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Finance (No. 2) BillPage 230

(3) After subsection (3) insert—

(3A) This subsection applies to a contribution if the contribution results
from the transfer of property or money, or the payment of a sum,
towards the pension scheme pursuant to a relevant order in a case
5where—

(a) section 266A (members’ liability in respect of unauthorised
member payments) applies, and

(b) relief is claimed under that section in respect of the liability
mentioned in subsection (1)(a) of that section.

(3B) 10In the case of a contribution which is greater than UMP (see section
266A(5)), subsection (3A) does not apply to the contribution so far as
it is greater than UMP.

(3C) In subsection (3A) “relevant order” means an order under any of the
following—

(a) 15section 16(1), 19(4) or 21(2)(a) of the Pensions Act 2004 (orders
for money etc to be restored to pension schemes), or

(b) Article 12(1), 15(4) or 17(2)(a) of the Pensions (Northern
Ireland) Order 2005 (corresponding provision for Northern
Ireland).

14 (1) 20Section 266A (member’s liability) is amended as follows.

(2) In subsection (1)(b) for the words from “an order” to “Regulator)” substitute
“a relevant order”.

(3) In subsection (5), in the definition of “ASO”—

(a) before the first “order” insert “relevant”, and

(b) 25for the words from the second “order” to “2005” substitute “relevant
order”.

(4) After subsection (6) insert—

(6A) In this section “relevant order” means an order under any of the
following—

(a) 30section 16(1), 19(4) or 21(2)(a) of the Pensions Act 2004 (orders
for money etc to be restored to pension schemes), or

(b) Article 12(1), 15(4) or 17(2)(a) of the Pensions (Northern
Ireland) Order 2005 (corresponding provision for Northern
Ireland).

15 (1) 35Section 266B (scheme’s liability) is amended as follows.

(2) In subsection (1)(b) for the words from “an order” to “Regulator)” substitute
“a relevant order”.

(3) In subsection (3), in the definition of “ASO”—

(a) before the first “order” insert “relevant”, and

(b) 40for the words from the second “order” to “2005” substitute “relevant
order”.

(4) After subsection (4) insert—

(5) In this section “relevant order” means an order under any of the
following—

Finance (No. 2) BillPage 231

(a) section 16(1), 19(4) or 21(2)(a) of the Pensions Act 2004 (orders
for money etc to be restored to pension schemes), or

(b) Article 12(1), 15(4) or 17(2)(a) of the Pensions (Northern
Ireland) Order 2005 (corresponding provision for Northern
5Ireland).

16 The amendments made by paragraphs 13 to 15 have effect in relation to
orders made on or after 1 September 2014.

Liabilities of trustees appointed by Pensions Regulator etc

17 In section 255 (assessments under Part) in subsection (1) after paragraph (e)
10insert—

(ea) liability under section 272C (former scheme administrator to
retain liability in cases involving independent trustees etc),.

18 In section 272 (trustees etc liable as scheme administrator) in subsection (4)
after “applying in relation to the pension scheme” insert “or by reason of
15section 272C(7) applying in relation to a liability”.

19 After section 272 insert—

272A Liabilities of independent trustee

(1) This section applies in relation to a person (“P”) who is an
independent trustee of a registered pension scheme.

(2) 20For the purposes of this section and section 272B an “independent
trustee” is a trustee of a pension scheme—

(a) who is appointed by, or otherwise pursuant to, an order
made—

(i) by the Pensions Regulator under section 7 of the
25Pensions Act 1995 or Article 7 of the Pensions
(Northern Ireland) Order 1995 (appointment of
trustees by the Pensions Regulator), or

(ii) by a court on an application made by the Pensions
Regulator, and

(b) 30who is not a trustee of the pension scheme at any time before
the relevant day.

(3) In this section “the relevant day” means—

(a) the day on which P’s appointment as trustee of the pension
scheme as mentioned in subsection (2)(a) takes effect, or

(b) 35if P is appointed as trustee of the pension scheme as
mentioned in subsection (2)(a) on more than one occasion,
the day on which P’s first appointment takes effect.

