Finance Bill

Session 2013 - 14
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Finance Bill

Finance Bill
Schedule 48 — Penalties: late filing, late payment and errors
604

the Table at the end of paragraph 1, after entry 6 insert—

“6ZA
Corporation tax
Amount payable
The later of—

under an exit
(a)
the first day

charge payment
after the period

plan entered into
of 12 months

5

in accordance
beginning

with Schedule
immediately

3ZB to TMA 1970
after the

migration

accounting

10

period (as

defined in Part

1 or 2 of

Schedule 3ZB

to TMA 1970,

15

as the case may

be), and

(b)
the date on

which the

amount is

20

payable under

the plan.”

Commencement
8     (1)
The amendments made by this Schedule are treated as having come into
force on 11 December 2012 in relation to an accounting period if the relevant
25
day, in relation to that period, falls on or after 11 December 2012.
      (2)
In sub-paragraph (1) “the relevant day”, in relation to an accounting period,
means the first day after the period of 9 months beginning immediately after
the accounting period.
      (3)
But if the relevant day falls between 11 December 2012 and 31 March 2013
30
(inclusive), paragraphs 1(4) and 4(3) of Schedule 3ZB to TMA 1970 (inserted
by this Schedule) have effect as if, in each case, for “before the end of the
period of 9 months beginning immediately after the migration accounting
period” there were substituted “on or before 31 March 2013”.
Schedule 48
35
Section 227

Penalties: late filing, late payment and errors
Amendments to Schedule 24 to FA 2007: penalties for errors
1     (1)
In Schedule 24 to FA 2007 (penalties for errors), paragraph 13 (procedure:
assessment) is amended as follows.
      (2)
In sub-paragraph (1)(c), after “assessed” insert “(subject to sub-paragraph
40
(1ZB))”.

Finance Bill
Schedule 48 — Penalties: late filing, late payment and errors
605

      (3)
After sub-paragraph (1) insert—
  “(1ZA)
Sub-paragraph (1ZB) applies where—
(a)
a person is at any time liable for two or more penalties
relating to PAYE returns, or for two or more penalties
relating to CIS returns, and
5
(b)
the penalties (“the relevant penalties”) are assessed in
respect of more than one tax period (“the relevant tax
periods”).
    (1ZB)
A notice under sub-paragraph (1) in respect of any of the relevant
penalties may, instead of stating the tax period in respect of which
10
the penalty is assessed, state the tax year or the part of a tax year
to which the penalty relates.
    (1ZC)
For that purpose, a relevant penalty relates to the tax year or the
part of a tax year in which the relevant tax periods fall.
    (1ZD)
For the purposes of sub-paragraph (1ZA)—
15
“a PAYE return” means a return for the purposes of PAYE
regulations;
“a CIS return” means a return for the purposes of regulations
under section 70(1)(a) of FA 2004 in connection with
deductions on account of tax under the Construction
20
Industry Scheme.”
Amendments to Schedule 55 to FA 2009: penalty for failure to make returns
2
Schedule 55 (penalty for failure to make returns etc) to FA 2009 is amended
in accordance with paragraphs 3 to 9.
3
In paragraph 1 (returns etc in respect of which penalties are to be paid under
25
that Schedule)—
(a)
in the definition of “penalty date” in sub-paragraph (4), after
“document” insert “falling within any of items 1 to 3 and 5 to 13 in
the Table”;
(b)
after sub-paragraph (4) insert—
30
   “(4A)
The Treasury may by order make such amendments to
item 4 in the Table as they think fit in consequence of any
amendment, revocation or re-enactment of the regulations
mentioned in that item.”
4
In the Table at the end of paragraph 1, in item 4 (annual return of payments
35
for purposes of PAYE regulations etc), for the words in the third column
substitute—
“Return under any of the following provisions of the Income
Tax (PAYE) Regulations 2003 (S.I. 2003/2682)—
(a)
regulation 67B (real time returns)
40
(b)
regulation 67D (exceptions to regulation 67B)”.
5
In paragraph 2 (amount of penalty: occasional returns and returns for
periods of 6 months or more), for “1 to 5” substitute “1 to 3, 5”.

Finance Bill
Schedule 48 — Penalties: late filing, late payment and errors
606

6
After paragraph 6A insert—
“Amount of penalty: real time information for PAYE
6B
Paragraphs 6C and 6D apply in the case of a return falling within
item 4 in the Table.
6C    (1)
If P fails during a tax month to make a return on or before the filing
5
date, P is liable to a penalty under this paragraph in respect of that
month.
      (2)
But this is subject to sub-paragraphs (3) and (4).
      (3)
P is not liable to a penalty under this paragraph in respect of a tax
month as a result of any failure to make a return on or before the
10
filing date which occurs during the initial period.
      (4)
P is not liable to a penalty under this paragraph in respect of a tax
month falling in a tax year if the month is the first tax month in that
tax year during which P fails to make a return on or before the
filing date (disregarding for this purpose any failure which occurs
15
during the initial period).
      (5)
In sub-paragraphs (3) and (4) “the initial period” means the period
which—
(a)
begins with the day in the first tax year on which P is first
required to make a return, and
20
(b)
is of such duration as is specified in regulations made by
the Commissioners,

