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Finance Act 2021

Type Public General Act

Publication 2021-06-10

Last updated 2025-05-31

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(2) Where HMRC assess a penalty they must—

(a) notify the person, and

(b) state in the notice the failure (or failures) for which the person is liable to a penalty.

(3) A penalty under this Schedule must be paid before the end of the period of 30 days beginning with the day on which notification of the penalty is issued.

(4) An assessment of a penalty under this Schedule—

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

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

Supplementary assessments

13

(1) A supplementary assessment may be made in respect of a penalty under this Schedule if an earlier assessment—

(a) is based on a liability to tax that would have been shown in a return, and that liability is found by HMRC to be an underestimate, or

(b) is based on a liability to tax that is found by HMRC to be insufficient.

(2) Sub-paragraph (3) applies if an assessment in respect of a penalty—

(a) is based on a liability to tax that would have been shown in a return, and that liability is found by HMRC to be an overestimate, or

(b) is based on a liability to tax that is found by HMRC to be excessive.

(3) HMRC may by notice to the person amend the assessment so that it is based upon the correct amount.

(4) An amendment under sub-paragraph (3)—

(a) does not affect when the penalty must be paid;

(b) may be made after the last day on which the assessment in question could have been made under paragraph 14.

Time limit for assessments

14

(1) An assessment of a penalty under this Schedule may not be made after the later of Date A and (where it applies) Date B.

(2) Date A is the end of the period of 2 years beginning with the due date.

(3) Date B is the last day of the period of 12 months beginning with—

(a) the end of the appeal period for the assessment of the liability to tax which would have been shown in the return, or

(b) if there is no such assessment, the date on which that liability is ascertained or it is ascertained that the liability is nil.

(4) In sub-paragraph (3)(a) “appeal period” means the period during which—

(a) an appeal could be brought (ignoring any possibility of an appeal out of time), or

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

(5) Sub-paragraph (1) does not apply to a re-assessment under paragraph 11(3).

(6) A re-assessment under that paragraph must be made before the end of the period of 2 years beginning with the day on which the return is made.

PART 3 — Supplementary provision

Double jeopardy

15

A person is not liable to a penalty under this Schedule in respect of a failure or action in respect of which the person has been convicted of an offence.

Withdrawal of notice to make a return

16

(1) This paragraph applies where—

(a) a person is liable to a penalty under this Schedule in relation to a failure to make a return within item 1 or 2 in the Table in paragraph 1, and

(b) HMRC decide (on the request of the person or otherwise) to give the person a notice under section 8B of TMA 1970 withdrawing a notice under section 8 or 8A of that Act.

(2) This paragraph also applies where—

(a) a person is liable to a penalty under this Schedule in relation to a failure to make a return within item 3 in the Table in paragraph 1, and

(b) HMRC decide (on a request under section 12AAA of TMA 1970) to give a notice under that section withdrawing a notice under section 12AA of that Act.

(3) The notice under section 8B or 12AAA of TMA 1970 may include provision under this paragraph cancelling liability to the penalty from the date specified in the notice.

Appeals

17

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

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

18

(1) An appeal under paragraph 17 is to be treated in the same way as an appeal against an assessment to the tax concerned (including by the application of any provision about bringing the appeal by notice to HMRC, about HMRC's review of the decision or about determination of the appeal by the First-tier Tribunal or Upper Tribunal).

(2) Sub-paragraph (1) does not apply—

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

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

19

(1) On an appeal under paragraph 17(1) that is notified to the tribunal, the tribunal may affirm or cancel HMRC's decision that a penalty is payable by the person.

(2) On an appeal under paragraph 17(2) that is notified to the tribunal, the tribunal may—

(a) affirm HMRC's decision, or

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

(3) If the tribunal substitutes its decision for HMRC's decision in relation to a penalty under this Schedule, the tribunal may rely on paragraph 9—

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

(b) to a different extent, but only if the tribunal thinks that HMRC's decision in respect of the application of paragraph 9 was flawed.

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

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

Partnerships

20

(1) This paragraph applies where—

(a) the representative partner, or a successor of the representative partner, fails to make a return falling within item 3 in the Table in paragraph 1, or

(b) the nominated partner fails to make a return falling within item 4 in that Table.

(2) In determining whether the representative partner, a successor of the representative partner or the nominated partner (as the case may be) is liable to a penalty under paragraph 3, the condition in sub-paragraph (2) of that paragraph is to be read as if the reference to the person's liability to tax was a reference to the liability to tax of any relevant partner.

(3) If a representative partner, a successor of a representative partner or a nominated partner is liable to a penalty under paragraph 3, every relevant partner is liable to a penalty under that paragraph.

(4) The amount of the penalty to which the representative partner, a successor of the representative partner, the nominated partner or a relevant partner is liable is £300 (and accordingly paragraphs 3(3) to (8), 4 to 8, 10, 11 and 13 do not apply).

(5) An appeal under paragraph 17 in connection with a penalty payable by virtue of this paragraph may be brought only by—

(a) the representative partner or a successor of the representative partner, in a case within sub-paragraph (1)(a), or

(b) the nominated partner, in a case within sub-paragraph (1)(b).

(6) Where such an appeal is brought in connection with a penalty payable in respect of a failure, the appeal is to be treated as if it were an appeal in connection with every penalty payable in respect of that failure.

(7) In this paragraph—

“nominated partner” has the meaning given by paragraph 5(5) of Schedule A1 to TMA 1970;

“relevant partner” means a person who was a partner in the partnership to which the return relates at any time during the period in respect of which the return was required;

“representative partner” means a person who has been required by a notice served under or for the purposes of section 12AA(2) or (3) of TMA 1970 to deliver any return;

“successor” has the meaning given by section 12AA(11) of TMA 1970.

Regulations: supplementary provision

21

(1) Regulations under this Schedule are to be made by statutory instrument.

(2) Regulations under this Schedule may include transitional, transitory and saving provision.

(3) A statutory instrument containing regulations under this Schedule is subject to annulment in pursuance of a resolution of the House of Commons.

SCHEDULE 26

PART 1 — Introduction

Introduction

1

(1) This Schedule makes provision for penalties to be payable by a person who, in relation to a tax dealt with by one of the following tables, fails to pay an amount specified in column 2 of the table (“the tax due”) on or before the date specified in column 3 of the table (“the specified date”).

