 1—

• (a) is to be treated as having come into force on 29 November 2017,

• (b) has effect for the purposes of the operation of Part 7A of ITEPA 2003 in relation to relevant steps taken on or after 22 November 2017, and

• (c) so has effect in the case of payments within the new subsection (5A)(a) whenever made (including ones made before 6 April 2011).

14

The amendments made by paragraphs 2, 3 and 5 of this Schedule in Part 7A of ITEPA 2003 have effect in relation to relevant steps taken on or after 6 April 2018.

15

The amendment made by paragraph 6 of this Schedule in section 39 of ITTOIA 2005 has effect in relation to employee benefit contributions (as defined in that section) made, or to be made, on or after 6 April 2018.

16

The amendment made by paragraph 7 of this Schedule in section 1291 of CTA 2009 has effect in relation to employee benefit contributions (as defined in that section) made, or to be made, on or after 1 April 2018.

SCHEDULE 2

1

In Schedule 12 to F(No.2)A 2017 (trading income provided through third parties: loans etc outstanding on 5 April 2019), after paragraph 20 insert—

(21) (1) Paragraph 22 applies if one of the following conditions is met. (2) The first condition is that— (a) a loan or quasi-loan in relation to which paragraph 1(2) applies is treated as a “relevant benefit” for the purposes of sections 23A to 23H of ITTOIA 2005, and (b) section 23E of ITTOIA 2005 applies in relation to the relevant benefit (see section 23A of that Act). (3) The second condition is that— (a) an application is made under paragraph 20(1) by reference to a loan or quasi-loan in relation to which paragraph 1(2) applies, (b) a favourable decision is made on the application before 6 April 2019, and (c) the first condition is not met in relation to the loan or quasi-loan. (4) Paragraph 22 does not apply in a case if— (a) a person agrees, with an officer of Revenue and Customs, terms for the discharge of liability for income tax arising because of the application of section 23E of ITTOIA 2005, (b) the terms cover all liability (if any) arising because of the application of that section by reference to a loan or quasi-loan in relation to which paragraph 1(2) applies, and (c) the terms are agreed before 1 October 2019. (22) (1) T, or T's personal representatives, must provide the loan charge information (see paragraph 23(1)) to the Commissioners for Her Majesty's Revenue and Customs. (2) The loan charge information must be provided— (a) after 5 April 2019, and (b) before 1 October 2019. (3) The loan charge information must be provided in such form and manner as may be specified by, or on behalf of, the Commissioners for Her Majesty's Revenue and Customs. (4) In this paragraph and in paragraph 23, “T” is the person mentioned in section 23A(2) of ITTOIA 2005. (23) (1) For the purposes of paragraph 22, the “loan charge information” consists of — (a) T's name and, if T's personal representatives are providing the information, their names, (b) the address and telephone number, and e-mail address (if any), of each person providing the information, (c) T's national insurance number (if any), (d) the unique taxpayer reference number (if any) allocated to T by HMRC, (e) the name of the arrangement mentioned in section 23A(3)(a) of ITTOIA 2005, (f) the reference number (if any) allocated to the arrangement by HMRC under section 311 of FA 2004 (disclosure of tax avoidance schemes: arrangements to be given reference number), (g) any other reference number allocated by HMRC in connection with the arrangement or with the loan or quasi-loan mentioned in paragraph 21(2) or (3), (h) if the loan or quasi-loan mentioned in paragraph 21(2) or (3) is made to someone other than T, the name of the person to whom it is made, (i) if a person has agreed terms with an officer of Revenue and Customs for the partial discharge of the liability for income tax arising because of the application of section 23E of ITTOIA 2005 in relation to the loan or quasi-loan mentioned in paragraph 21(2) or (3), the date of that agreement and the amount of the liability to which it relates, (j) if the condition in paragraph 21(2) or (3) is met by reference to a loan, the loan payment information (see sub-paragraph (2)), and (k) if the condition in paragraph 21(2) or (3) is met by reference to a quasi-loan, the quasi-loan payment information (see sub-paragraph (3)). (2) The “loan payment information”, in relation to a loan, consists of statements of the following— (a) whether the loan is an approved fixed term loan, (b) the initial principal amount of the loan, (c) the amount that has become principal under the loan, otherwise than by capitalisation of interest, in each relevant tax year, (d) the amount of principal under the loan repaid in each relevant tax year, ignoring any repayments not in money made on or after 5 December 2016, (e) the details of any repayment that is to be disregarded under paragraph 3(4), (f) the amount of principal under the loan that has been released or written off in each relevant tax year, (g) whether any liability for income tax arising because of the application of section 23E of ITTOIA 2005 by reason of the release or writing-off has been paid, and (h) any amount released that has, in accordance with section 97 of ITTOIA 2005, been brought into account as a receipt in calculating the profits of the relevant trade. (3) The “quasi-loan payment information”, in relation to a quasi-loan, consists of statements of the following— (a) the amount equal to the value of the acquired debt, (b) the amount equal to the value of the additional debts acquired in each relevant tax year, (c) the amount by which the initial debt amount has been reduced by way of repayment in each relevant tax year, ignoring any repayments not in money made on or after 5 