Finance (No. 4) Bill (HC Bill 325)

(c) if the amount is the value of a supply on which VAT is charged, a
reference to the VAT payable for the prescribed accounting period in
which output tax on the supply is required to be brought into
account (calculated with that output tax brought into account), and

(d) 5if the amount is the value of a supply to which Part 2 applies by
virtue of paragraph 26, a reference to the amount otherwise
recoverable under paragraph 5(3) of Schedule 11 to VATA 1994 in
respect of that supply.

Section 218

SCHEDULE 36 10International military headquarters, EU forces, etc

FA 1960

(1) Section 74A of FA 1960 (visiting forces and allied headquarters: stamp duty
land tax exemptions) is amended as follows.

(2) In subsection (4)—

(a) 15for “allied”, in the first place, substitute “international military”, and

(b) omit paragraph (c).

(3) In subsection (5)—

(a) omit paragraph (a),

(b) in paragraph (b), after “Council” insert “made for giving effect to an
20international agreement”, and

(c) in paragraph (c), after “detachment of” insert “a”.

(4) Accordingly, in the heading for that section for “allied” substitute
“international military”.

IHTA 1984

2 25In section 6 of IHTA 1984 (excluded property), in subsection (4), after
“section 155(1)” insert “or (5A)”.

(1) Section 155 of that Act (visiting forces and allied headquarters: residence,
etc) is amended as follows.

(2) In subsection (4) for “allied” substitute “international military”.

(3) 30After subsection (5) insert—

“(5A) Section 6(4) also applies to—

(a) the emoluments paid by the Government of any designated
country to a person belonging to the EU civilian staff, not
being a British citizen, a British overseas territories citizen, a
35British National (Overseas) or a British Overseas citizen, and

(b) any tangible movable property the presence of which in the
United Kingdom is due solely to the presence in the United
Kingdom of such a person serving as part of that staff.

(5B) A period during which any such person belonging to the EU civilian
40staff as is referred to in subsection (5A) is in the United Kingdom by

reason solely of that person belonging to that staff is not to be treated
for the purposes of this Act as a period of residence in the United
Kingdom or as creating a change of that person’s residence or
domicile.”

(4) 5In subsection (6), at the end insert—

• ““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
  10execution of, tasks 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
  15personnel)—

  (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)

  20otherwise made available to the EU by a
  member State for the purposes of activities of
  the kind referred to in paragraph (a).”

ITEPA 2003

(1) Section 303 of ITEPA 2003 (visiting forces and staff of designated allied
25headquarters: relief from income tax) is amended as follows.

(2) In subsection (2)(a) for “allied” substitute “international military”.

(3) After subsection (4) insert—

“(4A) No liability to income tax arises in respect of earnings if—

(a) they are paid by the government of a designated country to a
30person belonging to the EU civilian staff, and

(b) that person is not a British citizen, a British overseas
territories citizen, a British National (Overseas) or a British
Overseas citizen.”

(4) In subsection (6)—

(a) 35omit the “and” before the definition of “designated”, and

(b) after that definition insert “, and

• the EU civilian staff” means—

  (a)

  civilian personnel seconded by a member
  State to an EU institution for the purposes of
  40activities (including exercises) relating to the
  preparation for, and execution of, tasks
  mentioned in Article 43(1) of the Treaty on
  European Union (tasks relating to a common
  security and defence policy), as amended
  45from time to time, and

  (b)

  civilian personnel (other than locally hired
  personnel)—

  Finance (No. 4) BillPage 632

  (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)

  5otherwise made available to the EU by
  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
10allied headquarters” substitute “etc”.

ITA 2007

(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
15military”.

(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—”
20substitute “An individual is within this subsection if the individual—”.

(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
25of that staff, and

(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) 30after that definition insert “, and

• 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
  35preparation for, and execution of, tasks
  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)

  40civilian personnel (other than locally hired
  personnel)—

  (i)

  made available to the EU by a member
  State to work with designated
  international military headquarters or
  45a force of a designated country, or

  Finance (No. 4) BillPage 633

  (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) 5Accordingly, in the heading for that section for “and staff of designated
allied headquarters” substitute “etc”.

Section 221

SCHEDULE 37 Tax agents: dishonest conduct

Part 1 10Introduction

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) 15Part 2 sets out the process for establishing whether someone is
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) 20Parts 6 and 7 contain miscellaneous provisions and consequential
amendments.

Tax agent

(1) A “tax agent” is an individual who, in the course of business, assists other
persons (“clients”) with their tax affairs.

(2) 25Individuals can be tax agents even if they (or the organisations for which
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) 30advising a client in relation to tax, and

(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
35position.

(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.

Dishonest conduct

(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) 5It does not matter whether a loss is actually brought about.

