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Finance (No. 2) BillPage 390

(c) the date on which the amendment was made, if the return is
amended under paragraph 3 (amendment by person making the
return).

(4) A return that has been the subject of one notice under this paragraph may
5not be the subject of another, except a notice given in consequence of an
amendment (or another amendment) of the return under paragraph 3.

(5) A notice under this paragraph is referred to as a “notice of enquiry”.

Scope of enquiry

9 (1) An enquiry extends to anything contained in the return, or required to be
10contained in the return, that relates—

(a) to the question whether the relevant person is chargeable to tax with
respect to the interest to which the return relates for the chargeable
period concerned, or

(b) to the amount of tax chargeable on the relevant person with respect
15to that interest for that period.

(2) Sub-paragraph (3) applies if the notice of enquiry is given as a result of the
amendment of a return under paragraph 3 (amendment by person making
the return)—

(a) at a time when it is no longer possible to give a notice of enquiry
20under paragraph 8(3)(a) or (b), or

(b) after an enquiry into the return has been completed.

(3) The enquiry is limited to—

(a) matters to which the amendment relates, and

(b) matters affected by the amendment.

25Amendment of self assessment during enquiry to prevent loss of tax

10 (1) If at a time when an enquiry is in progress into a return an officer of Revenue
and Customs forms the opinion—

(a) that the amount stated in the self assessment contained in the return
as the amount of tax payable is insufficient, and

(b) 30that unless the assessment is immediately amended there is likely to
be a loss of tax to the Crown,

the officer may by notice in writing to the relevant person amend the
assessment to make good the deficiency.

(2) If the enquiry is one that is limited by paragraph 9(2) and (3) to matters
35arising from an amendment of the return, sub-paragraph (1) above applies
only so far as the deficiency is attributable to the amendment.

(3) For the purposes of this paragraph the period during which an enquiry is in
progress is the whole of the period—

(a) beginning with the day on which the notice of enquiry is given, and

(b) 40ending with the day on which the enquiry is completed.

Finance (No. 2) BillPage 391

Referral of questions to tribunal during enquiry

11 (1) At any time when an enquiry is in progress into a return any question arising
in connection with the subject-matter of the return may be referred to the
tribunal for determination.

(2) 5Notice of the referral must be given to the tribunal jointly by the relevant
person and an officer of Revenue and Customs.

(3) More than one notice of referral may be given under this paragraph in
relation to an enquiry.

(4) For the purposes of this paragraph the period during which an enquiry is in
10progress is the whole of the period—

(a) beginning with the day on which the notice of enquiry is given, and

(b) ending with the day on which the enquiry is completed.

Withdrawal of notice of referral

12 An officer of Revenue and Customs or the relevant person may withdraw a
15notice of referral under paragraph 11.

Effect of referral on enquiry

13 (1) While proceedings on a referral under paragraph 11 are in progress in
relation to an enquiry—

(a) no closure notice may be given in relation to the enquiry, and

(b) 20no application may be made for a direction to give a closure notice.

(2) Proceedings on a referral are “in progress” where—

(a) notice of referral has been given and has not been withdrawn, and

(b) the questions referred have not been finally determined.

(3) A question referred has been “finally determined” when—

(a) 25it has been determined by the tribunal, and

(b) there is no further possibility of the determination being varied or set
aside (disregarding any power to grant permission to appeal out of
time).

Effect of determination

14 (1) 30A determination under paragraph 11 is binding on the parties to the referral
in the same way, and to the same extent, as a decision on a preliminary issue
in an appeal.

(2) The officer of Revenue and Customs conducting the enquiry must take the
determination into account—

(a) 35in reaching conclusions on the enquiry, and

(b) in the formulation of any amendments of the return that may be
required to give effect to those conclusions.

(3) The question determined may not be reopened on an appeal, except to the
extent that it could be reopened if it had been determined as a preliminary
40issue in that appeal.

Finance (No. 2) BillPage 392

Tribunal to which referrals are made

15 (1) Where the question to be referred under paragraph 11 is of the market value
of any single-dwelling interest, the referral is to be made to—

(a) the Upper Tribunal, if the land is in England and Wales;

(b) 5the Lands Tribunal for Scotland, if the land is in Scotland;

(c) the Lands Tribunal for Northern Ireland, if the land is in Northern
Ireland.

