Finance (No. 4) Bill

Session 2010 - 12
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Finance (No. 4) Bill

Finance (No. 4) Bill
Schedule 36 — International military headquarters, EU forces, etc
636

(i)
made available to the EU by a member
State to work with designated
international military headquarters or
a force of a designated country, or
(ii)
otherwise made available to the EU by
5
a member State for the purposes of
activities of the kind referred to in
paragraph (a).”
      (5)
Accordingly, in the heading for that section for “and staff of designated
allied headquarters” substitute “etc”.
10
ITA 2007
5     (1)
Section 833 of ITA 2007 (visiting forces and staff of designated allied
headquarters: residence, etc) is amended as follows.
      (2)
In subsection (2), in paragraph (a) for “allied” substitute “international
military”.
15
      (3)
After that subsection insert—
“(2A)
This section also applies to an individual within subsection (3) or
(3A).”
      (4)
In subsection (3), for “This section also applies to an individual who—”
substitute “An individual is within this subsection if the individual—”.
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      (5)
After that subsection insert—
“(3A)
An individual is within this subsection if the individual—
(a)
belongs to the EU civilian staff,
(b)
is in the United Kingdom, but only because of serving as part
of that staff, and
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(c)
is not a British citizen, a British overseas territories citizen, a
British National (Overseas) or a British Overseas citizen.”
      (6)
In subsection (7)—
(a)
omit the “and” before the definition of “designated”, and
(b)
after that definition insert “, and
30
“the EU civilian staff” means—
(a)
civilian personnel seconded by a member
State to an EU institution for the purposes of
activities (including exercises) relating to the
preparation for, and execution of, tasks
35
mentioned in Article 43(1) of the Treaty on
European Union (tasks relating to a common
security and defence policy), as amended
from time to time, and
(b)
civilian personnel (other than locally hired
40
personnel)—
(i)
made available to the EU by a member
State to work with designated
international military headquarters or
a force of a designated country, or
45

Finance (No. 4) Bill
Schedule 37 — Tax agents: dishonest conduct
Part 1 — Introduction
637

(ii)
otherwise made available to the EU by
a member State for the purposes of
activities of the kind referred to in
paragraph (a).”
      (7)
Accordingly, in the heading for that section for “and staff of designated
5
allied headquarters” substitute “etc”.
Schedule 37
Section 221

Tax agents: dishonest conduct
Part 1
Introduction
10
Overview
1
This Schedule is arranged as follows—
(a)
this Part explains who is a tax agent and what it means to engage in
dishonest conduct,
(b)
Part 2 sets out the process for establishing whether someone is
15
engaging in or has engaged in dishonest conduct,
(c)
Part 3 confers power on HMRC to obtain relevant documents,
(d)
Part 4 sets out sanctions for engaging in dishonest conduct,
(e)
Part 5 provides for assessment of and appeals against penalties, and
(f)
Parts 6 and 7 contain miscellaneous provisions and consequential
20
amendments.
Tax agent
2     (1)
A “tax agent” is an individual who, in the course of business, assists other
persons (“clients”) with their tax affairs.
      (2)
Individuals can be tax agents even if they (or the organisations for which
25
they work) are appointed—
(a)
indirectly, or
(b)
at the request of someone other than the client.
      (3)
Assistance with a client’s tax affairs includes—
(a)
advising a client in relation to tax, and
30
(b)
acting or purporting to act as agent on behalf of a client in relation to
tax.
      (4)
Assistance with a client’s tax affairs also includes assistance with any
document that is likely to be relied on by HMRC to determine a client’s tax
position.
35
      (5)
Assistance given for non-tax purposes counts as assistance with a client’s tax
affairs if it is given in the knowledge that it will be, or is likely to be, used by
a client in connection with the client’s tax affairs.

Finance (No. 4) Bill
Schedule 37 — Tax agents: dishonest conduct
Part 2 — Establishing dishonest conduct
638