(4) If P is, or is one of the persons who are, the scheme administrator, P
does not assume any liability falling within subsection (7) which P
40would otherwise assume (including by reason of section 272C(3) or
(4)).

(5) Subsection (4) does not apply if P is, or is one of the persons who are,
the scheme administrator at any time before the relevant day.

Finance (No. 2) BillPage 232

(6) In relation to any liability falling within subsection (7), in section
272(4) references to trustees or to persons who control the
management of the pension scheme do not include P.

(7) The liabilities falling within this subsection are—

(a) 5liabilities for the following in respect of payments made (or
treated as having been made) by the pension scheme on or
before the relevant day—

(i) the short service refund lump sum charge;

(ii) the serious ill-health lump sum charge;

(iii) 10the special lump sum death benefits charge;

(iv) the authorised surplus payments charge;

(v) the scheme sanction charge in respect of scheme
chargeable payments falling within section 241(1)(a)
or (b);

(b) 15liabilities for the lifetime allowance charge in respect of
benefit crystallisation events occurring on or before the
relevant day;

(c) liabilities for the scheme sanction charge in respect of scheme
chargeable payments treated under section 185A or 185F as
20having been made by the pension scheme in tax years earlier
than the one in which the relevant day falls;

(d) any liability for the scheme sanction charge in respect of the
relevant fraction of any scheme chargeable payment treated
under section 185A as having been made by the pension
25scheme in the tax year in which the relevant day falls;

(e) where the pension scheme is treated under section 185F as
having made a scheme chargeable payment in the tax year in
which the relevant day falls and there is a relevant net gain,
any liability for the scheme sanction charge in respect of the
30relevant amount;

(f) any liability to pay interest in respect of a liability mentioned
in paragraphs (a) to (e) arising at any time.

(8) For the purposes of subsection (7)(d) “the relevant fraction” is—


35where—

(9) For the purposes of subsection (7)(e)

(a) 40there is a “relevant net gain” if—

(i) the total amount of any gains treated under section
185F as accruing in the tax year on or before the
relevant day, exceeds

(ii) the total amount of any losses treated under section
45185F as so accruing, and

(b) “the relevant amount” is—

(i) the scheme chargeable payment, or

Finance (No. 2) BillPage 233

(ii) if that payment is greater than the excess of gains over
losses mentioned in paragraph (a), the amount of that
excess.

(10) Subsection (11) applies if—

(a) 5apart from that subsection, losses in relation to which section
185G(10) applies would be included in the total amount
mentioned in subsection (9)(a)(ii), and

(b) the losses exceed the gains—

(i) which are included in the total amount mentioned in
10subsection (9)(a)(i), and

(ii) from which the losses can be deducted in accordance
with section 185G(10).

(11) The losses are not to be included in the total amount mentioned in
subsection (9)(a)(ii) so far as they exceed the gains.

272B 15 Liabilities of scheme administrator appointed by independent trustee
etc

(1) This section applies in relation to a person (“Q”) who is, or is one of
the persons who are, the scheme administrator of a registered
pension scheme where Q’s appointment as such takes effect at a time
20when the pension scheme has one or more independent trustees.

(2) Q does not assume any liability falling within section 272A(7) which
Q would otherwise assume.

(3) In relation to any liability falling within section 272A(7), in section
272(4) references to persons who control the management of the
25pension scheme do not include Q.

(4) Subsections (2) and (3) do not apply if Q is, or is one of the persons
who are, the scheme administrator at any time before the relevant
day.

(5) In this section, and in section 272A as it applies for the purposes of
30this section, “the relevant day” means the first day on which the
pension scheme has an independent trustee (whether or not there are
days between that day and the day on which Q’s appointment takes
effect on which the pension scheme has no independent trustees).