1	Amount of income tax or capital gains tax payable under section 55 of TMA 1970	The date determined in accordance with section 55 of TMA 1970 as the date by which the amount must be paid
2	Amount of income tax or capital gains tax payable under section 59B(3) or (4) of TMA 1970	The date specified in section 59B(3) or (4) of TMA 1970 as the date by which the amount must be paid
3	Amount of income tax or capital gains tax payable under section 59B(5) or (6) of TMA 1970	The date specified in section 59B(5) or (6) of TMA 1970 as the date by which the amount must be paid
4	Amount of income tax or capital gains tax payable under section 59B(5A) of TMA 1970	The date specified in section 59B(5A) of TMA 1970 as the date by which the amount must be paid
5	Amount of income tax or capital gains tax payable under section 59BA(4) or (5) of TMA 1970	The date specified in section 59BA(4) or (5) of TMA 1970 as the date by which the amount must be paid
6	Amount of income tax payable under regulations under section 244L(2)(a) of FA 2004	The due date determined by or under the regulations
7	Amount of income tax shown in a return under section 254(1) of FA 2004	The date specified in section 254(5) of FA 2004 as the date by which the amount must be paid
8	Amount of income tax or capital gains tax (not within item 4) shown in an assessment or determination made by HMRC in default of a return (see paragraph 3)	The date by which the amount would have been required to be paid if it had been shown in the return in question
9	Amount of income tax or capital gains tax (not within item 1 or 3) shown in an amendment or correction of a return	The later of—the date by which the amount must be paid, andthe date on which the amendment or correction is made
10	Amount of income tax or capital gains tax (not within item 1 or 3) shown in an assessment or determination made by HMRC otherwise than in default of a return (see paragraph 3)	The later of—the date by which the amount must be paid, andthe date on which the assessment or determination is made
1	Amount of value added tax payable under section 25(1) of VATA 1994 except an amount within item 3, 4 or 5, or that is an annual accounting scheme instalment	The date determined by or under regulations under section 25 of VATA 1994 as the date by which the amount must be paid
---	---	---
2	. . .	. . .
3	Amount of value added tax shown in an assessment made by HMRC in default of a return (see paragraph 3)	The date by which the amount would have been required to be paid if it had been shown in the return in question
4	Amount of value added tax shown in an amendment or correction of a return	The date falling 30 days after the date on which the amendment or correction is made
5	Amount of value added tax shown in an assessment made by HMRC otherwise than in default of a return (see paragraph 3)	The date falling 30 days after the date on which the assessment is made

(2) In the table relating to value added tax, “annual accounting scheme instalment” means an amount payable to HMRC by virtue of regulation 50(2)(a) of the Value Added Tax Regulations 1995 (S.I. 1995/2518).

2

In this Schedule, “HMRC” means Her Majesty's Revenue and Customs.

Assessments and determinations in default of return

3

(1) This paragraph applies for the interpretation of the tables in paragraph 1.

(2) An assessment or determination by HMRC is made in default of a return if it is made where—

(a) a person is required to make or deliver a return which falls within—

(i) any group of returns in the Table in paragraph 2 of Schedule 24, or

(ii) any item in the Table in paragraph 1 of Schedule 55 to FA 2009,

(b) that person fails to make or deliver the return on or before the date by which it is required to be made or delivered, and

(c) if the return had been made or delivered as required, the return would have shown that an amount falling within the relevant table in paragraph 1 was due and payable.

(3) An assessment or determination by HMRC is made otherwise than in default of a return if it is made otherwise than as described in sub-paragraph (2).

PART 2 — Liability to a penalty

No penalty if payment in full before end of 15 day period

4

No penalty is payable if—

(a) the tax due is paid in full before the end of the 15 day period, or

(b) the 15 day time to pay condition is met,

(but see paragraph 7).

First penalty: tax remains due at end of 15 day period

5

(1) A penalty is payable under this paragraph if—

(a) the tax due is not paid in full before the end of the 15 day period, and

(b) the 15 day time to pay condition is not met.

(2) If the tax due is paid in full after the end of the 15 day period but before the end of the 30 day period, the amount of the penalty is amount A.

(3) If the tax due is not paid in full before the end of the 30 day period, the amount of the penalty is—

(a) if the 30 day time to pay condition is met, amount A, and

(b) if the 30 day time to pay condition is not met, the total of amount A and amount B,

(but see paragraph 7).

(4) Amount A is 3% of so much of the tax due as is unpaid at the end of the 15 day period.

(5) Amount B is 3% of so much of the tax due as is unpaid at the end of the 30 day period.

Meaning of “15 day time to pay condition” and “30 day time to pay condition”

6

(1) The 15 day time to pay condition is met if a time to pay agreement is made (whether before or after the end of the 15 day period) as a result of proposals for paying the tax due made by the person before the end of the 15 day period.

(2) The 30 day time to pay condition is met if a time to pay agreement is made (whether before or after the end of the 30 day period) as a result of proposals for paying the tax due made by the person after the end of the 15 day period, but before the end of the 30 day period.

First penalty: effect of breaking time to pay agreement

7

(1) This paragraph applies where—

(a) the 15 day time to pay condition or the 30 day time to pay condition is met, and

(b) the person breaks the time to pay agreement by virtue of which the condition was met.

(2) If HMRC give the person notice that a penalty is payable under paragraph 5, a penalty is payable under that paragraph as if the condition in question had never been met.

Second penalty: tax remains due at end of 30 day period

8

(1) A penalty is payable under this paragraph if any amount of the tax due is unpaid at the end of the 30 day period.

(2) The amount of the penalty is calculated by applying the penalty rate, during the further penalty period, to so much of the tax due as is from time to time unpaid.

(3) The penalty rate is 10% per annum.

(4) The further penalty period is the period—

(a) beginning with the day after the last day of the 30 day period, and

(b) ending with the day on which the tax due is paid in full.

(5) But if a time to pay agreement has effect during the further penalty period, the further penalty period does not include the period—

(a) beginning with the relevant day, and

(b) ending with the day on which the tax due is paid in full,

(but see paragraph 9).

(6) The relevant day is the day on which the person makes the proposals to HMRC for paying the tax due, as a result of which the time to pay agreement is made.

Second penalty: effect of breaking time to pay agreement

9

(1) This paragraph applies where—

(a) a time to pay agreement has effect during the further penalty period, and

(b) the person breaks the time to pay agreement.

(2) If HMRC give the person notice that a penalty is payable under paragraph 8, a penalty is payable under that paragraph as if the time to pay agreement had never had effect.

Interpretation of Part 2

10

(1) This paragraph gives the meaning of terms used in this Part of this Schedule.

(2) The “15 day period”, in relation to tax due, is the period of 15 days beginning with the day after the specified date.

(3) The “30 day period”, in relation to tax due, is the period of 30 days beginning with the day after the specified date.

(4) A “time to pay agreement” is an agreement between HMRC and a person that payment of an amount of tax due (the “deferred amount”) may be deferred for a period (the “deferral period”).

(5) A person breaks a time to pay agreement if—

(a) the person fails to pay the deferred amount when the deferral period ends, or

(b) the deferral is subject to the person complying with a condition (including a condition that part of the deferred amount be paid during the deferral period) and the person fails to comply with it.

(6) If a time to pay agreement is varied at any time by a further agreement between the person and HMRC, references in this Schedule to the agreement include the agreement as varied.