Dishonest conduct
3     (1)
An individual “engages in dishonest conduct” if, in the course of acting as a
tax agent, the individual does something dishonest with a view to bringing
about a loss of tax revenue.
      (2)
It does not matter whether a loss is actually brought about.
5
      (3)
Nor does it matter whether the individual is acting on the instruction of
clients.
      (4)
A loss of tax revenue would be brought about for these purposes if clients
were to—
(a)
account for less tax than they are required to account for by law,
10
(b)
obtain more tax relief than they are entitled to obtain by law,
(c)
account for tax later than they are required to account for it by law, or
(d)
obtain tax relief earlier than they are entitled to obtain it by law.
      (5)
“Tax” is defined in Part 6 of this Schedule.
      (6)
“Tax relief” includes—
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(a)
any exemption from or deduction or credit against or in respect of
tax, and
(b)
any repayment of tax.
      (7)
A reference in this paragraph to doing something dishonest includes—
(a)
dishonestly omitting to do something, and
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(b)
advising or assisting a client to do something that the individual
knows to be dishonest.
Part 2
Establishing dishonest conduct
Conduct notice
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4     (1)
This paragraph applies if HMRC determine that an individual is engaging
in or has engaged in dishonest conduct.
      (2)
An authorised officer (or an officer of Revenue and Customs with the
approval of an authorised officer) may notify the individual of that
determination.
30
      (3)
The notice must state the grounds on which the determination was made.
      (4)
For the effect of notifying the individual, see paragraphs 7(2) and 29(2).
      (5)
A notice under this paragraph is referred to as a “conduct notice”.
      (6)
In relation to a conduct notice, a reference to “the determination” is to the
determination forming the subject of the notice.
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Appeal against determination
5     (1)
An individual to whom a conduct notice is given may appeal against the
determination.
      (2)
Notice of appeal must be given—

Finance (No. 4) Bill
Schedule 37 — Tax agents: dishonest conduct
Part 2 — Establishing dishonest conduct
639

(a)
in writing to the officer who gave the conduct notice, and
(b)
within the period of 30 days beginning with the day on which the
conduct notice was given.
      (3)
It must state the grounds of appeal.
      (4)
On an appeal that is notified to the tribunal, the tribunal may confirm or set
5
aside the determination.
      (5)
Subject to this paragraph, the provisions of Part 5 of TMA 1970 relating to
appeals have effect in relation to an appeal under this paragraph as they
have effect in relation to an appeal against an assessment to income tax.
      (6)
Setting aside a determination does not prevent a further conduct notice
10
being given in respect of the same conduct if further evidence emerges.
Offence of concealment etc in connection with conduct notice
6     (1)
A person (“P”) commits an offence if, after a relevant event has occurred, P—
(a)
conceals, destroys or otherwise disposes of a material document, or
(b)
arranges for the concealment, destruction or disposal of a material
15
document.
      (2)
A “relevant event” occurs if—
(a)
a conduct notice is given to an individual, or
(b)
an individual is informed by an officer of Revenue and Customs that
a conduct notice will be or is likely to be given to the individual.
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      (3)
A “material document” is any document that could be sought under
paragraph 8 as a result of the giving of the conduct notice.
      (4)
If P acts after the event described in sub-paragraph (2)(a), no offence is
committed if P acts—
(a)
after the determination has been set aside,
25
(b)
more than 4 years after the conduct notice was given, or
(c)
without knowledge of that event.
      (5)
If P acts before that event but after the event described in sub-paragraph
(2)(b), no offence is committed if P acts—
(a)
more than 2 years after the individual was, or was last, so informed,
30
or
(b)
without knowledge of the event described in sub-paragraph (2)(b).
      (6)
P acts without knowledge of an event if P—
(a)
is not the individual with respect to whom the event has occurred,
and
35
(b)
does not know, and could not reasonably be expected to know, that
the event has occurred.
      (7)
A person guilty of an offence under this paragraph is liable—
(a)
on summary conviction, to a fine not exceeding the statutory
maximum, and
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(b)
on conviction on indictment, to imprisonment for a term not
exceeding 2 years or to a fine, or both.

Finance (No. 4) Bill
Schedule 37 — Tax agents: dishonest conduct
Part 3 — Power to obtain tax agent’s files etc
640

Part 3
Power to obtain tax agent’s files etc
Circumstances in which power is exercisable
7     (1)
The power in paragraph 8 is exercisable only in case A or case B and only
with the approval of the tribunal.
5
      (2)
Case A is where a conduct notice has been given to an individual and
either—
(a)
the time allowed for giving notice of appeal against the
determination has expired without any such notice being given, or
(b)
notice of appeal against the determination was given within that
10
time, but the appeal has been withdrawn or the determination
confirmed.
      (3)
Case B is where—
(a)
an individual has been convicted of an offence relating to tax that
involves fraud or dishonesty,
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(b)
the offence was committed after the individual became a tax agent
(whether or not the individual was still a tax agent when it was
committed and regardless of the capacity in which it was
committed),
(c)
either—
20
(i)
the time allowed for appealing against the conviction has
expired without any such appeal being brought, or
(ii)
an appeal against the conviction was brought within that
time, but the appeal has been withdrawn or the conviction
upheld, and
25
(d)
no more than 12 months have elapsed since the date on which
paragraph (c) was satisfied.
      (4)
For the purposes of this paragraph, a determination or conviction that is
appealed is not considered to have been confirmed or upheld until—
(a)
the time allowed for bringing any further appeal has expired, or
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(b)
if a further appeal is brought within that time, that further appeal has
been withdrawn or determined.
      (5)
In this Schedule, a reference to “the tax agent” is—
(a)
in a case falling within case A, a reference to the individual
mentioned in sub-paragraph (2), and
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(b)
in a case falling within case B, a reference to the individual
mentioned in sub-paragraph (3).
      (6)
It does not matter whether the individual is still a tax agent when the power
in paragraph 8 is to be exercised.
File access notice
40
8     (1)
Subject to paragraph 7, an officer of Revenue and Customs may by notice in
writing require any person mentioned in sub-paragraph (2) to provide
relevant documents.
      (2)
The persons are—