272C Former scheme administrator etc to retain liability

(1) 35This section applies in relation to a liability which, by reason of
section 272A(4), is not assumed by P (in which case “the relevant
day” is to be read in accordance with section 272A(3)).

(2) This section also applies in relation to a liability which, by reason of
section 272B(2), is not assumed by Q (in which case “the relevant
40day” is to be read in accordance with section 272B(5)).

(3) The liability is to be the liability of the person who is, or the persons
who are, the scheme administrator immediately before the relevant
day (unless dead or having ceased to exist).

(4) If there is no scheme administrator immediately before the relevant
45day, the liability is to be the liability of the person or persons to
whom section 271(4) applies immediately before the relevant day.

Finance (No. 2) BillPage 234

(5) Nothing in section 271 prevents a person from having (and
continuing to have) the liability by reason of subsection (3) or (4).

(6) Subsection (7) applies if—

(a) no-one has the liability by reason of subsection (3) or (4),

(b) 5no-one who has the liability by reason of subsection (3) or (4)
can be traced, or

(c) the person who has, or all the persons who have, the liability
by reason of subsection (3) or (4) are in serious default (as
determined in accordance with section 272(6)).

(7) 10The liability is to be assumed by the person or persons determined in
accordance with section 272(4).

(8) Section 272(5) applies in relation to a person who assumes the
liability by reason of subsection (7) as it applies in relation to a person
who assumes a liability by reason of section 272.

(9) 15Nothing in this section prevents any person from being subject to the
liability apart from this section (in addition to any person who is
subject to the liability by reason of this section).

20 In section 273 (members liable as scheme administrator) after subsection (1)
insert—

(1A) 20This section also applies in relation to a registered pension scheme
if—

(a) a person has, or persons have, by reason of section 272C(7)
assumed a liability to pay tax (or interest on tax) by virtue of
section 239 (scheme sanction charge) in respect of the whole
25or a part of a scheme chargeable payment falling within
section 241(1)(b) or (c) made (or treated as having been made)
by the pension scheme,

(b) that person, or each of those persons, has failed (in whole or
in part) to satisfy the liability, and

(c) 30that person, or each of those persons, has either died or
ceased to exist or is a person in whose case an officer of
Revenue and Customs considers the person’s failure to
satisfy the liability to be of a serious nature.

21 (1) Section 274 (supplementary) is amended as follows.

(2) 35In subsection (1)—

(a) after “(trustees etc)” insert “, section 272C(7)”, and

(b) in paragraph (b) after “administrator)” insert “, section 272C(3) or
(4)”.

(3) After subsection (2) insert—

(2A) 40In subsection (2) the reference to a liability imposed on the scheme
administrator includes a liability which would have been imposed
on the scheme administrator apart from section 272A(4) or 272B(2).

(4) In subsection (3)(b) after “272” insert “, 272C”.

22 Sections 272A to 272C of FA 2004 (as inserted by paragraph 19) have effect
45for cases where the relevant day falls on or after 1 September 2014.

Finance (No. 2) BillPage 235

Other provision

23 In the following provisions (which relate to the giving of information etc) for
“incorrect” (in all places) substitute “inaccurate”—

(a) section 169(5)(a)(ii);

(b) 5section 257(4)(a) and (b);

(c) section 261(1)(a);

(d) section 264(2)(a).

Section 48

SCHEDULE 6 Employee share schemes

10Part 1 Share incentive plans

Amendments to Chapter 6 of Part 7 of ITEPA 2003

1 Chapter 6 of Part 7 of ITEPA 2003 (employment income: income and
exemptions relating to securities: share incentive plans) is amended as
15follows.

2 In the title omit “Approved”.

3 (1) Section 488 (introduction to share incentive plans) is amended as follows.

(2) In the heading omit “Approved”.

(3) In subsection (1)—

(a) 20omit paragraph (a), and

(b) in paragraph (b) for “those plans” substitute “share incentive plans
(“SIPs”) which are Schedule 2 SIPs”.