Power to amend figures by regulations

11

The Commissioners for HMRC may by regulations amend this Part of this Schedule so as to—

(a) change references to 15 days (or to another number of days resulting from the previous exercise of powers under this sub-paragraph) to references to a greater or lesser number of days;

(b) change references to 30 days (or to another number of days resulting from the previous exercise of powers under this sub-paragraph) to references to a greater or lesser number of days;

(d) increase or reduce the percentage specified in paragraph 5(5);

(e) increase or reduce the percentage specified in paragraph 8(3).

PART 3 — Supplementary provision

Reasonable excuse

12

(1) Liability to a penalty under this Schedule does not arise in respect of a failure to make a payment if the person satisfies HMRC (or on appeal, the tribunal) that the person had a reasonable excuse for the failure.

(2) For this purpose—

(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 another 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.

(3) In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 20(1)).

Special reduction

13

(1) If HMRC think it right because of special circumstances, they may reduce a penalty under this Schedule.

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

(a) ability to pay, or

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

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

(a) staying a penalty, and

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

Double jeopardy

14

A person is not liable to a penalty under this Schedule in respect of a failure in respect of which the person has been convicted of an offence.

Interaction with other penalties

15

In the application of the following provisions, no account is to be taken of a penalty under this Schedule—

(a) section 97A of TMA 1970 (multiple penalties),

(b) paragraph 12(2) of Schedule 24 to FA 2007 (interaction with other penalties), and

Assessments

16

(1) Where a person is liable to a penalty under this Schedule HMRC may assess the penalty.

(2) HMRC may by regulations make provision for HMRC to assess a penalty under paragraph 8 at times or intervals before the end of the further penalty period.

(3) Where HMRC assess a penalty they must notify the person and state in the notice—

(a) the failure to pay the tax due, for which the person is liable to the penalty,

(b) the amount of the penalty, and

(4) A penalty under this Schedule must be paid before the end of the period of 30 days beginning with the day on which notification of the penalty is issued.

(5) An assessment of a penalty under this Schedule—

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

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

17

(1) A supplementary assessment may be made in respect of a penalty if an earlier assessment is based on an amount of tax due and payable that is found by HMRC to be an underestimate or insufficient.

(2) If an assessment in respect of a penalty is based on an amount of tax due or payable that is found by HMRC to be excessive, HMRC may by notice amend the assessment so that it is based upon the correct amount.

(3) An amendment under sub-paragraph (2)—

(a) does not affect when the penalty must be paid;

(b) may be made after the last day on which the assessment in question could have been made under paragraph 18.

Time limit for assessments

18

(1) An assessment of a penalty under this Schedule in respect of any amount must be made on or before the later of date A and (where it applies) date B.

(2) Date A is the last day of the period of 2 years beginning with the date specified in or for the purposes of column 3 of the relevant table in paragraph 1 (that is to say, the last date on which payment may be made without incurring a penalty).

(3) Date B is the last day of the period of 12 months beginning with—

(a) the end of the appeal period for the assessment of the amount of tax in respect of which the penalty is assessed, or

(b) if there is no such assessment, the date on which that amount of tax is ascertained.

(4) In sub-paragraph (3)(a) “appeal period” means the period during which—

(a) an appeal could be brought (ignoring any possibility of an appeal out of time), or

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

Appeals

19

(1) A person may appeal against a decision of HMRC that the person is liable to a penalty under this Schedule.

(2) A person liable to a penalty under this Schedule may appeal against a decision of HMRC as to the amount of the penalty.

20

(1) An appeal under paragraph 19 is to be treated in the same way as an appeal against an assessment to the tax concerned (including by the application of any provision about bringing the appeal by notice to HMRC, about HMRC's review of the decision or about determination of the appeal by the First-tier Tribunal or Upper Tribunal).

(2) Sub-paragraph (1) does not apply—

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

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

21

(1) On an appeal under paragraph 19(1) that is notified to the tribunal, the tribunal may affirm or cancel HMRC's decision.

(2) On an appeal under paragraph 19(2) that is notified to the tribunal, the tribunal may—

(a) affirm HMRC's decision, or

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

(3) If the tribunal substitutes its decision for HMRC's decision in relation to a penalty under this Schedule, the tribunal may rely on paragraph 13—

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

(b) to a different extent, but only if the tribunal thinks that HMRC's decision in respect of the application of paragraph 13 was flawed.

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

(5) In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 20(1)).

Regulations: supplementary provision

22

(1) Regulations under this Schedule are to be made by statutory instrument.

(2) A statutory instrument containing regulations under paragraph 11 (powers to amend Part 2) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.

(3) A statutory instrument containing regulations under paragraph 16 (assessments) is subject to annulment in pursuance of a resolution of the House of Commons.

(4) Regulations under this Schedule may include transitional, transitory and saving provision.

SCHEDULE 27

Taxes Management Act 1970

1

TMA 1970 is amended as follows.

2

For section 8B(8) (withdrawal of notice to file personal or trustee return) substitute—

(8) See paragraph 21 of Schedule 24 and paragraph 16 of Schedule 25 to the Finance Act 2021 as to the cancellation of liabilities under those Schedules by including provision in a notice under this section.

3

For section 12AAA(9) (withdrawal of notice to file partnership return) substitute—

(9) See paragraph 21 of Schedule 24 and paragraph 16 of Schedule 25 to the Finance Act 2021 as to the cancellation of liabilities under those Schedules by including provision in a notice under this section.

4

In section 49E (nature of review etc), after subsection (5) insert—

(5A) See section 49EA concerning additional conclusions a review can reach in the case of penalties under Schedule 24 to the Finance Act 2021.

5

After section 49E insert—

(49EA) (1) This section applies if— (a) notice of appeal has been given to HMRC under paragraph 22(b) of Schedule 24 to the Finance Act 2021 in respect of a penalty, and (b) HMRC are required to review the matter in question under section 49B or 49C (which apply to the appeal by virtue of paragraph 23(1) of that Schedule). (2) The review may also conclude that HMRC's view that the appellant was liable to any of the penalty points by virtue of which the appellant was liable to the penalty is to be— (a) upheld, or (b) cancelled. (3) Subsection (2) applies in relation to a penalty point even if the time limit for appealing against it expired before notice of appeal in respect of the penalty was given. (4) Subsection (2) does not apply in relation to a penalty point if— (a) it was concluded on an earlier review under section 49B or 49C that HMRC's view that the appellant was liable to the penalty point was to be upheld, or (b) HMRC's decision that the appellant was liable to the penalty point has been affirmed on appeal.

6

After section 49F insert—

(49FA) (1) If the conclusions of a review include conclusions reached by virtue of section 49EA and the conclusions of the review are final, sub-paragraphs (4) and (5) of paragraph 24 of Schedule 24 to the Finance Act 2021 apply but with the following modifications— (a) references to the appeal under paragraph 22(b) of that Schedule are to be read as references to the review under section 49B or 49C (as the case may be), (b) references to the tribunal are to be read as references to HMRC, and (c) references to cancelling a decision are to be read as references to concluding that HMRC's view is to be cancelled. (2) For the purposes of subsection (1) the conclusions of a review are to be treated as final only if the post-review period has ended and the appellant did not notify the appeal to the tribunal within that period. (3) In subsection (2) “post-review period” has the same meaning as in section 49G (see subsection (5) of that section).

