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

Finance (No. 4) BillPage 640

(6) 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).

(7) Subject to this paragraph, the provisions of Part 5 of TMA 1970 relating to
5appeals 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.

Offence of concealment etc in connection with file access notice

(1) A person (“P”) commits an offence if P—

(a) conceals, destroys or otherwise disposes of a required document, or

(b) 10arranges for the concealment, destruction or disposal of a required
document.

(2) A “required document” is a document within sub-paragraph (3) or sub-
paragraph (4).

(3) A document is within this sub-paragraph if at the time when P acts—

(a) 15P is required to provide the document by a file access notice, and

(b) either—

(i) the notice has not been complied with, or

(ii) it has been complied with, but P has been notified in writing
by an officer of Revenue and Customs that P must continue
20to preserve the document (and the notification has not been
withdrawn).

(4) A document is within this sub-paragraph if at the time when P acts—

(a) P is not required to provide the document by a file access notice,

(b) P has been informed by an officer of Revenue and Customs that P
25will be or is likely to be so required, and

(c) no more than 6 months have elapsed since P was, or was last, so
informed.

(5) A person guilty of an offence under this paragraph is liable—

(a) on summary conviction, to a fine not exceeding the statutory
30maximum, and

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

Penalty for failure to comply

(1) A person who fails to comply with a file access notice is liable to a penalty of
35£300.

(2) Failing to comply with a file access notice also includes—

(a) concealing, destroying or otherwise disposing of a required
document, or

(b) arranging for any such concealment, destruction or disposal.

(3) 40“Required document” has the same meaning as in paragraph 21.

Finance (No. 4) BillPage 641

Daily penalty for failure to comply

23 If the failure continues after notification of a penalty under paragraph 22 has
been issued, the person is liable to a further penalty, for each subsequent day
on which the failure continues, of an amount not exceeding £60 for each such
5day.

Failure to comply with time limit

24 A failure to do anything required to be done within a limited period of time
does not give rise to liability to a penalty under paragraph 22 or 23 if the
thing was done within such further time (if any) as an officer of Revenue and
10Customs may have allowed.

Reasonable excuse

(1) Liability to a penalty under paragraph 22 or 23 does not arise if the person
satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that
there is a reasonable excuse for the failure.

(2) 15For the purposes of this paragraph—

(a) an insufficiency of funds is not a reasonable excuse unless
attributable to events outside the person’s control,

(b) if the person relies on another person to do anything, that is not a
reasonable excuse unless the first person took reasonable care to
20avoid the failure,

(c) if 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.

25Part 4 Sanctions for dishonest conduct

Penalty for dishonest conduct

(1) An individual who engages in dishonest conduct is liable to a penalty.

(2) Subject to paragraph 27, the penalty to which the individual is liable is to
30be—

(a) no less than £5,000, and

(b) no more than £50,000.

(3) In assessing the amount of the penalty, regard must be had to—

(a) whether the individual disclosed the dishonest conduct,

(b) 35whether that disclosure was prompted or unprompted,

(c) the quality of that disclosure, and

(d) the quality of the individual’s compliance with any file access notice
in connection with the dishonest conduct.

(4) An individual “discloses” dishonest conduct by—

(a) 40telling HMRC about it,

Finance (No. 4) BillPage 642

(b) giving HMRC reasonable help in identifying the client or clients
concerned and in quantifying the loss of tax revenue (if any) brought
about by it, and

(c) allowing HMRC access to records for the purpose of ensuring that
5any such loss is recovered or otherwise properly accounted for.

(5) A disclosure is “unprompted” if it is made at a time when the individual has
no reason to believe that HMRC have discovered or are about to discover the
dishonest conduct.

(6) Otherwise, a disclosure is “prompted”.

(7) 10In relation to disclosure or compliance, “quality” includes timing, nature
and extent.

Special reduction

(1) This paragraph applies if HMRC propose to assess an individual to a
penalty under paragraph 26 of £5,000.

(2) 15If they think it right because of special circumstances, HMRC may take one
or more of the following steps—

(a) reduce the penalty to an amount below £5,000 (which may be nil),

(b) stay the penalty, or

(c) agree a compromise in relation to proceedings for the penalty.

(3) 20“Special circumstances” does not include—

(a) ability to pay, or

(b) the fact that a loss of tax revenue from a client is balanced by an over-
payment by another person (whether or not a client).

Power to publish details

(1) 25The Commissioners may publish information about an individual if the
individual incurs a penalty under paragraph 26.

(2) The information that may be published is—

(a) the individual’s name (including any trading name, previous name
or pseudonym),

(b) 30the individual’s address,

(c) the nature of any business carried on by the individual,

(d) the amount of the penalty,

(e) the periods or times to which the dishonest conduct relates,

(f) any other information the Commissioners consider it appropriate to
35publish in order to make clear the individual’s identity, and

(g) the link (if there is one) between the dishonest conduct and any
inaccuracy, failure or action as a result of which information is
published under section 94 of FA 2009 (which relates to deliberate
tax defaulters).