Finance (No. 4) Bill
Schedule 37 — Tax agents: dishonest conduct
Part 3 — Power to obtain tax agent’s files etc
641

(a)
the tax agent, and
(b)
any other person the officer believes may hold relevant documents.
      (3)
“Relevant documents” is defined in paragraph 9.
      (4)
A notice under this paragraph is referred to as a “file access notice”.
      (5)
The person to whom a file access notice is given is referred to as “the
5
document-holder”.
Relevant documents
9     (1)
“Relevant documents” means the tax agent’s working papers (whenever
acting as a tax agent) and any other documents received, created, prepared
or used by the tax agent for the purposes of or in the course of assisting
10
clients with their tax affairs.
      (2)
It does not matter who owns the papers or other documents.
      (3)
The reference in sub-paragraph (1) to clients—
(a)
includes former clients, and
(b)
is not limited to the clients with respect to whom the tax agent is
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engaging in or has engaged in dishonest conduct.
Content of notice
10    (1)
A file access notice may require the provision of—
(a)
particular relevant documents specified in the notice, or
(b)
all relevant documents in the document-holder’s possession or
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power.
      (2)
A file access notice does not need to identify the clients of the tax agent.
      (3)
A file access notice addressed to anyone other than the tax agent must name
the tax agent.
Compliance
25
11
A file access notice may require documents to be provided—
(a)
within such period,
(b)
by such means and in such form, and
(c)
to such person and at such place,

as is reasonably specified in the notice or in a document referred to in the
30
notice.
12
Unless otherwise specified in the notice, a file access notice may be complied
with by providing copies of the relevant documents.
Approval by tribunal
13    (1)
The tribunal may not approve the giving of a file access notice unless—
35
(a)
the application for approval is made by or with the agreement of an
authorised officer,
(b)
the tribunal is satisfied that the case falls within case A or case B (see
paragraph 7),

Finance (No. 4) Bill
Schedule 37 — Tax agents: dishonest conduct
Part 3 — Power to obtain tax agent’s files etc
642

(c)
the tribunal is satisfied that, in the circumstances, the officer giving
the notice is justified in doing so,
(d)
the document-holder and (where different) the tax agent have been
told that relevant documents are to be required and given a
reasonable opportunity to make representations to an officer of
5
Revenue and Customs, and
(e)
the tribunal has been given a summary of any representations so
made.
      (2)
Nothing in sub-paragraph (1) requires the tribunal to determine whether an
individual is engaging in or has engaged in dishonest conduct.
10
      (3)
A decision by the tribunal under this paragraph is final (despite the
provisions of sections 11 and 13 of the Tribunals, Courts and Enforcement
Act 2007).
Documents not in person’s possession or power
14
A file access notice only requires the document-holder to provide a
15
document if it is in the document-holder’s possession or power.
Types of information
15    (1)
A file access notice does not require the document-holder to provide—
(a)
parts of a document that contain information relating to the conduct
of a pending appeal relating to tax, or
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(b)
journalistic material (as defined in section 13 of the Police and
Criminal Evidence Act 1984).
      (2)
A file access notice does not require the document-holder to provide
personal records (as defined in section 12 of the Police and Criminal
Evidence Act 1984).
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      (3)
But a file access notice may require the document-holder to provide
documents that are personal records, omitting any information whose
inclusion (whether alone or with other information) makes the original
documents personal records.
Old documents
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16    (1)
A file access notice does not require the document-holder to provide a
relevant document if—
(a)
the whole of the document originated before the back-stop day, and
(b)
no part of it has a bearing on tax periods ending on or after that day.
      (2)
“The back-stop day” is the first day of the period of 20 years ending with the
35
day on which the file access notice is given.
Privileged communications between professional legal advisers and clients
17    (1)
A file access notice does not require the document-holder to provide any
part of a document that is privileged.
      (2)
For the purposes of this paragraph a document is privileged if it is a
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document in respect of which a claim to legal professional privilege, or (in