7

In section 69 (recovery of penalty or interest), in subsection (1)—

(a) after paragraph (a) insert—

(aa) penalties imposed under Schedule 26 to the Finance Act 2021;

;

(b) omit paragraph (b).

8

In section 103ZA (disapplication of sections 100 to 103 in the case of certain penalties)—

(a) omit the “or” at the end of paragraph (k);

(b) after paragraph (l) insert—

(m) Schedule 24 to the Finance Act 2021 (penalties for failure to make returns etc), (n) Schedule 25 to that Act (penalties for deliberately withholding information), or (o) Schedule 26 to that Act (penalties for failure to pay tax).

9

(1) Section 107A (relevant trustees) is amended as follows.

(2) In subsection (2)—

(a) in paragraph (a), after “Schedule 22 to the Finance Act 2016” insert “ or Schedule 25 to the Finance Act 2021 ”;

(b) in paragraph (c)—

(i) after “Schedule 56 to the Finance Act 2009” insert “ or Schedule 26 to the Finance Act 2021 ”;

(ii) for “that Act” substitute “ the Finance Act 2009 ”.

(3) In subsection (3)—

(a) omit paragraph (a);

(b) in paragraph (c)—

(i) in sub-paragraph (i), for “1, 3C, 12, 18 or 19” substitute “ 3C ”;

(ii) omit sub-paragraph (ii) (but not the “or” at the end of that sub-paragraph);

(iii) in sub-paragraph (iii), omit “or (ii)”;

(e) in relation to— (i) a penalty under Schedule 26 to the Finance Act 2021 (penalties for failure to pay tax), or (ii) interest under section 101 of the Finance Act 2009 on a penalty within sub-paragraph (i), the end of the specified date as defined in paragraph 1 of Schedule 26 to the Finance Act 2021;

Income and Corporation Taxes Act 1988

10

In section 824 of the Income and Corporation Taxes Act 1988 (repayment supplements: individuals and others), in subsection (1)—

(a) omit paragraph (c);

(b) in paragraph (d), for “that Act” substitute “ the Finance Act 2009 or Schedules 24 to 26 to the Finance Act 2021. ”

11

The Social Security Contributions and Benefits Act 1992 is amended as follows.

12

In section 11A (application of certain provisions of the Income Tax Acts in relation to Class 2 contributions under section 11(2)), after subsection (1)(ea) insert—

(eb) Schedules 24 and 25 to the Finance Act 2021 (penalties for failure to make returns etc or for deliberately withholding information);

13

In section 16(1) (application of Income Tax Acts and destination of Class 4 contributions), at the end of paragraph (e) insert

and (f) the provisions of Schedules 24 and 25 to the Finance Act 2021 (penalties for failure to make returns etc or for deliberately withholding information),

14

In section 11A of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (application of certain provisions of the Income Tax Acts in relation to Class 2 contributions under section 11(2)), after subsection (1)(ea) insert—

(eb) Schedules 24 and 25 to the Finance Act 2021 (penalties for failure to make returns etc or for deliberately withholding information);

Value Added Tax Act 1994

15

VATA 1994 is amended as follows.

16

In the italic heading before section 59, omit “Default surcharge and other”.

17

Omit sections 59 to 59B (default surcharge).

18

(1) Section 69 (breaches of regulatory provisions) is amended as follows.

(2) In subsection (4)(a), for “for a surcharge under section 59 or 59A” substitute “ to a penalty point or a penalty under Schedule 24 to the Finance Act 2021 ”.

(3) In subsection (9)—

(a) omit paragraph (b) and the “or” at the end of that paragraph;

(b) after paragraph (c) insert

or (d) a person is awarded a penalty point or assessed to a penalty under Schedule 24 to the Finance Act 2021,

19

In section 71 (construction of sections 59 to 70), in the heading and in subsections (1) and (2), for “59” substitute “ 60 ”.

20

(1) Section 76 (assessment of amounts due by way of penalty, interest or surcharge) is amended as follows.

(2) In the heading, for “penalty, interest or surcharge” substitute “ penalty or interest ”.

(3) In subsection (1)—

(a) omit paragraph (a) and the “or” at the end of that paragraph;

(b) in the words after paragraph (d), for “penalty, interest or surcharge” substitute “ penalty or interest ”.

(4) In subsection (3)—

(a) in the words before paragraph (a), for “penalties, interest and surcharge” substitute “ penalties and interest ”;

(b) omit paragraph (a).

(5) In subsection (4), for “penalty, interest or surcharge”, in both places, substitute “ penalty or interest ”.

(6) In subsection (5), for “penalty, interest or surcharge”, in both places, substitute “ penalty or interest ”.

21

In section 77 (assessments: time limits and supplementary assessments), in subsections (2), (3) and (5), for “penalty, interest or surcharge” substitute “ penalty or interest ”.

22

In section 81 (interest given by way of credit and set-off of credits), in subsections (3)(b) and (3A)(c), for “penalty, interest or surcharge” substitute “ penalty or interest ”.

23

In section 83 (appeals), in subsection (1)—

(a) in paragraph (n)—

(i) omit “or surcharge”;

(ii) for “59” substitute “ 60 ”;

(b) in paragraph (q), for “penalty, interest or surcharge” substitute “ penalty or interest ”.

24

In section 83F (nature of review etc), after subsection (5) insert—

(5A) See section 83FA concerning additional conclusions a review can reach in the case of penalties under Schedule 24 to the Finance Act 2021.

25

After section 83F insert—

(83FA) (1) This section applies if HMRC are required, by virtue of paragraph 23(1) of Schedule 24 to the Finance Act 2021, to undertake a review under section 83C or 83E of a penalty decision in respect of which an appeal lies under paragraph 22(b) of that Schedule. (2) The review may also conclude that HMRC's decision that P was liable to any of the penalty points by virtue of which P was liable to the penalty in respect of which the appeal lies is to be— (a) upheld, or (b) cancelled. (3) Subsection (2) applies in relation to a penalty point even if the time limit for appealing against it expired before the relevant date. (4) Subsection (2) does not apply in relation to a penalty point if— (a) it was concluded on an earlier review required to be undertaken under section 83C or 83E that HMRC's decision that P was liable to the penalty point was to be upheld, or (b) HMRC's decision that P was liable to the penalty point has been affirmed on appeal. (5) In subsection (3) “relevant date” has the same meaning as in section 83F(6) (see section 83F(7)).