(4) Omit subsection (2).

(5) In subsection (4)—

(a) 25omit the definitions of “approved” and “approval”, and

(b) after the definition of “PAYE deduction” insert—

4 (1) Section 489 (operation of tax advantages) is amended as follows.

(2) 30In the heading for “approved” substitute “Schedule 2”.

(3) In subsection (1) for “an approved” substitute “a Schedule 2”.

5 In section 498 (no charge on shares ceasing to be subject to plan in certain
circumstances) in subsection (9)(b) for “an approved” substitute “a Schedule
2”.

6 (1) 35Section 500 (operation of tax charges) is amended as follows.

(2) In the heading for “approved” substitute “Schedule 2”.

Finance (No. 2) BillPage 236

(3) In subsection (1) for “an approved” substitute “a Schedule 2”.

7 In section 503 (charge on partnership share money) in subsection (2), in the
entry for paragraph 56, for “withdrawal of plan approval” substitute “plan
ceasing to be a Schedule 2 SIP”.

8 (1) 5Section 506 (charge on partnership shares ceasing to be subject to plan) is
amended as follows.

(2) In subsection (2) for “market value of the shares at the exit date” substitute
“relevant amount”.

(3) After subsection (2) insert—

(2A) 10Subject to subsection (2B), in subsection (2) “the relevant amount”
means the market value of the shares at the exit date.

(2B) If the shares cease to be subject to the plan by virtue of a provision of
the kind mentioned in paragraph 43(2B) of Schedule 2 (provision
requiring partnership shares to be offered for sale), in subsection (2)
15“the relevant amount” means the lesser of—

(a) the amount of partnership share money used to acquire the
shares, and

(b) the market value of the shares at the time they are offered for
sale.

(2C) 20Paragraph 92(2) of Schedule 2 (market value of shares subject to a
restriction) applies for the purposes of subsection (2B)(b).

(4) After subsection (3) insert—

(3A) If the shares cease to be subject to the plan by virtue of a provision of
the kind mentioned in paragraph 43(2B) of Schedule 2, in subsection
25(3)(b) the reference to the market value of the shares at the exit date
is to be read as a reference to the market value of the shares at the
time they are offered for sale (as determined in accordance with
paragraph 92(2) of Schedule 2 if relevant).

9 In section 509 (modification of section 696) in subsection (1)(a) for “an
30approved” substitute “a Schedule 2”.

10 In section 510 (payments by trustees) in subsection (1) for “an approved”
substitute “a Schedule 2”.

11 In section 511 (deductions to be made by trustees) in subsection (1) for “an
approved” substitute “a Schedule 2”.

12 35In section 515 (tax advantages and charges under other Acts) in subsection
(2)(a) and (d) for “an approved” substitute “a Schedule 2”.

13 Schedule 2 is amended as follows.

14 In the title omit “Approved”.

15 In the cross-heading before paragraph 1 for “Approval of” substitute
40Introduction to Schedule 2”.

16 (1) Paragraph 1 (introduction) is amended as follows.

Finance (No. 2) BillPage 237

(2) For sub-paragraphs (1) and (2) substitute—

(A1) For the purposes of the SIP code a share incentive plan (a “SIP”) is
a Schedule 2 SIP if the requirements of Parts 2 to 9 of this Schedule
are met in relation to the SIP.

(3) 5For sub-paragraph (4) substitute—

(4) Sub-paragraph (A1) is subject to Part 10 of this Schedule which—

(a) requires notice of a plan to be given to Her Majesty’s
Revenue and Customs (“HMRC”) in order for the plan to
be a Schedule 2 SIP (see paragraph 81A(1)),

(b) 10provides for a plan in relation to which such notice is given
to be a Schedule 2 SIP (see paragraph 81A(4)), and

(c) gives power to HMRC to enquire into a plan and to decide
that the plan should not be a Schedule 2 SIP (see
paragraphs 81F to 81I).

17 15In the cross-heading before paragraph 6 omit “for approval”.