and for this purpose “the first tax year” means the first tax year in
which P is required to make returns.
      (6)
P may be liable under this paragraph to no more than one penalty
25
in respect of each tax month.
      (7)
The penalty under this paragraph is to be calculated in accordance
with regulations made by the Commissioners.
      (8)
Regulations under sub-paragraph (7) may provide for a penalty
under this paragraph in respect of a tax month to be calculated by
30
reference to either or both of the following matters—
(a)
the number of persons employed by P, or treated as
employed by P for the purposes of PAYE regulations;
(b)
the number of previous penalties incurred by P under this
paragraph in the same tax year.
35
      (9)
The Commissioners may by regulations disapply sub-paragraph
(3) or (4) in such circumstances as are specified in the regulations.
     (10)
If P has elected under PAYE regulations to be treated as different
employers in relation to different groups of employees, this
paragraph applies to P as if—
40
(a)
in respect of each group P were a different person, and
(b)
each group constituted all of P’s employees.
     (11)
Regulations made by the Commissioners under this paragraph
may—

Finance Bill
Schedule 48 — Penalties: late filing, late payment and errors
607

(a)
make different provision for different cases, and
(b)
include incidental, consequential and supplementary
provision.
6D    (1)
P may be liable to one or more penalties under this paragraph in
respect of extended failures.
5
      (2)
In this paragraph an “extended failure” means a failure to make a
return on or before the filing date which continues after the end of
the period of 3 months beginning with the day after the filing date.
      (3)
P is liable to a penalty or penalties under this paragraph if (and
only if)—
10
(a)
HMRC decide at any time that such a penalty or penalties
should be payable in accordance with sub-paragraph (4) or
(6), and
(b)
HMRC give notice to P specifying the date from which the
penalty, or each penalty, is payable.
15
      (4)
HMRC may decide under sub-paragraph (3)(a) that a separate
penalty should be payable in respect of each unpenalised
extended failure in the tax year to date.
      (5)
In that case the amount of the penalty in respect of each failure is
5% of any liability to make payments which would have been
20
shown in the return in question.
      (6)
HMRC may decide under sub-paragraph (3)(a) that a single
penalty should be payable in respect of all the unpenalised
extended failures in the tax year to date.
      (7)
In that case the amount of the penalty in respect of those failures
25
is 5% of the sum of the liabilities to make payments which would
have been shown in each of the returns in question.
      (8)
For the purposes of this paragraph, an extended failure is
unpenalised if a penalty has not already been imposed in respect
of it under this paragraph (whether in accordance with sub-
30
paragraph (4) or (6)).
      (9)
The date specified in the notice under sub-paragraph (3)(b) in
relation to a penalty—
(a)
may be earlier than the date on which the notice is given,
but
35
(b)
may not be earlier than the end of the period mentioned in
sub-paragraph (2) in relation to the relevant extended
failure.
     (10)
In sub-paragraph (9)(b) “the relevant extended failure” means—
(a)
the extended failure in respect of which the penalty is
40
payable, or
(b)
if the penalty is payable in respect of more than one
extended failure (in accordance with sub-paragraph (6)),
the extended failure with the latest filing date.”
7
In paragraph 18 (assessment), for sub-paragraph (5) substitute—
45
    “(5)
Sub-paragraph (6) applies if—

Finance Bill
Schedule 48 — Penalties: late filing, late payment and errors
608

(a)
an assessment in respect of a penalty is based on a liability
to tax that would have been shown in a return, and
(b)
that liability is found by HMRC to be excessive.
      (6)
HMRC may by notice to P amend the assessment so that it is based
upon the correct amount.
5
      (7)
An amendment under sub-paragraph (6)—
(a)
does not affect when the penalty must be paid;
(b)
may be made after the last day on which the assessment in
question could have been made under paragraph 19.”
8     (1)
Paragraph 19 (assessment) is amended as follows.
10
      (2)
In sub-paragraph (2) after “Date A is” insert “—
(a)
in the case of an assessment of a penalty under paragraph
6C, the last day of the period of 2 years beginning with the
end of the tax month in respect of which the penalty is
payable,
15
(b)
in the case of an assessment of a penalty under paragraph
6D, the last day of the period of 2 years beginning with the
filing date for the relevant extended failure (as defined in
paragraph 6D(10)), and
(c)
in any other case,”.
20
      (3)
In sub-paragraph (3)(a), after “return” insert “or returns (as the case may be
in relation to penalties under section 6C or 6D)”.
9     (1)
Paragraph 27 (interpretation) is amended as follows.
      (2)
After sub-paragraph (2) insert—
   “(2A)
“The Commissioners” means the Commissioners for Her
25
Majesty’s Revenue and Customs.”
      (3)
After sub-paragraph (3) insert—
   “(3A)
“Tax month” means the period beginning with the 6th day of a
month and ending with the 5th day of the following month.”
Amendments to Schedule 56 to FA 2009: penalty for failure to make payments on time
30
10
Schedule 56 (penalty for failure to make payments on time) to FA 2009 is
amended in accordance with paragraphs 11 to 14.
11
In paragraph 1 (penalty for failure to pay tax), in sub-paragraph (4), for the
words from “the date on which” to the end substitute “the day after the date
specified in or for the purposes of column 4 of the Table in relation to that
35
amount.”
12    (1)
Paragraph 6 (amount of penalty: PAYE and CIS amounts) is amended as
follows.
      (2)
For sub-paragraph (1) substitute—
    “(1)
P is liable to a penalty under this paragraph, in relation to each tax,
40
each time that P makes a default in relation to a tax year.”
      (3)
In sub-paragraph (2)—