26

After section 83FA (inserted by paragraph 25) insert—

(83FB) (1) If the conclusions of a review include conclusions reached by virtue of section 83FA and the conclusions of the review are final, sub-paragraphs (4) and (5) of paragraph 24 of Schedule 24 to the Finance Act 2021 apply but with the following modifications— (a) references to the appeal under paragraph 22(b) of that Schedule are to be read as references to the review required to be undertaken under section 83C or 83E (as the case may be), (b) references to the tribunal are to be read as references to HMRC, and (c) references to cancelling a decision are to be read as references to concluding that HMRC's decision is to be cancelled. (2) For the purposes of subsection (1) the conclusions of a review are to be treated as final only if the period specified in subsection (3)(b), (4)(b) or (5) of section 83G for appealing the reviewed decision has ended and no appeal has been made within that period.

27

In section 84 (further provisions relating to appeals), in subsection (6)—

(a) for “penalty, interest or surcharge” substitute “ penalty or interest ”;

(b) for “59” substitute “ 60 ”.

28

In Schedule 13 (transitional provisions and savings), omit paragraph 14.

Income Tax (Trading and Other Income) Act 2005

29

ITTOIA 2005 is amended as follows.

30

In the italic heading before section 54, for “, interest and VAT surcharges” substitute “ and interest ”.

31

In section 54 (penalties, interest and VAT surcharges)—

(a) in the heading, for “, interest and VAT surcharges” substitute “ and interest ”;

(b) omit subsection (3).

32

In section 272 (application of trading income rules: GAAP), in the table in subsection (2), in the entry for section 54, in the second column, for “, interest and VAT surcharges” substitute “ and interest ”.

33

In section 272ZA (application of trading income rules: cash basis), in the table in subsection (1), in the entry for section 54, in the second column, for “, interest and VAT surcharges” substitute “ and interest ”.

34

In the italic heading before section 869, for “, interest and VAT surcharges” substitute “ and interest ”.

35

In section 869 (penalties, interest and VAT surcharges: non trades etc)—

(a) in the heading, for “, interest and VAT surcharges” substitute “ and interest ”;

(b) omit subsection (5).

Corporation Tax Act 2009

36

In section 1303 of CTA 2009 (penalties, interest and VAT surcharges)—

(a) in the heading, for “, interest and VAT surcharges” substitute “ and interest ”;

(b) omit subsection (3).

Finance Act 2009

37

FA 2009 is amended as follows.

38

In section 108 (suspension of penalties during currency of agreement for deferred payment), in subsection (5), in the Table, omit the entry for value added tax.

39

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

(2) In paragraph 1—

(a) in sub-paragraph (4), in the definition of “penalty date”, for “1 to 3” substitute “ 2A ”;

(b) in the Table, omit items 1, 2 and 3.

(3) In paragraph 2 (as substituted by paragraph 3 of Schedule 10 to F(No.3)A 2010), in sub-paragraph (1)(a), for “1 to 5” substitute “ 2A, 4, 4A, 5 ”.

(4) Omit paragraphs 17A and 17B (cancellation of penalty) and the italic heading before those paragraphs.

(5) Omit paragraph 25 (partnerships) and the italic heading before that paragraph.

(6) Until the coming into force of paragraph 3 of Schedule 10 to F(No.3)A 2010, paragraph 2 of Schedule 55 to FA 2009 has effect as if for “1 to 3” there were substituted “ 2A ”.

40

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

(2) In paragraph 1, in the Table—

(a) omit items 1, 3, 3A, 12, 18 and 19;

(b) omit items 6A and 6B (inserted by paragraph 2(7) of Schedule 11 to F(No.3)A 2010);

(d) in item 17—

(i) in column 2, for “1” substitute “ 2, 3B ”;

(ii) in column 3, for “12” substitute “ 13 ”;

(e) in item 23—

(i) in column 2, for “1 to 6A” (as substituted by paragraph 2(13)(a) of Schedule 11 to F(No.3)A 2010) substitute “2, 3B to 6”;

(ii) in column 3—

(a) omit the words in brackets;

(b) for “1 to 6A” (as substituted by paragraph 2(13)(a) of Schedule 11 to F(No.3)A 2010) substitute “2, 3B to 6”;

(f) in item 24—

(i) in column 2, for “1 to 6A” (as substituted by paragraph 2(14)(a) of Schedule 11 to F(No.3)A 2010) substitute “2, 3B to 6”;

(ii) in column 3 omit the words in brackets.

(3) In paragraph 2(c), for “1” substitute “ 2 and 3B ”.

(4) In paragraph 3—

(a) in sub-paragraph (1)(a)—

(i) omit “1, 3,”;

(ii) omit “6B,” (as substituted by paragraph 5(3) of Schedule 11 to F(No.3)A 2010);

(iii) for “12” (as substituted by paragraph 5(3) of Schedule 11 to F(No.3)A 2010) substitute “13”;

(b) in sub-paragraph (1)(b) omit “6A,” (as substituted by paragraph 5(4)(a) of Schedule 11 to F(No.3)A 2010);

(5) In paragraph 8A (inserted by paragraph 7 of Schedule 11 to F(No.3)A 2010)—

(a) in sub-paragraph (1), omit “6A,”;

(b) omit sub-paragraphs (2) and (3).

(6) In paragraph 8F (inserted by paragraph 7 of Schedule 11 to F(No.3)A 2010)—

(a) in sub-paragraph (1) omit “6A,”;

(b) omit sub-paragraph (2).

(7) Omit paragraph 8K and the italic heading before that paragraph and omit paragraph 8 of Schedule 11 to F(No.3)A 2010 that inserted them.

(8) Until the coming into force of paragraph 2(13)(a) of Schedule 11 to F(No.3)A 2010, item 23 in the Table in paragraph 1 of Schedule 56 to FA 2009 has effect as if, in columns 2 and 3, for “1” there were substituted “ 2, 3B ”.

(9) Until the coming into force of paragraph 2(14)(a) of Schedule 11 to F(No.3)A 2010, item 24 in the Table in paragraph 1 of Schedule 56 to FA 2009 has effect as if, in column 2, for “1” there were substituted “ 2, 3B ”.

Finance Act 2012

41

In Schedule 38 to FA 2012 (tax agents: dishonest conduct), in paragraph 34(1)—

(a) omit the “or” at the end of paragraph (b);

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

, or (d) Schedule 24 (penalties for failure to make returns etc) or Schedule 25 (penalties for deliberately withholding information) to FA 2021.

Finance Act 2013

42

In Schedule 43C to FA 2013 (penalty under section 212A: supplementary provision), in paragraph 8—

(a) in sub-paragraph (3)(b), after “Schedule 55 to FA 2009” insert “ , or sub-paragraph (3)(b) or (5)(b) of paragraph 3 or paragraph 20(4) of Schedule 25 to FA 2021 ”;

(b) in sub-paragraph (5)—

(i) omit the “or” at the end of paragraph (c);

(ii) at the end of paragraph (d) insert

, or (e) Schedule 25 to FA 2021 (penalties for deliberately withholding information).