18 (1) Paragraph 6 (general requirements for SIPs) is amended as follows.

(2) Make the existing text sub-paragraph (1).

(3) After the new sub-paragraph (1) insert—

(2) The requirements of this Part are also to be taken to include the
20requirements of paragraphs 89 and 90 (plan termination notices
etc).

19 (1) Paragraph 7 (the purpose of the plan) is amended as follows.

(2) In sub-paragraph (1)—

(a) after “provide” insert “, in accordance with this Schedule,”, and

(b) 25for “nature” substitute “form”.

(3) After sub-paragraph (1) insert—

(1A) The plan must not provide benefits to employees otherwise than
in accordance with this Schedule.

(1B) For example, the plan must not provide cash to employees as an
30alternative to shares.

(1C) Sub-paragraph (1A) does not prohibit an employee receiving a
benefit from a company as a result of any shares in that company
being held on the employee’s behalf under the plan where the
employee would have received the same benefit from the
35company had the shares been acquired by the employee otherwise
than by virtue of the plan.

(4) Omit sub-paragraph (2).

20 In paragraph 18 (requirement not to participate in other SIPs) in sub-
paragraph (1) for “approved” substitute “Schedule 2”.

21 40In paragraph 18A (participation in more than one connected SIP) in sub-
paragraph (1) for “approved” substitute “Schedule 2”.

Finance (No. 2) BillPage 238

22 In paragraph 37 (holding period: power of participant to direct trustees) in
sub-paragraph (3)(b) for “an approved” substitute “a Schedule 2”.

23 In paragraph 43 (partnership shares: introduction) after sub-paragraph (2A)
insert—

(2B) 5Partnership shares may (notwithstanding sub-paragraph (2A) if
relevant) be subject to provision requiring partnership shares
acquired on behalf of an employee to be offered for sale but only
if the requirement of sub-paragraph (2C) is met.

(2C) The consideration at which the shares are required to be offered
10for sale must be at least equal to—

(a) the amount of partnership share money applied in
acquiring the shares on behalf of the employee, or

(b) if lower, the market value of the shares at the time they are
offered for sale.

24 15In the cross-heading before paragraph 56 for “withdrawal of approval
substitute “plan ceasing to be a Schedule 2 SIP”.

25 (1) Paragraph 56 (repayment of partnership share money) is amended as
follows.

(2) In sub-paragraph (1) for “approval of the plan is withdrawn (see paragraph
2083)” substitute “plan is not to be a Schedule 2 SIP by virtue of paragraph 81H
or 81I”.

(3) In sub-paragraph (2) for the words from “notice” to the end substitute “the
relevant day”.

(4) After sub-paragraph (2) insert—

(2A) 25If the plan is not to be a Schedule 2 SIP by virtue of paragraph 81H,
in sub-paragraph (2) “the relevant day” means—

(a) the last day of the period in which notice of an appeal
under paragraph 81K(2)(a) may be given, or

(b) if notice of such an appeal is given, the day on which the
30appeal is determined or withdrawn.

(2B) If the plan is not to be a Schedule 2 SIP by virtue of paragraph 81I,
in sub-paragraph (2) “the relevant day” means—

(a) the last day of the period in which notice of an appeal
under paragraph 81K(3) may be given, or

(b) 35if notice of such an appeal is given, the day on which the
appeal is determined or withdrawn.

26 (1) Paragraph 65 (general requirements as to dividend shares) is amended as
follows.

(2) Make the existing text sub-paragraph (1).

(3) 40After the new sub-paragraph (1) insert—

(2) Dividend shares may (notwithstanding sub-paragraph (1)(b) if
relevant) be subject to provision requiring dividend shares
acquired on behalf of an employee to be offered for sale but only
if the requirement of sub-paragraph (3) is met.

Finance (No. 2) BillPage 239

(3) The consideration at which the shares are required to be offered
for sale must be at least equal to—

(a) the amount of the cash dividends applied in acquiring the
shares on behalf of the employee, or

(b) 5if lower, the market value of the shares at the time they are
offered for sale.