Finance Bill
Schedule 48 — Penalties: late filing, late payment and errors
609

(a)
in the opening words, after “default” insert “in relation to a tax year”;
(b)
in paragraph (a), at the end insert “of tax payable in relation to the tax
year”;
(c)
in paragraph (b), at the end insert “payable in relation to the tax
year”;
5
(d)
in paragraph (c), at the end insert “payable in relation to the tax
year”;
(e)
in paragraph (d), at the end insert “and due for the tax year”.
      (4)
For sub-paragraphs (3) to (7) substitute—
    “(3)
But where a failure to make one of those payments (or to pay an
10
amount comprising two or more of those payments) would, apart
from this sub-paragraph, constitute the first default in relation to
a tax year, that failure does not count as a default in relation to that
year for the purposes of a penalty under this paragraph.
      (4)
The amount of the penalty for a default made in relation to a tax
15
year is determined by reference to—
(a)
the amount of the tax comprised in the default, and
(b)
the number of previous defaults that P has made in
relation to the same tax year.
      (5)
If the default is P’s 1st, 2nd or 3rd default in relation to the tax year,
20
P is liable, at the time of the default, to a penalty of 1% of the
amount of tax comprised in the default.
      (6)
If the default is P’s 4th, 5th or 6th default in relation to the tax year,
P is liable, at the time of the default, to a penalty of 2% of the
amount of tax comprised in the default.
25
      (7)
If the default is P’s 7th, 8th or 9th default in relation to the tax year,
P is liable, at the time of the default, to a penalty of 3% of the
amount of tax comprised in the default.
     (7A)
If the default is P’s 10th or subsequent default in relation to the tax
year, P is liable, at the time of the default, to a penalty of 4% of the
30
amount of tax comprised in the default.”
      (5)
In sub-paragraph (8), for paragraph (b) substitute—
“(b)
a previous default counts for the purposes of sub-
paragraphs (5) to (7A) even if it is remedied before the time
of the default giving rise to the penalty.”
35
      (6)
After sub-paragraph (8) insert—
   “(8A)
Regulations made by the Commissioners for Her Majesty’s
Revenue and Customs may specify—
(a)
circumstances in which, for the purposes of sub-paragraph
(2), a payment of less than the full amount may be treated
40
as a payment in full;
(b)
circumstances in which sub-paragraph (3) is not to apply.
     (8B)
Regulations under sub-paragraph (8A) may—
(a)
make different provision for different cases, and
(b)
include incidental, consequential and supplementary
45
provision.”

Finance Bill
Schedule 48 — Penalties: late filing, late payment and errors
610

13
After paragraph 9 insert—
“Interaction with other penalties and late payment surcharges
9A
In the application of the following provisions, no account shall be
taken of a penalty under this Schedule—
(a)
section 97A of TMA 1970 (multiple penalties),
5
(b)
paragraph 12(2) of Schedule 24 to FA 2007 (interaction
with other penalties), and
(c)
paragraph 15(1) of Schedule 41 to FA 2008 (interaction
with other penalties).”
14    (1)
Paragraph 11 (assessment of penalty) is amended as follows.
10
      (2)
For sub-paragraph (4A) substitute—
   “(4A)
If an assessment in respect of a penalty is based on an amount of
tax due or payable that is found by HMRC to be excessive, HMRC
may by notice to P amend the assessment so that it is based upon
the correct amount.
15
     (4B)
An amendment made under sub-paragraph (4A)—
(a)
does not affect when the penalty must be paid;
(b)
may be made after the last day on which the assessment in
question could have been made under paragraph 12.”
      (3)
Omit sub-paragraph (5).
20
Consequential amendment
15
In consequence of paragraph 7, paragraph 10 of Schedule 10 to the Finance
(No. 3) Act 2010 is repealed.
Commencement
16    (1)
The amendments made by paragraph 1 have effect in relation to any
25
assessment of a penalty under Schedule 24 to FA 2007 made on or after the
day on which this Act is passed.
      (2)
The amendments made by paragraphs 2 to 9 and 15 have effect for the tax
year 2014-15 and subsequent tax years in relation to failures to make returns
with a filing date (as defined in paragraph 1(4) of Schedule 55 to FA 2009) on
30
or after 6 April 2014.
      (3)
The amendments made by paragraphs 10 to 14 have effect for defaults made
in relation to the tax year 2014-15 and subsequent tax years (see paragraph
6(2) of Sch.56 to FA 2009 (as amended by paragraph 12(3) of this Schedule)
as to when a default is made in relation to a tax year).
35