;

(i) in paragraph (a)—

(a) omit the “or” at the end of sub-paragraph (ii);

(b) at the end of sub-paragraph (iii) insert

or (iv) paragraph 3(4)(c) of Schedule 25 to FA 2021,

;

(ii) in paragraph (b)—

(a) omit the “or” at the end of sub-paragraph (ii);

(b) at the end of sub-paragraph (iii) insert

or (iv) paragraph 3(4)(b) of Schedule 25 to FA 2021,

;

(iii) in paragraph (c)—

(a) omit the “or” at the end of sub-paragraph (ii);

(b) at the end of sub-paragraph (iii) insert

or (iv) paragraph 3(6)(c) of Schedule 25 to FA 2021,

;

(iv) in paragraph (d)—

(a) omit the “or” at the end of sub-paragraph (ii);

(b) at the end of sub-paragraph (iii), for “and” substitute

or (iv) paragraph 3(6)(b) of Schedule 25 to FA 2021, and

Finance Act 2014

43

In section 212 of FA 2014 (aggregate penalties)—

(a) in subsection (2)(b), after “Schedule 55 to FA 2009” insert “ or paragraph 3(3)(b) or (5)(b) or 20(4) of Schedule 25 to FA 2021 ”;

(b) in subsection (4)—

(i) omit the “or” at the end of paragraph (d);

(ii) at the end of paragraph (e) insert

, or (f) Schedule 25 to FA 2021 (penalties for deliberately withholding information).

;

(i) omit the “or” at the end of paragraph (a)(ii);

(ii) at the end of paragraph (a)(iii) insert

or (iv) paragraph 3(4)(c) of Schedule 25 to FA 2021,

;

(iii) omit the “or” at the end of paragraph (b)(ii);

(iv) at the end of paragraph (b)(iii) insert

or (iv) paragraph 3(4)(b) of Schedule 25 to FA 2021,

;

(v) at the end of paragraph (c)(iii) insert

or (iv) paragraph 3(6)(c) of Schedule 25 to FA 2021,

;

(vi) in paragraph (d)(iii), for “and” substitute

or (iv) paragraph 3(6)(b) of Schedule 25 to FA 2021, and

Finance Act 2015

44

(1) Schedule 21 to FA 2015 (penalties in connection with offshore asset moves) is amended as follows.

(2) In paragraph 1(2), at the beginning of paragraph (b) insert “ where the original penalty is a penalty specified in paragraph (a), (b), (c) or (d) of paragraph 2, ”.

(3) In paragraph 2—

(a) omit the “and” at the end of paragraph (c);

(b) at the end of paragraph (d) insert

, and (e) a penalty under paragraph 3 of Schedule 25 to FA 2021 (penalties for deliberately withholding information), where the tax at stake is income tax or capital gains tax.

(4) In paragraph 5—

(a) in sub-paragraph (4), in the words before paragraph (a)—

(i) after “original penalty is” insert “ a penalty under paragraph 6 of Schedule 55 to FA 2009 ”;

(ii) for “Schedule 55 to FA 2009” substitute “ that Schedule ”;

(b) after sub-paragraph (5) insert—

(6) Where the original penalty is a penalty under paragraph 3 of Schedule 25 to FA 2021 for a failure to make a return or deliver a document specified in the table in paragraph 1 of that Schedule, the relevant time is, if the tax at stake is income tax or capital gains tax, the beginning of the tax year to which the return or document relates.

Finance Act 2016

45

FA 2016 is amended as follows.

46

In section 167 (simple assessments), omit subsections (3) and (4).

47

(1) Schedule 20 (penalties for enablers of offshore tax evasion or non-compliance) is amended as follows.

(2) In paragraph 1(4), after paragraph (d) insert—

(e) a penalty under paragraph 3 of Schedule 25 to FA 2021 (penalties for deliberately withholding information) involving offshore activity.

(3) In paragraph 3(3)—

(a) omit the “or” at the end of paragraph (b);

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

or (d) the liability to tax which would have been shown on the return (within the meaning of Schedule 25 to FA 2021),

;

(c) in the words after paragraph (d) (as inserted above), for “or paragraph 6 of Schedule 55” substitute “ , paragraph 6 of Schedule 55 or paragraph 3 of Schedule 25 ”.

(4) In paragraph 4(3)(b), after “Schedule 55 to FA 2009” insert “ or paragraph 3 of Schedule 25 to FA 2021 ”.

(5) In paragraph 5, after sub-paragraph (4) insert—

(5) In the case of a penalty under paragraph 3 of Schedule 25 to FA 2021 involving offshore activity, the potential lost revenue is the liability to tax which would have been shown in the return in question (within the meaning of that Schedule).

48

(1) Schedule 22 (asset-based penalty for offshore inaccuracies and failures) is amended as follows.

(2) In paragraph 2—

(a) in sub-paragraph (1), for “or (4A)” substitute “ , (4A) or (4B) ”;

(b) in sub-paragraph (4A), in the words before paragraph (a), for “paragraph” substitute “ sub-paragraph ”;

(4B) A penalty falls within this sub-paragraph if— (a) it is imposed under paragraph 3 of Schedule 25 to FA 2021 (penalties for deliberately withholding information), (b) it is imposed for the withholding of information involving an offshore matter or an offshore transfer, and (c) the tax at stake is (or includes) capital gains tax or asset-based income tax.

(3) After paragraph 3(4), insert—

(4A) Where a standard offshore tax penalty is imposed under paragraph 3 of Schedule 25 to FA 2021 for a failure to make a return or deliver a document listed in the table in paragraph 1 of that Schedule, the tax year to which that penalty relates is, if the tax at stake is income tax or capital gains tax, the tax year to which the return or document relates.

(4) In paragraph 5—

(a) in sub-paragraph (1)(b), after “Schedule 55 to FA 2009” insert “ or Schedule 25 to FA 2021 ”;

(b) in sub-paragraph (2)(a), for “or paragraph 6 of Schedule 55 to FA 2009” substitute “ , paragraph 6 of Schedule 55 to FA 2009 or paragraph 3 of Schedule 25 to FA 2021 ”.

(5) In paragraph 19(2), for “or Part 1 of Schedule 18 to FA 2017” substitute “ , Part 1 of Schedule 18 to F(No.2)A 2017 or Schedule 25 to FA 2021 ”.

49

In Schedule 23 (simple assessments), omit paragraph 9.

Finance Act 2017

50

In Schedule 4 to FA 2017 (pensions: offshore transfers), omit paragraph 20.

Finance (No. 2) Act 2017

51

In Schedule 18 to F(No.2)A 2017 (requirement to correct certain offshore tax non-compliance), in paragraph 15(2)(b), after “Schedule 55 to FA 2009” insert “ or of paragraph 11 of Schedule 25 to FA 2021, as the case may be ”.