27 In paragraph 71A (duty to monitor participants) for “approved” substitute
“Schedule 2”.

28 For Part 10 substitute—

10 Part 10 Notification of plans, annual returns and enquiries
81A Notice of SIP to be given to HMRC

(1) For a SIP to be a Schedule 2 SIP, notice of the SIP must be given to
Her Majesty’s Revenue and Customs (“HMRC”).

(2) 15The notice must—

(a) be given by the company,

(b) contain, or be accompanied by, such information as HMRC
may require, and

(c) contain a declaration within sub-paragraph (3) made by
20such persons as HMRC may require.

(3) A declaration within this sub-paragraph is a declaration—

(a) that the requirements of Parts 2 to 9 of this Schedule are
met in relation to the SIP, and

(b) if the declaration is made after the first date on which
25awards of shares are made under the SIP (“the first award
date”), that those requirements—

(i) were met in relation to those awards of shares, and

(ii) have otherwise been met in relation to the SIP at all
times on or after the first award date when shares
30appropriated to, or acquired on behalf of,
individuals under the SIP have been held under the
SIP.

(4) If notice is given under this paragraph in relation to a SIP, for the
purposes of the SIP code the SIP is to be a Schedule 2 SIP at all
35times on and after the relevant date (but not before that date).

(5) But if the notice is given after the initial notification deadline, the
SIP is to be a Schedule 2 SIP only from the beginning of the
relevant tax year.

(6) For the purposes of this Part—

(7) Sub-paragraph (4) is subject to the following paragraphs of this
Part.

81B 10Annual returns

(1) This paragraph applies if notice is given in relation to a SIP under
paragraph 81A.

(2) The company must give to HMRC a return for the tax year in
which the relevant date falls and for each subsequent tax year
15(subject to sub-paragraph (9)).

(3) If paragraph 81A(5) applies in relation to the SIP, in sub-
paragraph (2) the reference to the tax year in which the relevant
date falls is to be read as a reference to the relevant tax year.

(4) A return for a tax year must—

(a) 20contain, or be accompanied by, such information as HMRC
may require, and

(b) be given on or before 6 July in the following tax year.

(5) The information which may be required under sub-paragraph
(4)(a) includes (in particular) information to enable HMRC to
25determine the liability to tax, including capital gains tax, of—

(a) any person who has participated in the SIP, or

(b) any other person whose liability to tax the operation of the
SIP is relevant to.

(6) If during a tax year an alteration is made in a key feature of—

(a) 30the SIP, or

(b) the plan trust,

the return for the tax year must contain a declaration within sub-
paragraph (7) made by such persons as HMRC may require.

(7) A declaration within this sub-paragraph is a declaration that the
35alteration has not caused the requirements of Parts 2 to 9 of this
Schedule not to be met in relation to the SIP.

(8) For the purposes of sub-paragraph (6) a “key feature” of a SIP or
plan trust is a provision of the SIP or plan trust which is necessary
in order for the requirements of Parts 2 to 9 of this Schedule to be
40met in relation to the SIP.

(9) A return is not required for any tax year following that in which
the termination condition is met in relation to the SIP.

(10) For the purposes of this Part “the termination condition” is met in
relation to a SIP when—

Finance (No. 2) BillPage 241

(a) a plan termination notice has been issued in relation to it
under paragraph 89, and

(b) all the requirements under paragraphs 56(3), 68(4)(c) and
90 have been met by the trustees.

(11) 5If the company becomes aware that—

(a) anything which should have been included in, or should
have accompanied, a return for a tax year was not included
in, or did not accompany, the return,

(b) anything which should not have been included in, or
10should not have accompanied, a return for a tax year was
included in, or accompanied, the return, or

(c) any other error or inaccuracy has occurred in relation to a
return for a tax year,

the company must give an amended return correcting the position
15to HMRC without delay.