(2) In any other case a referral under paragraph 11 is to be made to—

(a) the First-tier Tribunal, or

(b) 10where determined by or under Tribunal Procedure Rules, the Upper
Tribunal.

(3) References to “the tribunal” in paragraphs 11 and 13 are to be read
accordingly.

Completion of enquiry

16 (1) 15An enquiry under paragraph 8 is completed when an officer of Revenue and
Customs informs the relevant person by a notice (a “closure notice”) that the
enquiry is complete and states the conclusions reached in the enquiry.

(2) A closure notice must either—

(a) state that in the officer’s opinion no amendment of the return is
20required, or

(b) make the amendments of the return required to give effect to the
officer’s conclusions.

(3) A closure notice takes effect when it is issued.

Direction to complete enquiry

17 (1) 25The relevant person may apply to the tribunal for a direction that a closure
notice is to be given within a specified period.

(2) The tribunal hearing the application must give a direction unless satisfied
that HMRC have reasonable grounds for not giving a closure notice within
that period.

(3) 30In this paragraph “the tribunal” means—

(a) the First-tier Tribunal, or

(b) where determined by or under Tribunal Procedure Rules, the Upper
Tribunal.

Part 4 35HMRC determination where no return delivered

Determination of tax chargeable if no return delivered

18 (1) This paragraph applies where condition A or condition B is met.

(2) Condition A is that—

Finance (No. 2) BillPage 393

(a) an officer of Revenue and Customs has reason to believe that a
person (“P”) is chargeable to tax for a chargeable period in respect of
a single-dwelling interest,

(b) P has not made an annual tax on enveloped dwellings return for the
5period in respect of the interest, and

(c) the relevant filing date has passed.

(3) Condition B is that—

(a) an officer of Revenue and Customs has reason to believe that
additional tax is payable by a person (“P”) under section 161(3) for a
10chargeable period in respect of a single-dwelling interest,

(b) P has not made an annual tax on enveloped dwellings return for the
period in respect of the interest, and

(c) the relevant filing date has passed.

(4) “The relevant filing date” means the date by which the officer believes a
15return was required to be delivered.

(5) The officer may make a determination (an “HMRC determination”) to the
best of the officer’s information and belief of the amount of tax to which P is
chargeable for the period concerned with respect to the interest.

(6) Notice of the determination must be given to P and must state the date on
20which it is issued.

(7) No HMRC determination may be made more than 4 years after the end of
the chargeable period to which it relates.

Determination to have effect as a self assessment

19 (1) A determination under paragraph 18 has effect for enforcement purposes as
25if it were a self assessment made by P.

(2) In sub-paragraph (1) “for enforcement purposes” means for the purposes of
section 163 and Schedule 12 to FA 2003 (collection and recovery of tax etc).

(3) Nothing in this paragraph affects any liability of a person to a penalty for
failure to deliver a return.

30Determination superseded by actual self assessment

20 (1) If after an HMRC determination has been made P delivers a return for the
chargeable period with respect to the interest in question, the self assessment
included in that return supersedes the determination.

(2) Sub-paragraph (1) does not apply to a return delivered—

(a) 35more than 4 years after the power to make the determination first
became exercisable, or

(b) more than 12 months after the date of the determination,

whichever is the later.

(3) Where—

(a) 40proceedings have been begun for the recovery of any tax charged by
an HMRC determination, and

(b) before the proceedings are concluded the determination is
superseded by a self assessment,

Finance (No. 2) BillPage 394

the proceedings may be continued as if they were proceedings for the
recovery of so much of the tax charged by the self assessment as is due and
payable and has not yet been paid.

Part 5 5HMRC assessments

Assessment where loss of tax discovered

21 (1) Sub-paragraph (2) applies if an officer of Revenue and Customs discovers
that—

(a) an amount of tax that ought to have been assessed under this Part of
10this Act as tax chargeable on a person for a chargeable period with
respect to a single-dwelling interest has not been assessed,

(b) an assessment of the tax chargeable on a person for a chargeable
period in respect of a single-dwelling interest is or has become
insufficient, or

(c) 15relief has been given that is or has become excessive.