(3) 40No information may be published under this paragraph if the penalty
incurred by the individual is £5,000 or less.

(4) Subsections (5) to (9) and (11) of section 94 of FA 2009 apply to publishing
information about an individual under this paragraph as they apply to
publishing information about a person under that section.

Finance (No. 4) BillPage 643

(5) If, in acting as a tax agent, the individual works or worked for an
organisation, sub-paragraph (2)(f) includes power to publish such
information about that organisation as the Commissioners consider
appropriate in order to make clear the individual’s identity.

(6) 5Before publishing information about the organisation, the Commissioners
must—

(a) inform the organisation that they are considering doing so, and

(b) afford the organisation reasonable opportunity to make
representations about whether it should be published.

10Part 5 Penalties: assessment etc

Assessment of penalties

(1) If a person becomes liable to a penalty under Part 3 or 4 of this Schedule,
HMRC may assess the penalty.

(2) 15But, in the case of a penalty under Part 4, they may only do so if a conduct
notice has been given to the person and either—

(a) the time allowed for giving notice of appeal against the
determination has expired without notice of appeal being given, or

(b) notice of appeal against the determination was given within the time
20allowed, but the appeal has been withdrawn or the determination
confirmed.

(3) Paragraph 7(4) applies for the purposes of sub-paragraph (2)(b).

(4) If HMRC assess a penalty, they must notify the person.

(1) HMRC may not assess a penalty under this Schedule after the applicable
25deadline.

(2) For a penalty under Part 3, the applicable deadline is the end of the period
of 12 months beginning with the day on which the person became liable to
the penalty.

(3) For a penalty under Part 4, the applicable deadline is the end of the period
30of 12 months beginning with the later of—

(a) the first day on which HMRC may assess the penalty (see paragraph
29(2)), and

(b) day X.

(4) If a loss of tax revenue is brought about by the dishonest conduct, day X is—

(a) 35the day immediately following the end of the appeal period for the
assessment or determination of the tax revenue lost (or, if more than
one client is involved, the end of the last such period), or

(b) if there is no such assessment or determination, the day on which the
amount of tax revenue lost is ascertained.

(5) 40Otherwise, day X is the day on which HMRC ascertain that no loss of tax
revenue has been brought about by the dishonest conduct.

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

(a) an appeal could be brought, or

Finance (No. 4) BillPage 644

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

Appeal against penalty

(1) A person may appeal against a decision of HMRC

(a) 5that a penalty is payable under Part 3 of this Schedule, or

(b) as to the amount of a penalty payable under Part 3 or 4 of this
Schedule.

(2) Notice of appeal must be given—

(a) in writing to HMRC, and

(b) 10before the end of the period of 30 days beginning with the day on
which notification of the penalty was issued.

(3) It must state the grounds of appeal.

(4) On an appeal under sub-paragraph (1)(a) that is notified to the tribunal, the
tribunal may confirm or cancel the decision.

(5) 15On an appeal under sub-paragraph (1)(b) that is notified to the tribunal, the
tribunal may—

(a) confirm the decision, or

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

(6) 20If, in the case of an appeal against a penalty under Part 4, the tribunal
substitutes its decision for HMRC’s, the tribunal may rely on paragraph 27
(special reduction)—

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

(b) 25to a different extent, but only if the tribunal thinks that HMRC’s
decision in respect of the application of that paragraph was flawed
(when considered in the light of the principles applicable in
proceedings for judicial review).

(7) Subject to this paragraph and paragraph 32, the provisions of Part 5 of TMA
301970 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.

Enforcement of penalty

(1) A penalty under this Schedule must be paid—

(a) 35before the end of the period of 30 days beginning with the day on
which notification of the penalty was issued, or

(b) if a notice of appeal under paragraph 31 is given, before the end of
the period of 30 days beginning with the day on which the appeal is
withdrawn or determined.

(2) 40A penalty under this Schedule may be enforced as if it were income tax
charged in an assessment and due and payable.

Finance (No. 4) BillPage 645

Double jeopardy

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

(1) A person is not liable to a penalty under this Schedule in respect of anything
5in respect of which the person is personally liable to a penalty under—

(a) Schedule 24 to FA 2007 (penalties for errors),

(b) Schedule 41 to FA 2008 (penalties for failure to notify etc), or

(c) Schedule 55 to FA 2009 (penalties for failure to make a return etc).

(2) Sub-paragraph (1) applies where, for example, the person is personally
10liable by virtue of section 48(3) of VATA 1994 (VAT representatives).