(1) This paragraph applies if the company fails to give a return for a
tax year (containing, or accompanied by, all required information
and declarations) on or before the date mentioned in paragraph
81B(4)(b) (“the date for delivery”).

(2) 20The company is liable for a penalty of £100.

(3) If the company’s failure continues after the end of the period of 3
months beginning with the date for delivery, the company is liable
for a further penalty of £300.

(4) If the company’s failure continues after the end of the period of 6
25months beginning with the date for delivery, the company is liable
for a further penalty of £300.

(5) The company is liable for a further penalty under this sub-
paragraph if—

(a) the company’s failure continues after the end of the period
30of 9 months beginning with the date for delivery,

(b) HMRC decide that such a penalty should be payable, and

(c) HMRC give notice to the company specifying the period in
respect of which the penalty is payable.

(The company may be liable for more than one penalty under this
35sub-paragraph.)

(6) The penalty under sub-paragraph (5) is £10 for each day that the
failure continues during the period specified in the notice under
sub-paragraph (5)(c).

(7) The period specified in the notice under sub-paragraph (5)(c)

(a) 40may begin earlier than the date on which the notice is
given, but

(b) may not begin until after the end of the period mentioned
in sub-paragraph (5)(a) or, if relevant, the end of any
period specified in any previous notice under sub-
45paragraph (5)(c) given in relation to the failure.

Finance (No. 2) BillPage 242

(8) Liability for a penalty under this paragraph does not arise if the
company satisfies HMRC (or, on an appeal under paragraph 81K,
the tribunal) that there is a reasonable excuse for its failure.

(9) For the purposes of sub-paragraph (8)

(a) 5an insufficiency of funds is not a reasonable excuse, unless
attributable to events outside the company’s control,

(b) where the company relies on any other person to do
anything, that is not a reasonable excuse unless the
company took reasonable care to avoid the failure, and

(c) 10where the company had a reasonable excuse for the failure
but the excuse ceased, the company is to be treated as
having continued to have the excuse if the failure is
remedied without unreasonable delay after the excuse
ceased.

81D 15Notices and returns to be given electronically etc

(1) A notice under paragraph 81A, and any information
accompanying the notice, must be given electronically.

(2) A return under paragraph 81B, and any information
accompanying the return, must be given electronically.

(3) 20But, if HMRC consider it appropriate to do so, HMRC may allow
the company to give a notice or return or any accompanying
information in another way; and, if HMRC do so, the notice, return
or information must be given in that other way.

(4) The Commissioners for Her Majesty’s Revenue and Customs—

(a) 25must prescribe how notices, returns and accompanying
information are to be given electronically;

(b) may make different provision for different cases or
circumstances.

(1) This paragraph applies if a return under paragraph 81B, or any
30information accompanying such a return—

(a) is given otherwise than in accordance with paragraph 81D,
or

(b) contains a material inaccuracy—

(i) which is careless or deliberate, or

(ii) 35which is not corrected as required by paragraph
81B(11).

(2) The company is liable for a penalty of an amount decided by
HMRC.

(3) The penalty must not exceed £5,000.

(4) 40For the purposes of sub-paragraph (1)(b)(i) an inaccuracy is
careless if it is due to a failure by the company to take reasonable
care.

Finance (No. 2) BillPage 243

81F Enquiries

(1) This paragraph applies if notice is given in relation to a SIP under
paragraph 81A.

(2) HMRC may enquire into the SIP if HMRC give notice to the
5company of HMRC’s intention to do so no later than—

(a) 6 July in the tax year following the tax year in which the
initial notification deadline falls, or

(b) if the notice under paragraph 81A is given after the initial
notification deadline, 6 July in the second tax year
10following the relevant tax year.

(3) HMRC may enquire into the SIP if HMRC give notice to the
company of HMRC’s intention to do so no later than 12 months
after the date on which a declaration within paragraph 81B(7) is
given to HMRC.