(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) 10account for less tax than they are required to account for by law,

(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) 15“Tax relief” includes—

(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) 20dishonestly omitting to do something, and

(b) advising or assisting a client to do something that the individual
knows to be dishonest.

Part 2 Establishing dishonest conduct

25Conduct notice

(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
30determination.

(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
35determination forming the subject of the notice.

Appeal against determination

(1) An individual to whom a conduct notice is given may appeal against the
determination.

(2) Notice of appeal must be given—

(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) 5On an appeal that is notified to the tribunal, the tribunal may confirm or set
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) 10Setting aside a determination does not prevent a further conduct notice
being given in respect of the same conduct if further evidence emerges.

Offence of concealment etc in connection with conduct notice

(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) 15arranges for the concealment, destruction or disposal of a material
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
20a conduct notice will be or is likely to be given to the individual.

(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) 25after the determination has been set aside,

(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) 30more than 2 years after the individual was, or was last, so informed,
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,
35and

(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
40maximum, and

(b) on conviction on indictment, to imprisonment for a term not
exceeding 2 years or to a fine, or both.

Part 3 Power to obtain tax agent’s files etc

Circumstances in which power is exercisable

(1) The power in paragraph 8 is exercisable only in case A or case B and only
5with the approval of the tribunal.

(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) 10notice of appeal against the determination was given within that
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
15involves fraud or dishonesty,

(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) 20either—

(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
25upheld, and

(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) 30the time allowed for bringing any further appeal has expired, or

(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
35mentioned in sub-paragraph (2), and

(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.

40File access notice

(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—

(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) 5The person to whom a file access notice is given is referred to as “the
document-holder”.

Relevant documents

(1) “Relevant documents” means the tax agent’s working papers (whenever
acting as a tax agent) and any other documents received, created, prepared
10or used by the tax agent for the purposes of or in the course of assisting
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) 15is not limited to the clients with respect to whom the tax agent is
engaging in or has engaged in dishonest conduct.

Content of notice

(1) A file access notice may require the provision of—

(a) particular relevant documents specified in the notice, or

(b) 20all relevant documents in the document-holder’s possession or
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.

25Compliance

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,

30as is reasonably specified in the notice or in a document referred to in the
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

(1) 35The tribunal may not approve the giving of a file access notice unless—

(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),

(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
5reasonable opportunity to make representations to an officer of
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
10individual is engaging in or has engaged in dishonest conduct.

(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 15A file access notice only requires the document-holder to provide a
document if it is in the document-holder’s possession or power.

Types of information

(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
20of a pending appeal relating to tax, or

(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
25Evidence Act 1984).

(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.

30Old documents

(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) 35“The back-stop day” is the first day of the period of 20 years ending with the
day on which the file access notice is given.

Privileged communications between professional legal advisers and clients

(1) A file access notice does not require the document-holder to provide any
part of a document that is privileged.

(2) 40For the purposes of this paragraph a document is privileged if it is a
document in respect of which a claim to legal professional privilege, or (in

Scotland) to confidentiality of communications between client and
professional legal adviser, could be maintained in legal proceedings.

(3) Regulations under paragraph 23 of Schedule 36 to FA 2008 (information
powers: privileged communications) apply (with any necessary
5modifications) to disputes under this paragraph as to whether a document
is privileged.

Power to copy documents

18 If a document is provided pursuant to a file access notice, an officer of
Revenue and Customs may take copies of or make extracts from the
10document.

Power to retain documents

(1) If a document is provided pursuant to a file access notice, HMRC may retain
the document for a reasonable period if an officer of Revenue and Customs
thinks it necessary to do so.

(2) 15While a document is retained—

(a) the document-holder may, if the document is reasonably required
for any purpose, request a copy of it, and

(b) an officer of Revenue and Customs must comply with such a request
without charge.

(3) 20The retention of a document under this paragraph is not to be regarded as
breaking any lien claimed on the document.

(4) If a document retained under this paragraph is lost or damaged, the
Commissioners are liable to compensate the owner of the document for any
expenses reasonably incurred in replacing or repairing the document.

25Appeal against file access notice

(1) If the document-holder is a person other than the tax agent, the document-
holder may appeal against the file access notice, or any requirement in it, on
the ground that it would be unduly onerous to comply with the notice or
requirement.

(2) 30Notice of appeal must be given—

(a) in writing to the officer by whom the file access notice was given, and

(b) within the period of 30 days beginning with the day on which the file
access notice was given.

(3) It must state the grounds of appeal.

(4) 35On an appeal that is notified to the tribunal, the tribunal may confirm, vary
or set aside the file access notice or a requirement in it.

(5) If the tribunal confirms or varies the notice or a requirement in it, the
document-holder must comply with the notice or requirement—

(a) within such period as is specified by the tribunal, or

(b) 40if the tribunal does not specify a period, within such period as is
reasonably specified in writing by an officer of Revenue and
Customs following the tribunal’s decision.