(2) An officer of Revenue and Customs may make an assessment (a “discovery
assessment”) in the amount or further amount that ought in the officer’s
opinion to be charged in order to make good to the Crown the loss of tax.

(3) The functions of an officer of Revenue and Customs under this paragraph
20are also exercisable by the Commissioners for Her Majesty’s Revenue and
Customs.

Assessment to recover excessive repayment of tax

22 (1) If an amount of tax has been, but ought not to have been, repaid to a person
that amount may be assessed and recovered as if it were unpaid tax.

(2) 25If the repayment was made with interest, the amount assessed and
recovered may include the amount of interest that ought not to have been
paid.

References to “the taxpayer”

23 In paragraphs 24 to 27 references to “the taxpayer” are to the person
30mentioned in paragraph 21(1)(a) or (b) or 22(1).

Conditions for making assessment where return has been delivered

24 (1) If the taxpayer has delivered a return in respect of the interest in question for
the chargeable period in question, an assessment under paragraph 21 or 22
may only be made in the two cases specified in sub-paragraphs (2) and (3).

(2) 35The first case is where the situation mentioned in paragraph 21(1) or 22(1)
was brought about carelessly or deliberately by—

(a) the taxpayer,

(b) a person acting on behalf of the taxpayer, or

(c) a person who was a partner of the taxpayer at the relevant time.

Finance (No. 2) BillPage 395

(3) The second case is where it could not reasonably have been expected that an
officer of Revenue and Customs in possession of the information made
available to HMRC before the relevant time would be aware at the relevant
time of the situation mentioned in paragraph 21(1) or 22(1).

(4) 5In sub-paragraph (3) “the relevant time” means the time HMRC

(a) ceased to be entitled to give a notice of enquiry into the return, or

(b) completed their enquiries into the return.

(5) For this purpose information is regarded as made available to HMRC if—

(a) it is contained in a return delivered by the taxpayer,

(b) 10it is contained in any documents produced or information provided
to an officer of Revenue and Customs for the purposes of an enquiry
into any such return,

(c) it is information the existence and relevance of which officers of
Revenue and Customs could reasonably have been expected to infer
15from information made available as mentioned in paragraph (a) or
(b), or

(d) it is information the existence and relevance of which was notified to
an officer of Revenue and Customs by the taxpayer or a person acting
on the taxpayer’s behalf.

(6) 20In sub-paragraph (5)(c) and (d) “relevance” means relevance as regards the
situation mentioned in paragraph 21(1) or 22(1).

(7) No assessment may be made under paragraph 21 or 22 if—

(a) the situation mentioned in paragraph 21(1) or 22(1) is attributable to
a mistake in the return as to the basis on which the tax liability ought
25to have been calculated, and

(b) the return was in fact made on the basis prevailing, or in accordance
with the practice generally prevailing, at the time it was made.

Time limit for assessments

25 (1) The general rule is that no assessment may be made more than 4 years after
30the end of the chargeable period to which the assessment relates.

(2) An assessment of a person to tax in a case involving a loss of tax brought
about carelessly by the taxpayer or a related person may be made up to 6
years after the end of the chargeable period to which the assessment relates.

(3) An assessment to which this sub-paragraph applies may be made up to 20
35years after the end of the chargeable period to which the assessment relates.

(4) Sub-paragraph (3) applies to an assessment of a person in any case involving
a loss of tax—

(a) brought about deliberately by the taxpayer or a related person,

(b) attributable to a failure by the taxpayer to comply with obligations
40under section 157(1) or 157(1) (duty to make annual tax on enveloped
dwellings return or return of adjusted chargeable amount, or

(c) attributable to arrangements in respect of which the person has
failed to comply with an obligation under section 309, 310 or 313 of
FA 2004 (obligation of parties to tax avoidance schemes to provide
45information to HMRC).

Finance (No. 2) BillPage 396

(5) An assessment under paragraph 22 (assessment to recover excessive
repayment of tax) is not out of time if it is made—

(a) while an enquiry is in progress into a relevant return, or

(b) within the period of one year beginning with the date on which the
5repayment in question was made.