SCHEDULE 28

PART 1 — Amendment of Chapter 2 of Part 4 of FA 2014

1

Chapter 2 of Part 4 of FA 2014 (follower notices) is amended as follows.

Additional penalty for unreasonable tax appeal

2

After section 208 (penalty if corrective action not taken in response to follower notice) insert—

(208A) (1) In the case of a follower notice given by virtue of section 204(2)(a) in relation to a tax enquiry into a return or claim made by P, this section applies where— (a) P makes a tax appeal addressed to the tribunal in relation to the return or claim, and (b) P is assessed to a penalty under section 208. (2) In the case of a follower notice given by virtue of section 204(2)(b) in relation to a tax appeal made by P, this section applies where— (a) the tax appeal is addressed to the tribunal, and (b) P is assessed to a penalty under section 208. (3) P is liable to pay a penalty (in addition to the penalty under section 208) if P or P's representative is found to have acted unreasonably in bringing or conducting relevant proceedings. (4) For the purposes of subsection (3), P or P's representative is found to have acted unreasonably in bringing or conducting relevant proceedings if (and only if) subsection (5) or (6) applies. (5) This subsection applies if— (a) the proceedings are struck out— (i) because there is no reasonable prospect of P's case, or part of it, succeeding, or (ii) because of something that P or P's representative has done (or not done), (b) the appeal period has ended, and (c) the proceedings have not been reinstated or (where the strike out was not automatic) the decision to strike out the proceedings has not been set aside or overturned on appeal. (6) This subsection applies if— (a) on an application by HMRC, the tribunal to which the proceedings are addressed makes a declaration that P or P's representative acted unreasonably in bringing or conducting the proceedings, (b) the appeal period has ended, and (c) the decision to make the declaration has not been set aside or overturned on appeal. (7) The powers of the tribunal in relation to relevant proceedings are to be taken to include the power to make a declaration for the purposes of subsection (6)(a). (8) For the purposes of this section, the following are “relevant proceedings” in relation to P— (a) where the whole of the proceedings on P's tax appeal relate to the chosen arrangements, the whole of those proceedings; (b) where part only of the proceedings on P's tax appeal relates to the chosen arrangements, that part of those proceedings; (c) proceedings before the Upper Tribunal on any further appeal by P in relation to relevant proceedings within paragraph (a) or (b) (where those proceedings were determined by the First-tier Tribunal). (9) For the purposes of subsection (8), P's tax appeal is the tax appeal mentioned in subsection (1)(a) or (2)(a) (as the case may be). (10) For the purposes of this section, “the appeal period” is— (a) the period during which an appeal could be brought against the striking out of the proceedings or, as the case may be, the decision to make the declaration under subsection (6)(a) (ignoring any possibility of an appeal out of time), or (b) where an appeal mentioned in paragraph (a) has been brought, the period during which that appeal has not been finally determined, withdrawn or otherwise disposed of. (11) For the purposes of subsection (10), an appeal includes an application to reinstate proceedings that have been struck out or for the tribunal to set aside its decision. (12) In this section, “tribunal” means the First-tier Tribunal or Upper Tribunal.

Amount of a section 208 or 208A penalty

3

(1) Section 209 (amount of a section 208 penalty) is amended as follows.

(2) In the heading, after “208” insert “ or 208A ”.

(3) In subsection (1), for “50%” substitute “ 30% ”.

(4) After subsection (1) insert—

(1A) The penalty under section 208A is 20% of the value of the denied advantage.

(5) In subsection (3)—

(a) in the words before paragraph (a), for “specified time” substitute “ relevant time ”;

(b) in the words after paragraph (b), after “(1)” insert “ , (1A) ”.

(6) After subsection (3) insert—

(4) The “relevant time” means— (a) in the case of a penalty under section 208, the specified time; (b) in the case of a penalty under section 208A, the day after the end of the appeal period. (5) “The appeal period” has the same meaning for the purposes of this section as it has for the purposes of section 208A (see section 208A(10) and (11)).

Assessment of a section 208A penalty

4

After section 211 (assessment of a section 208 penalty) insert—

(211A) (1) Where a person is liable for a penalty under section 208A, HMRC must— (a) assess the penalty, (b) notify the person who is liable for the penalty, and (c) state in the notice a tax period in respect of which the penalty is assessed. (2) A penalty under section 208A must be paid before the end of the period of 30 days beginning with the day on which the person is notified of the penalty under subsection (1). (3) Subsection (4) of section 211 applies to an assessment under this section as it applies to an assessment under that section. (4) An assessment of a penalty under section 208A must be made before the end of the period of 90 days beginning with the day after the end of the appeal period. (5) “The appeal period” has the same meaning for the purposes of this section as it has for the purposes of section 208A (see section 208A(10) and (11)).

Aggregate penalties

5

(1) Section 212 (aggregate penalties) is amended as follows.

(2) In subsection (2), after “(1)(b) and (c)” insert “ and any penalty under section 208A that is additional to the penalty mentioned in subsection (1)(b) ”.

(3) In subsection (3), after “208” insert “ or 208A ”.

Alteration of assessment of a section 208 or 208A penalty

6

(1) Section 213 (alteration of assessment of a section 208 penalty) is amended as follows.

(2) In the heading, after “208” insert “ or 208A ”.

(3) In subsection (1), after “211(2)” insert “ or 211A(1) ”.

Cancellation of a section 208A penalty

7

In section 214 (appeal against a section 208 penalty), after subsection (8) insert—

(8A) If the tribunal cancels a decision of HMRC that a penalty is payable by P under section 208, any penalty additional to that penalty to which P is liable under section 208A is also cancelled.

Appeal against a section 208A penalty

8

After section 214 insert—

(214A) (1) P may appeal against a decision of HMRC that a penalty is payable by P under section 208A. (2) P may appeal against a decision of HMRC as to the amount of a penalty payable by P under section 208A. (3) An appeal under subsection (1) may be made only on one or more of the following grounds— (a) that section 208A did not apply when the decision was made or no longer applies; (b) that the condition in section 208A(3) was not met when the decision was made or is no longer met; (c) that the penalty was not assessed before the end of the period mentioned in section 211A(4). (4) An appeal under this section must be made within the period of 30 days beginning with the day on which notification of the penalty is given under section 211A. (5) On an appeal under subsection (1), the tribunal may affirm or cancel HMRC's decision. (6) On an appeal under subsection (2), the tribunal may— (a) affirm HMRC's decision, or (b) substitute for HMRC's decision another decision that HMRC had power to make. (7) Subsections (5) to (7) of section 214 apply to an appeal under this section as they apply to an appeal under that section. (8) In this section “tribunal” has the meaning it has for the purposes of section 214 (see section 214(5) and (11)).

PART 2 — Amendments consequential on Part 1

FA 2014

9

FA 2014 is amended as follows.

10

In the heading of Schedule 30 (section 208 penalty: value of the denied advantage), after “208” insert “ or 208A ”.

