Finance Bill (HC Bill 49)

Part 4 Sanctions for dishonest conduct

Penalty for dishonest conduct

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

(2) 5Subject to paragraph 27, the penalty to which the individual is liable is to
be—

(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) 10whether the individual disclosed the dishonest conduct,

(b) whether 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) 15An individual “discloses” dishonest conduct by—

(a) telling HMRC about it,

(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) 20allowing HMRC access to records for the purpose of ensuring that
any 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) 25Otherwise, a disclosure is “prompted”.

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

Special reduction

27 (1) This paragraph applies if HMRC propose to assess an individual to a
30penalty under paragraph 26 of £5,000.

(2) If 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) 35agree a compromise in relation to proceedings for the penalty.

(3) “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

28 (1) The 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) 5the individual’s name (including any trading name, previous name
or pseudonym),

(b) the individual’s address,

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

(d) the amount of the penalty,

(e) 10the periods or times to which the dishonest conduct relates,

(f) any other information the Commissioners consider it appropriate to
publish 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
15published under section 94 of FA 2009 (which relates to deliberate
tax defaulters).

(3) No 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
20information about an individual under this paragraph as they apply to
publishing information about a person under that section.

(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
25appropriate in order to make clear the individual’s identity.

(6) Before 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
30representations about whether it should be published.

Part 5 Penalties: assessment etc

Assessment of penalties

29 (1) If a person becomes liable to a penalty under Part 3 or 4 of this Schedule,
35HMRC may assess the penalty.

(2) But, 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) 40notice of appeal against the determination was given within the time
allowed, 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.

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

(2) For a penalty under Part 3, the applicable deadline is the end of the period
5of 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
of 12 months beginning with the later of—

(a) the first day on which HMRC may assess the penalty (see paragraph
1029(2)), and

(b) day X.

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

(a) the day immediately following the end of the appeal period for the
assessment or determination of the tax revenue lost (or, if more than
15one 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) Otherwise, day X is the day on which HMRC ascertain that no loss of tax
revenue has been brought about by the dishonest conduct.

(6) 20In sub-paragraph (4), “appeal period” means the period during which—

(a) an appeal could be brought, or

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

Appeal against penalty

31 (1) 25A person may appeal against a decision of HMRC—

(a) that 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) 30in writing to HMRC, and

(b) before 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
35tribunal may confirm or cancel the decision.

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

(a) confirm the decision, or

(b) substitute for the decision another decision that HMRC had power to
40make.

(6) If, 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) to a different extent, but only if the tribunal thinks that HMRC’s
decision in respect of the application of that paragraph was flawed
5(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
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
10to income tax.

Enforcement of penalty

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

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

(b) 15if 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) A penalty under this Schedule may be enforced as if it were income tax
charged in an assessment and due and payable.

20Double 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.

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

(a) 25Schedule 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
liable by virtue of section 48(3) of VATA 1994 (VAT representatives).

30Power to change amount of penalties

35 (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
(2)(a) and 28(3) such other sums as appear to them to be justified by the
35change.

(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
been exercised in relation to that sum.

(3) 40Regulations 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) A 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

5Application of provisions of TMA 1970

36 Subject 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) 10section 114 (want of form), and

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

Tax

37 (1) “Tax” means—

(a) income tax,

(b) 15capital gains tax,

(c) corporation tax,

(d) construction industry deductions,

(e) VAT,

(f) insurance premium tax,

(g) 20inheritance tax,

(h) stamp duty land tax,

(i) stamp duty reserve tax,

(j) petroleum revenue tax,

(k) aggregates levy,

(l) 25climate change levy,

(m) landfill 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) 30“Corporation tax” includes an amount assessable or chargeable as if it were
corporation 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
35(amounts shown on invoices as VAT), and

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

General interpretation

38 In this Schedule—

• 40“appointed” includes engaged;

• “client” (except in paragraph 17)—

  Finance BillPage 655

  (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
  5Revenue 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);

• 10“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
  15respect 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.

39 (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
20affairs.

(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
25be 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 30A 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 35Nothing 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
40relevant documents.