(6) In sub-paragraph (5)—

(7) 10If the taxpayer has died—

(a) any assessment on the personal representatives must be made within
4 years after the death, and

(b) an assessment is not to be made by virtue of sub-paragraph (2) in
respect of a chargeable period that ended more than 6 years before
15the death.

(8) Any objection to the making of an assessment on the ground that the time
limit for making it has expired can only be made on an appeal against the
assessment.

(9) In this paragraph “related person”, in relation to the taxpayer, means—

(a) 20a person acting on the taxpayer’s behalf, or

(b) a person who was the partner of the taxpayer at the relevant time.

Losses brought about carelessly or deliberately

26 (1) This paragraph applies for the purposes of paragraph 25.

(2) A loss of tax is brought about carelessly by a person if the person fails to take
25reasonable care to avoid bringing about that loss.

(3) Sub-paragraph (4) applies where—

(a) information is provided to HMRC,

(b) the person who provided the information, or the person on whose
behalf the information was provided, discovers some time later that
30the information was inaccurate, and

(c) that person fails to take reasonable steps to inform HMRC.

(4) Any loss of tax brought about by the inaccuracy is to be treated as having
been brought about carelessly by that person.

(5) References to a loss of tax brought about deliberately by a person include a
35loss of tax brought about as a result of a deliberate inaccuracy in a document
given to HMRC by or on behalf of that person.

Assessment procedure

27 (1) Notice of an assessment must be served on the taxpayer.

(2) The notice must state—

(a) 40the tax due,

(b) the date on which the notice is issued, and

(c) the time within which any appeal against the assessment must be
made.

Finance (No. 2) BillPage 397

(3) After notice of the assessment has been served on the taxpayer, the
assessment may not be altered except in accordance with the express
provisions of this Part of this Act.

(4) Where an officer of Revenue and Customs has decided to make an
5assessment to tax, and has taken all other decisions needed for arriving at the
amount of the assessment, the officer may entrust to some other officer of
Revenue and Customs the responsibility for completing the assessing
procedure, whether by means involving the use of a computer or otherwise,
including responsibility for serving notice of the assessment.

10Part 6 Relief in case of overpaid tax or excessive assessment

Relief in case of double assessment

28 (1) A person who believes that tax has been assessed on that person more than
once in respect of the same matter may make a claim to the Commissioners
15for Her Majesty’s Revenue and Customs for relief against any double
charge.

(2) Schedule 11A to FA 2003 (claims not included in returns) applies in relation
to a claim under sub-paragraph (1) as it applies to a claim such as is
mentioned in paragraph 1 of that Schedule.

20Claim for relief for overpaid tax etc

29 (1) This paragraph applies where—

(a) a person has paid an amount by way of tax but believes the tax was
not chargeable, or

(b) a person has been assessed as chargeable to an amount of tax, or a
25determination has been made that a person is chargeable to an
amount of tax but the person believes the tax is not chargeable.

(2) The person may make a claim to the Commissioners for Her Majesty’s
Revenue and Customs for the amount to be repaid or discharged.

(3) Where this paragraph applies, the Commissioners for Her Majesty’s
30Revenue and Customs are not liable to give relief, except as provided in this
Schedule or by or under any other provision of this Part of this Act.

(4) For the purposes of this paragraph and paragraphs 30 to 34, an amount paid
by one person on behalf of another is treated as paid by the other person.

Cases in which Commissioners are not liable to give effect to a claim

30 (1) 35The Commissioners for Her Majesty’s Revenue and Customs are not liable
to give effect to a claim under paragraph 29 if or to the extent that the claim
falls within a case described in this paragraph.

(2) Case A is where the amount of tax paid, or liable to be paid, is excessive
because of—

(a) 40a mistake in a claim, or

(b) a mistake consisting of making, or failing to make, a claim.

Finance (No. 2) BillPage 398

(3) Case B is where the claimant is or will be able to seek relief by taking other
steps under this Part of this Act.