11

In Schedule 31 (follower notices and partnerships), after paragraph 4 insert—

(4A) Section 208A(3) applies, in relation to a partnership follower notice, as if the first reference to P were to each relevant partner.

12

(1) In Schedule 31, paragraph 5 is amended as follows.

(2) In sub-paragraph (2)—

(a) in paragraph (a), for “20%” substitute “ 12% ”;

(b) after paragraph (a), insert—

(aa) the total amount of the penalties under section 208A(3) for which the relevant partners are liable is 8% of the value of the denied advantage,

;

(3) In sub-paragraph (5), after “penalties” insert “ under section 208(2) (as modified by this paragraph) ”.

(4) In sub-paragraph (6), after “paragraph 4(2)” insert “ or 4A ”.

(5) In sub-paragraph (7)(a), after “penalties” insert “ under section 208(2) ”.

(6) After sub-paragraph (9), insert—

(9A) The right of appeal under section 214A extends to— (a) a decision that penalties under section 208A(3) are payable by the relevant partners by virtue of this paragraph, and (b) a decision as to the total amount of those penalties payable by those partners, but not to a decision as to the appropriate share of, or the amount of a penalty payable by, a relevant partner. (9B) Section 214A(3) applies to an appeal by virtue of sub-paragraph (9A)(a) as it applies to an appeal under section 214A(1). (9C) Section 214A(5) applies to an appeal by virtue of sub-paragraph (9A)(a), and section 214A(6) to an appeal by virtue of sub-paragraph (9A)(b).

(7) In sub-paragraph (11), after “(2)(a)” insert “ and (aa) ”.

National Insurance Contributions Act 2015

13

(1) In Schedule 2 to the National Insurance Contributions Act 2015, paragraph 20 (recovery of penalties under Part 4 of FA 2014) is amended as follows.

(2) In sub-paragraph (1), after “208” insert “ , 208A ”.

(3) In sub-paragraph (3), after “208” insert “ or 208A ”.

PART 3 — Amendment of Schedule 20 to FA 2015

14

In Schedule 20 to FA 2015 (penalties in connection with offshore matters and offshore transfers), after paragraph 20 insert—

(21) (1) Section 212(5) of FA 2014 (follower notices: aggregate penalties) is amended as follows. (2) After paragraph (b) insert— (ba) 125% in a case where neither paragraph (a) nor paragraph (b) applies and at least one of the penalties is determined by reference to the percentage in— (i) paragraph 4(2)(c) of Schedule 24 to FA 2007, (ii) paragraph 6(2)(a) of Schedule 41 to FA 2008, or (iii) paragraph 6(3A)(a) of Schedule 55 to FA 2009, (3) In paragraph (c), for “neither paragraph (a) nor paragraph (b) applies” substitute “ none of paragraphs (a) to (ba) applies ”. (4) In paragraph (d), for “none of paragraphs (a), (b) and (c) applies” substitute “ none of paragraphs (a) to (c) applies ”.

PART 4 — Commencement

15

The amendments made by Parts 1 and 2 of this Schedule have effect where a penalty under section 208 of FA 2014 is assessed, under section 211 of that Act, on or after the day on which this Schedule comes into force.

16

The reference in section 120(2) of FA 2015 (commencement) to Schedule 20 to that Act is to be read as a reference to Schedule 20 as amended by Part 3 of this Schedule.

SCHEDULE 29

1

FA 2009 is amended as follows.

2

In section 102(4) (repayment interest on sums to be paid by HMRC)—

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

(b) after paragraph (a) insert—

(aa) Part 2A makes special provision as to the period for which an amount of VAT credit carries interest, and

3

(1) Schedule 54 (repayment interest) is amended as follows.

(2) In Part 2, after paragraph 12B insert—

(12C) (1) This paragraph applies in the case of a repayment of the amount by which— (a) the total amount of payments on account made in respect of a prescribed accounting period, exceeds (b) the amount of VAT payable in respect of that accounting period. (2) The repayment interest start date is the date on which the VAT return for the prescribed accounting period is due. (3) In this paragraph— - “payment on account” means a payment on account required under section 28 of VATA 1994; - “prescribed accounting period” has the same meaning as in VATA 1994; - “VAT return” means a return required to be made by regulations under VATA 1994.

(3) After Part 2 insert—

(12D) In this Part of this Schedule— - “prescribed accounting period” has the same meaning as in VATA 1994; - “relevant VAT return” means the VAT return for the prescribed accounting period to which the VAT credit relates; - “VAT credit” has the same meaning as in VATA 1994; - “VAT return” means a return required to be made by regulations under VATA 1994. (12E) (1) An amount of VAT credit does not carry interest for any period during which— (a) a VAT return required to be made on or before the date on which the relevant VAT return is made has not been made, or (b) there is a failure to comply with a requirement imposed under paragraph 4(1) or (1A) of Schedule 11 to VATA 1994 (production of evidence and giving of security). (2) The period referred to in sub-paragraph (1)(b)— (a) begins on the date when written notice requiring production of evidence or the giving of security is given by HMRC, and (b) ends on the date when HMRC receive the required evidence or the required security.

4

(1) Schedule 54A (further provision as to late payment interest and repayment interest) is amended as follows.

(2) After the Schedule heading insert— “ PART 1 CORPORATION TAX ”(so that the existing text of the Schedule becomes Part 1 of the Schedule).

(3) At the end of the Schedule insert—

(5) In this Part of this Schedule— - “assessment” has the same meaning as in paragraph 3 of Schedule 53; - “prescribed accounting period” has the same meaning as in VATA 1994; - “VAT credit” has the same meaning as in VATA 1994. (6) Where each of conditions A to C is met, an amount of repayment interest that— (a) has been paid to a person, but (b) ought not to have been paid (see condition C), may be recovered from the person as if it were late payment interest. (7) (1) Condition A is that repayment interest has been paid to the person on a VAT credit for a prescribed accounting period. (2) Condition B is that (whether or not a previous assessment has been made), an assessment or amendment of an assessment is made of the amount of value added tax payable by the person for that prescribed accounting period. (3) Condition C is that as a result of the assessment or amendment of an assessment, it appears to HMRC that some or all of the repayment interest ought not to have been paid. (8) (1) This paragraph applies where there is a common period in relation to a person (see sub-paragraph (2)). (2) A common period in relation to a person is any period during which— (a) an amount of value added tax that carries late payment interest is due and payable by the person (“the overdue payment”), and (b) an amount of VAT credit that carries repayment interest is payable to the person (“the VAT credit”). (3) During the common period— (a) the overdue payment is to be treated as carrying late payment interest only on the amount (if any) by which the overdue payment exceeds the VAT credit, and (b) the VAT credit is to be treated as carrying repayment interest only on the amount (if any) by which the VAT credit exceeds the overdue payment.

SCHEDULE 30

PART 1 — Stop notices and information & inspection powers

1

After section 236 (of FA 2014) insert—

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