December 2016, (d) where the acquired debt or an additional debt is a right to a transfer of assets, and the assets have been transferred, the amount of the market value of the assets at the time of the transfer, (e) the details of any repayment that is to be disregarded under paragraph 9(5), (f) the amount by which the initial debt amount has been reduced by release or writing off in each relevant tax year, (g) whether any liability for income tax arising because of the application of section 23E of ITTOIA 2005 by reason of the release or writing-off has been paid, and (h) any amount released that has, in accordance with section 97 of ITTOIA 2005, been brought into account as a receipt in calculating the profits of the relevant trade. (4) In this paragraph “relevant tax year” in relation to a loan, or a quasi-loan, means— (a) the tax year in which the loan or quasi-loan was made, and (b) each subsequent tax year. (5) In sub-paragraph (3), “acquired debt”, “additional debt” and “initial debt amount” have the same meaning as in paragraph 9. (6) In this paragraph and in paragraphs 26 to 29, “HMRC” means Her Majesty's Revenue and Customs. (24) The Commissioners for Her Majesty's Revenue and Customs may by regulations amend paragraph 23 so as to— (a) add, remove or amend an entry in a list of information, and (b) make incidental provision. (25) (1) A person who fails to comply with paragraph 22 is liable to a penalty of £300. (2) Sub-paragraph (3) applies if the failure continues after the date on which a penalty is imposed under sub-paragraph (1) in respect of the failure. (3) The person is liable to a further penalty or penalties not exceeding £60 for each subsequent day, up to a maximum of 90 days, on which the failure continues. (26) (1) This paragraph applies if— (a) in complying with the duty under paragraph 22, a person provides inaccurate information, and (b) condition A, B or C is met. (2) Condition A is that the inaccuracy is careless or deliberate. (3) An inaccuracy is careless if it is due to a failure by the person to take reasonable care. (4) Condition B is that the person knows of the inaccuracy at the time the information is provided but does not inform HMRC at that time. (5) Condition C is that the person— (a) discovers the inaccuracy some time later, and (b) fails to take reasonable steps to inform HMRC. (6) The person is liable to a penalty not exceeding £3000. (7) Where the information contains more than one inaccuracy, a penalty is payable for each inaccuracy. (27) (1) Liability to a penalty under paragraph 25 does not arise if the person satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that there is a reasonable excuse for the failure. (2) For the purposes of this paragraph— (a) an insufficiency of funds is not a reasonable excuse unless attributable to events outside the person's control, (b) where the person relies on any other person to do anything, that is not a reasonable excuse unless the first person took reasonable care to avoid the failure, and (c) where the person had a reasonable excuse for the failure but the excuse has ceased, the person is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased. (28) (1) Where a person becomes liable for a penalty under paragraph 25 or 26— (a) HMRC may assess the penalty, and (b) if they do so, they must notify the person. (2) An assessment of a penalty under paragraph 25 must be made before 1 October 2021. (3) An assessment of a penalty under paragraph 26 must be made before 1 October 2023. (29) (1) A person may appeal against any of the following decisions of an officer of Revenue and Customs— (a) a decision that a penalty is payable by that person under paragraph 25 or 26, or (b) a decision as to the amount of such a penalty. (2) Notice of an appeal under this paragraph must be given— (a) in writing, (b) before the end of the period of 30 days beginning with the date on which the notification under paragraph 28 was issued, and (c) to HMRC. (3) Notice of an appeal under this paragraph must state the grounds of appeal. (4) On an appeal under sub-paragraph (1)(a) that is notified to the tribunal, the tribunal may confirm or cancel the decision. (5) On an appeal under sub-paragraph (1)(b) that is notified to the tribunal, the tribunal may— (a) confirm the decision, or (b) substitute for the decision another decision that the officer of Revenue and Customs had power to make. (30) (1) A penalty under paragraph 25 or 26 must be paid— (a) before the end of the period of 30 days beginning with the date on which the notification under paragraph 28 was issued, or (b) if a notice of an appeal against the penalty is given, before the end of the period of 30 days beginning with the date on which the appeal is determined or withdrawn. (2) A penalty under paragraph 25 or 26 may be enforced as if it were income tax charged in an assessment and due and payable.

SCHEDULE 3

Amendments of and relating to Part 4 of the Finance Act 2004

1

• (1) Part 4 of FA 2004 (pension schemes etc) is amended in accordance with sub-paragraphs (2) to (8).

• (2) In section 150 (meaning of “pension scheme”), after subsection (5) insert—

(5A) This Part applies in relation to certain pension schemes that are not occupational pension schemes as it applies in relation to occupational pension schemes (see section 274B and paragraph 1(4A) of Schedule 36).

• (3) In section 153 (registration of pensions schemes), in subsection (5), at the end insert

, or (h) the pension scheme is an occupational pension scheme, and a sponsoring employer in relation to the scheme is a body corporate that has been dormant during a continuous period of one month that falls within the period of one year ending with the day on which the decision is made, or (i) the pension scheme is an unauthorised Master Trust scheme.