(4) 15Sub-paragraph (5) applies if (at any time) HMRC have reasonable
grounds for believing that requirements of Parts 2 to 9 of this
Schedule—

(a) are not met in relation to the SIP, or

(b) have not been met in relation to the SIP.

(5) 20HMRC may enquire into the SIP if HMRC give notice to the
company of HMRC’s intention to do so.

(6) Notice may be given, and an enquiry may be conducted, under
sub-paragraph (2), (3) or (5) even though the termination
condition has been met in relation to the SIP.

(1) 25An enquiry under paragraph 81F(2), (3) or (5) is completed when
HMRC give the company a notice (a “closure notice”) stating—

(a) that HMRC have completed the enquiry, and

(b) that—

(i) paragraph 81H is to apply,

(ii) 30paragraph 81I is to apply, or

(iii) neither paragraph 81H nor paragraph 81I is to
apply.

(2) If the company receives notice under paragraph 81F(2), (3) or (5),
the company may make an application to the tribunal for a
35direction requiring a closure notice for the enquiry to be given
within a specified period.

(3) The application is to be subject to the relevant provisions of Part 5
of TMA 1970 (see, in particular, section 48(2)(b) of that Act).

(4) The tribunal must give a direction unless satisfied that HMRC
40have reasonable grounds for not giving the closure notice within
the specified period.

(1) This paragraph applies if HMRC decide—

(a) that requirements of Parts 2 to 9 of this Schedule—

(i) are not met in relation to the SIP, or

(ii) 45have not been met in relation to the SIP, and

Finance (No. 2) BillPage 244

(b) that the situation is, or was, so serious that this paragraph
should apply.

(2) If this paragraph applies—

(a) the SIP is not to be a Schedule 2 SIP with effect from—

(i) 5such relevant time as is specified in the closure
notice, or

(ii) if no relevant time is specified, the time of the
giving of the closure notice, and

(b) the company is liable for a penalty of an amount decided
10by HMRC.

(3) Sub-paragraph (2)(a) does not affect the operation of the SIP code
in relation to shares appropriated to, or acquired on behalf of, an
individual under the SIP before the time mentioned in sub-
paragraph (2)(a)(i) or (ii) (as the case may be).

(4) 15In particular, if the SIP was a Schedule 2 SIP when the shares were
appropriated to, or acquired on behalf of, the individual, the SIP is
to continue to be a Schedule 2 SIP in relation to those shares.

(5) The penalty under sub-paragraph (2)(b) must not exceed an
amount equal to twice HMRC’s reasonable estimate of—

(a) 20the total income tax for which participants in the SIP have
not been liable, or will not be liable in the future, and

(b) the total contributions under Part 1 of SSCBA 1992 or
SSCB(NI)A 1992 for which any persons have not been
liable, or will not be liable in the future,

25in consequence of the SIP having been a Schedule 2 SIP at any
relevant time before the time mentioned in sub-paragraph (2)(a)(i)
or (ii) (as the case may be).

(6) The liabilities covered by sub-paragraph (5) include liabilities for
income tax or contributions which a person has not had, or will not
30have, in consequence of sub-paragraphs (3) and (4).

(7) In this paragraph “relevant time” means any time before the
giving of the closure notice when requirements of Parts 2 to 9 of
this Schedule were not met in relation to the SIP.

(1) This paragraph applies if HMRC decide—

(a) 35that requirements of Parts 2 to 9 of this Schedule—

(i) are not met in relation to the SIP, or

(ii) have not been met in relation to the SIP, but

(b) that the situation is not, or was not, so serious that
paragraph 81H should apply.

(2) 40If this paragraph applies, the company—

(a) is liable for a penalty of an amount decided by HMRC, and

(b) must, no later than 90 days after the relevant day, secure
that the requirements of Parts 2 to 9 of this Schedule are
met in relation to the SIP.

(3) 45The penalty under sub-paragraph (2)(a) must not exceed £5,000.

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