Part 7 Consequential provisions

TMA 1970

44 TMA 1970 is amended as follows.

45 5Omit—

(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).

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

(2) 10In 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) 15In 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) 20In 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
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 25In section 20D (interpretation of sections 20 to 20CC)—

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

(b) omit subsection (2).

48 In section 103 (time limits for penalties)—

(a) 30omit subsection (3), and

(b) in 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) 35at the end of paragraph (f) insert “, or

“(g) Schedule 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 In 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.

5IHTA 1984

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

Social Security Contributions and Benefits Act 1992

53 In section 16 of the Social Security Contributions and Benefits Act 1992
10(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
2012”.

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
15of TMA 1970 includes a reference to this Schedule.

Social Security Contributions and Benefits (Northern Ireland) Act 1992

55 In 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
20TMA 1970 includes a reference to this Schedule.

Social Security Administration Act 1992

56 In section 110ZA of the Social Security Administration Act 1992 (Class 1, 1A,
1B or 2 contributions: powers to call for documents etc), after subsection (2)
insert—

“(2A) 25Part 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
30relating 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) 35the other Parts of that Schedule apply so far as necessary to
give effect to the application of Part 3 by virtue of this
subsection.”

Social Security Administration (Northern Ireland) Act 1992

57 In section 104ZA of the Social Security Administration (Northern Ireland)
40Act 1992 (Class 1, 1A, 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
relation to tax and, accordingly—

(a) the cases described in paragraph 7 of that Schedule (case A
5and case B) include cases involving conduct or an offence
relating 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
10relating 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
subsection.”

FA 2003

58 (1) 15FA 2003 is amended as follows.

(2) In 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) 20Omit section 96 (penalty for assisting in preparation of incorrect return etc).

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

(a) omit Parts 3 and 4, and

(b) for paragraph 53 substitute—

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

(a) 25falsifies, conceals, destroys or otherwise disposes
of a relevant document, or

(b) causes or permits the falsification, concealment,
destruction or disposal of a relevant document.

(2) A relevant document is a document that the person has
30been required by an order under Part 6 of this Schedule to
deliver.

(3) A person does not commit an offence under this paragraph
if the person acts—

(a) with the written permission of the tribunal or an
35officer of Revenue and Customs, or

(b) after the document has been delivered.

(4) A person does not commit an offence under this paragraph
if the person acts after the end of the period of 2 years
beginning with the date on which the order is made, unless
40before the end of that period an officer of Revenue and
Customs has notified the person in writing that the order
has not been complied with to the officer’s satisfaction.

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

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

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

Section 225

5SCHEDULE 38 Repeal of miscellaneous reliefs etc

Part 1 Stamp duty and stamp duty land tax

Nationalisation schemes

1 (1) 10Section 52 of FA 1946 (exemption from stamp duty of documents connected
with nationalisation schemes) is repealed.

(2) In consequence of the provision made by sub-paragraph (1)—

(a) section 67 of that Act (short title, construction, etc) is repealed,

(b) in section 41(1) of the Transport Act 1962 (exemptions from stamp
15duty), omit the words from “, or in section fifty-two” to “schemes),”,
and

(c) in section 160(1) of the Transport Act 1968 (stamp duty), omit the
words from “or in section 52” to “schemes)”.

Visiting forces and allied headquarters

2 20Section 74 of FA 1960 (visiting forces and allied headquarters: stamp duty
exemptions) is repealed.

Shared ownership transactions

3 (1) The following provisions are repealed—

(a) section 97 of FA 1980,

(b) 25section 108 of FA 1981, and

(c) section 54 of FA 1987.

(2) In consequence of the provision made by sub-paragraph (1), omit the
following provisions—

(a) in Schedule 2 to the Housing (Consequential Provisions) Act 1985,
30paragraph 43;

(b) in FA 1988, section 142(1);

(c) in Schedule 14 to FA 1999, paragraph 6.

Instruments subject to duty of fixed amount

4 (1) Section 87 of FA 1985 (certificates) is amended as follows.

(2) 35Omit subsection (2) (power to exempt instruments chargeable to stamp duty
of a fixed amount).

(3) In subsection (5), omit “or Treasury (as the case may be)”.