Power to change amount of penalties

(1) If it appears to the Treasury that there has been a change in the value of
money since the last relevant day, they may by regulations substitute for the
sums for the time being specified in paragraphs 22(1), 23, 26(2), 27(1) and
15(2)(a) and 28(3) such other sums as appear to them to be justified by the
change.

(2) “Relevant day”, in relation to a specified sum, means—

(a) the day on which this Act is passed, and

(b) each day on which the power conferred by sub-paragraph (1) has
20been exercised in relation to that sum.

(3) Regulations under this paragraph do not apply to a failure or conduct that
began before the day on which they come into force.

(4) The power to make regulations under this paragraph is exercisable by
statutory instrument.

(5) 25A statutory instrument containing regulations under this paragraph is
subject to annulment in pursuance of a resolution of the House of Commons.

Part 6 Miscellaneous provision and interpretation

Application of provisions of TMA 1970

36 30Subject to the provisions of this Schedule, the following provisions of TMA
1970 apply for the purposes of this Schedule as they apply for the purposes
of the Taxes Acts—

(a) section 108 (responsibility of company officers),

(b) section 114 (want of form), and

(c) 35section 115 (delivery and service of documents).

Tax

(1) “Tax” means—

(a) income tax,

(b) capital gains tax,

(c) 40corporation tax,

Finance (No. 4) BillPage 646

(d) construction industry deductions,

(e) VAT,

(f) insurance premium tax,

(g) inheritance tax,

(h) 5stamp duty land tax,

(i) stamp duty reserve tax,

(j) petroleum revenue tax,

(k) aggregates levy,

(l) climate change levy,

(m) 10landfill tax, and

(n) any duty of excise other than vehicle excise duty.

(2) “Construction industry deductions” means construction industry
deductions under Chapter 3 of Part 3 of FA 2004.

(3) “Corporation tax” includes an amount assessable or chargeable as if it were
15corporation tax.

(4) VAT” means—

(a) value added tax charged in accordance with VATA 1994,

(b) amounts recoverable under paragraph 5(2) of Schedule 11 to that Act
(amounts shown on invoices as VAT), and

(c) 20amounts treated as VAT by virtue of regulations under section 54 of
that Act (farmers etc).

General interpretation

38 In this Schedule—

  • “appointed” includes engaged;

  • 25“client” (except in paragraph 17)—

    (a)

    has the meaning given in paragraph 2(1), and

    (b)

    in relation to a particular tax agent, means a client of that tax
    agent;

  • “the Commissioners” means the Commissioners for Her Majesty’s
    30Revenue and Customs;

  • “conduct notice” has the meaning given in paragraph 4;

  • “the document-holder” has the meaning given in paragraph 8;

  • “document” includes a copy of a document (see also section 114 of FA
    2008);

  • 35“file access notice” has the meaning given in paragraph 8;

  • HMRC” means Her Majesty’s Revenue and Customs;

  • “organisation” includes any person or firm carrying on a business;

  • “specify” includes describe;

  • “tax period” means a tax year, accounting period or other period in
    40respect of which tax is charged;

  • “the tribunal” means the First-tier Tribunal or, where determined by or
    under the Tribunal Procedure Rules, the Upper Tribunal.

(1) A reference in this Schedule to clients of a tax agent (or to a tax agent’s
clients) is a reference to the persons whom the agent assists with their tax
45affairs.

Finance (No. 4) BillPage 647

(2) Sub-paragraph (1) applies even if—

(a) the agent works for an organisation, and

(b) it is the organisation that is appointed to give the assistance.

40 A loss of tax revenue is taken for the purposes of this Schedule to be (or to
5be capable of being) brought about by dishonest conduct despite the fact that
the loss can be recovered or properly accounted for (following discovery of
the conduct or otherwise).

41 A reference in this Schedule to working for an organisation includes being a
partner or member of an organisation.

42 10A reference in a provision of this Schedule to an authorised officer is to an
officer of Revenue and Customs who is, or is a member of a class of officers
who are, authorised by the Commissioners for the purposes of that
provision.

Relationship with other enactments

43 15Nothing in this Schedule limits—

(a) any liability a person may have under any other enactment in respect
of conduct in respect of which a person is liable to a penalty under
this Schedule, or

(b) any power a person may have under any other enactment to obtain
20relevant documents.

Part 7 Consequential provisions

TMA 1970

44 TMA 1970 is amended as follows.

45 25Omit—

(a) section 20A (power to call for papers of tax accountant),

(b) section 20B (restrictions on powers under section 20A), and

(c) section 99 (assisting in preparation of incorrect return etc).

(1) Section 20BB (falsification etc of documents) is amended as follows.

(2) 30In subsection (1)—

(a) for “subsections (2) to (4)” substitute “subsections (2) and (3)”,

(b) in paragraph (a), omit “a notice under section 20A above or”,

(c) at the end of that paragraph, omit “or”, and

(d) omit paragraph (b).