• (4) In section 158 (grounds for de-registration) in subsection (1), at the end insert

, or (g) that the pension scheme is an occupational pension scheme, and a sponsoring employer in relation to the scheme is a body corporate that has been dormant during a continuous period of one month that falls within the period of one year ending with the day on which the decision to withdraw registration is made, or (h) that the scheme is an unauthorised Master Trust scheme.

• (5) At the beginning of Chapter 8 (supplementary) insert—

(274B) (1) This Part applies in relation to a pension scheme that— (a) is established under section 67 of the Pensions Act 2008, and (b) is not an occupational pension scheme, as it applies in relation to an occupational pension scheme. (2) This Part applies in relation to a pension scheme that— (a) is a Master Trust scheme, and (b) is not an occupational pension scheme, as it applies in relation to an occupational pension scheme.

• (6) In section 279 (other definitions), after subsection (1A) insert—

(1B) In this Part “Master Trust scheme” means a pension scheme— (a) that is a Master Trust scheme within the meaning of the Pension Schemes Act 2017 (see sections 1 and 2 of that Act) or corresponding provision in force in Northern Ireland, and (b) whose operation would be unlawful under Part 1 of that Act (Master Trusts), or corresponding provision in force in Northern Ireland, were the scheme not authorised under that Part or that corresponding provision. (1C) For the purposes of determining whether the condition in subsection (1B)(b) is met, the following are to be ignored— (a) any regulations under section 40 of the Pension Schemes Act 2017 (regulations modifying application of Part 1 of that Act); (b) any provision in force in Northern Ireland corresponding to regulations that could be made under that section. (1D) For the purposes of this Part a Master Trust scheme is “unauthorised” if— (a) it is not authorised under Part 1 of the Pension Schemes Act 2017 or corresponding provision in force in Northern Ireland, and (b) its operation would be unlawful under that Part or that corresponding provision without such authorisation. (1E) Section 1169 of the Companies Act 2006 (dormant companies) applies for the purposes of this Part.

• (7) In section 280(2) (general index), in the table, insert at the appropriate places—

dormant (in relation to a body corporate)	section 279(1E)

;

Master Trust scheme	section 279(1B) and (1C)

;

unauthorised (in relation to a Master Trust scheme)	section 279(1D)

.

• (8) In Schedule 36 (pension schemes etc: transitional provisions and savings), in paragraph 1 (deemed registration of existing schemes), after sub-paragraph (4) insert—

(4A) This Part of this Act applies in relation to a pension scheme that— (a) is a registered pension scheme by virtue of sub-paragraph (1)(a), and (b) is neither a public service pension scheme nor an occupational pension scheme, as it applies in relation to an occupational pension scheme.

• (9) In consequence of the amendment made by sub-paragraph (5), in section 30 of F(No.3)A 2010 (pension scheme under section 67 of Pensions Act 2008), omit subsection (1).

Commencement

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• (1) The following provisions of paragraph 1 come into force on the day on which section 3 of the Pension Schemes Act 2017 (prohibition on operating Master Trust scheme unless authorised) comes into force or, if later, the day on which this Act is passed—

• (a) sub-paragraph (3) so far as it inserts section 153(5)(i) of FA 2004 and the “or” at the end of section 153(5)(h);

• (b) sub-paragraph (4) so far as it inserts section 158(1)(h) of that Act and the “or” at the end of section 158(1)(g);

• (c) sub-paragraph (6) so far as it inserts section 279(1D) of that Act (definition of “unauthorised Master Trust scheme”);

• (d) sub-paragraph (7) so far as it inserts an index entry relating to that definition.

• (2) The following provisions of paragraph 1 come into force on 6 April 2018—

• (a) sub-paragraph (3) so far as it inserts section 153(5)(h) of FA 2004 and the “or” at the end of section 153(5)(g);

• (b) sub-paragraph (4) so far as it inserts section 158(1)(g) of that Act and the “or” at the end of section 158(1)(f);

• (c) sub-paragraph (6) so far as it inserts section 279(1E) of that Act (definition of “dormant”);

• (d) sub-paragraph (7) so far as it inserts an index entry relating to that definition.

• (3) So far as not brought into force by sub-paragraph (1) or (2), and subject to sub-paragraph (4), paragraph 1 comes into force on the day on which this Act is passed.

• (4) Paragraph 1(8) is treated as always having had effect.

• (5) For the purposes of section 153(5)(h) and (i) of FA 2004 (as inserted by paragraph 1(3)) it is immaterial when the application in question was made.

Meaning of “Master Trust scheme”: transitional provision

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Before the coming into force of section 3 of the Pension Schemes Act 2017 (prohibition on operating Master Trust scheme unless authorised), section 279 of FA 2004 has effect as if subsections (1B)(b) and (1C) (as inserted by paragraph 1(6)) were omitted.

Master Trust schemes registered before the passing of this Act

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• (1) Sub-paragraph (2) applies to a pension scheme that—

• (a) is a Master Trust scheme,

• (b) is not an occupational pension scheme, and

• (c) was registered under Chapter 2 of Part 4 of FA 2004 before the passing of this Act.