(4) Case C is where the claimant—

(a) could have sought relief by taking such steps within a period that has
5now expired, and

(b) knew or ought reasonably to have known, before the end of that
period, that such relief was available.

(5) Case D is where the claim is made on grounds that—

(a) have been put to a court or tribunal in the course of an appeal by the
10claimant relating to the amount paid or liable to be paid, or

(b) have been put to HMRC in the course of an appeal by the claimant
relating to that amount that is treated as having been determined by
a tribunal (by virtue of paragraph 46 (settling of appeals by
agreement).

(6) 15Case E is where the claimant knew, or ought reasonably to have known, of
the grounds for the claim before the latest of the following—

(a) the date on which a relevant appeal in the course of which the
ground could have been put forward was determined by a court or
tribunal (or is treated as having been so determined);

(b) 20the date on which the claimant withdrew a relevant appeal to a court
or tribunal;

(c) the end of the period in which the claimant was entitled to make a
relevant appeal to a court or tribunal.

In this sub-paragraph “relevant appeal” means an appeal by the claimant
25relating to the amount paid or liable to be paid.

(7) Case F is where the amount in question was paid or is liable to be paid—

(a) in consequence of proceedings enforcing the payment of that
amount brought against the claimant by HMRC, or

(b) in accordance with an agreement between the claimant and HMRC
30settling such proceedings.

(8) Case G is where—

(a) the amount paid, or liable to be paid, is excessive by reason of a
mistake in calculating the claimant’s liability to tax, and

(b) liability was calculated in accordance with the practice generally
35prevailing at the time.

(9) Case G does not apply where the amount paid, or liable to be paid, is tax
which has been charged contrary to EU law.

(10) For the purposes of sub-paragraph (9), an amount of tax is charged contrary
to EU law if, in the circumstances in question, the charge to tax is contrary
40to—

(a) the provisions relating to the free movement of goods, persons,
services and capital in Titles II and IV of Part 3 of the Treaty on the
Functioning of the European Union, or

(b) the provisions of any subsequent treaty replacing the provisions
45mentioned in paragraph (a).

Finance (No. 2) BillPage 399

Making a claim

31 (1) A claim under paragraph 29 must be made within the period of 4 years after
the end of the chargeable period to which the payment by way of tax, or the
assessment or determination, relates.

(2) 5A claim under paragraph 29 may not be made by being included in a return.

(3) Schedule 11A to FA 2003 (claims not included in returns) applies in relation
to a claim under paragraph 29 as it applies to a claim such as is mentioned
in paragraph 1 of that Schedule.

The claimant: partnerships

32 (1) 10This paragraph is about the application of paragraph 29 in a case where
either—

(a) (in a case falling within sub-paragraph (1)(a) of that paragraph) the
person paid the amount in question in the capacity of a responsible
partner or representative partner, or

(b) 15(in a case falling within sub-paragraph (1)(b) of that paragraph) the
assessment was made on, or the determination related to the liability
of, the person in such a capacity.

(2) In such a case, only a relevant person who has been nominated to do so by
all of the relevant persons may make a claim under paragraph 29 in respect
20of the amount in question.

(3) The relevant persons are all the persons who would have been liable as
responsible partners to pay the amount in question had the payment been
due or (in a case falling within sub-paragraph (1)(b)) had the assessment or
determination been correctly made.

25Assessment of claimant in connection with claim

33 (1) This paragraph applies where—

(a) a claim is made under paragraph 29 (relief for overpaid tax etc),

(b) the grounds for giving effect to the claim also provide grounds for a
discovery assessment on the claimant in respect of single-dwelling
30interest, and

(c) such an assessment could be made but for a relevant restriction.

(2) In a case falling within paragraph 32(1)(a) or (b), the reference to the
claimant in sub-paragraph (1)(b) of this paragraph includes any relevant
person (as defined in paragraph 32(3)).

(3) 35The following are relevant restrictions—

(a) the restrictions in paragraph 24 (assessment where return has been
delivered);

(b) the expiry of a time limit for making a discovery assessment.

(4) Where this paragraph applies—

(a) 40the relevant restrictions are to be disregarded, and

(b) the discovery assessment is not out of time if it is made before the
final determination of the claim.

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