(3) 35In subsection (2)—

(a) in paragraph (a), omit “, the inspector”,

(b) at the end of that paragraph, insert “or”,

(c) at the end of paragraph (b), omit “or”, and

(d) omit paragraph (c).

(4) 40In subsection (3), for the words from “the notice is given” to the end
substitute “the order is made, unless before the end of that period an officer

Finance (No. 4) BillPage 648

of Revenue and Customs has notified the person in writing that the order
has not been complied with to the officer’s satisfaction”.

(5) Omit subsection (4).

47 In section 20D (interpretation of sections 20 to 20CC)—

(a) 5in subsection (1), for “sections 20A and 20BA” substitute “section
20BA”, and

(b) omit subsection (2).

48 In section 103 (time limits for penalties)—

(a) omit subsection (3), and

(b) 10in subsection (4), for “neither subsection (1) nor subsection (3) above
applies” substitute “subsection (1) does not apply”.

49 In section 103ZA (disapplication of sections 100 to 103)—

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

(b) at the end of paragraph (f) insert , or

(g) 15Schedule 37 to FA 2012 (tax agents: dishonest
conduct).

50 In section 118 (interpretation), in the definition of “tax”, omit the words from
“except that” to the end.

OTA 1975

51 20In Schedule 2 to OTA 1975 (management and collection of petroleum
revenue tax), in the Table in paragraph 1(1), omit the entry relating to section
99 of TMA 1970.

IHTA 1984

52 In section 247 of IHTA 1984 (provision of incorrect information), omit
25subsection (4).

Social Security Contributions and Benefits Act 1992

53 In section 16 of the Social Security Contributions and Benefits Act 1992
(applications of Income Tax Acts and destination of Class 4 contributions),
in subsection (1)(c), after “2009” insert “and of Schedule 37 to the Finance Act
302012”.

54 In paragraph 7B of Schedule 1 to that Act (collection of contributions other
than through PAYE system), the reference in sub-paragraph (5A) to Part 10
of TMA 1970 includes a reference to this Schedule.

Social Security Contributions and Benefits (Northern Ireland) Act 1992

55 35In paragraph 7B of Schedule 1 to the Social Security Contributions and
Benefits (Northern Ireland) Act 1992 (collection of contributions other than
through PAYE system), the reference in sub-paragraph (5A) to Part 10 of
TMA 1970 includes a reference to this Schedule.

Social Security Administration Act 1992

56 40In section 110ZA of the Social Security Administration Act 1992 (Class 1, 1A,

Finance (No. 4) BillPage 649

1B or 2 contributions: powers to call for documents etc), after subsection (2)
insert—

(2A) Part 3 of Schedule 37 to the Finance Act 2012 (power to obtain tax
agent’s files etc) applies in relation to relevant contributions as in
5relation to tax and, accordingly—

(a) the cases described in paragraph 7 of that Schedule (case A
and case B) include cases involving conduct or an offence
relating to relevant contributions,

(b) (whether the case involves conduct or an offence relating to
10tax or relevant contributions) the papers and other
documents that may be sought under that Part include ones
relating to relevant contributions, and

(c) the other Parts of that Schedule apply so far as necessary to
give effect to the application of Part 3 by virtue of this
15subsection.

Social Security Administration (Northern Ireland) Act 1992

57 In section 104ZA of the Social Security Administration (Northern Ireland)
Act 1992 (Class 1, 1A, 1B or 2 contributions: powers to call for documents
etc), after subsection (2) insert—

(2A) 20Part 3 of Schedule 37 to the Finance Act 2012 (power to obtain tax
agent’s files etc) applies in relation to relevant contributions as in
relation to tax and, accordingly—

(a) the cases described in paragraph 7 of that Schedule (case A
and case B) include cases involving conduct or an offence
25relating to relevant contributions,

(b) (whether the case involves conduct or an offence relating to
tax or relevant contributions) the papers and other
documents that may be sought under that Part include ones
relating to relevant contributions, and

(c) 30the other Parts of that Schedule apply so far as necessary to
give effect to the application of Part 3 by virtue of this
subsection.

FA 2003

(1) FA 2003 is amended as follows.

(2) 35In section 93 (information powers)—

(a) in subsection (2), omit the entries relating to Parts 3 and 4 of Schedule
13, and

(b) omit subsections (3) to (6).

(3) Omit section 96 (penalty for assisting in preparation of incorrect return etc).

(4) 40In Schedule 13 (stamp duty land tax: information powers)—

(a) omit Parts 3 and 4, and

(b) for paragraph 53 substitute—

(1) A person commits an offence if the person intentionally—

(a) falsifies, conceals, destroys or otherwise disposes
45of a relevant document, or