Finance Bill (HC Bill 10)

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deductions which may be made in relation to the scheme under section 999
of CTA 2009 (deduction for costs of setting up scheme) if they would
otherwise do so.

214 The amendments made by paragraph 179 above do not affect a notice given
5in relation to the scheme under paragraph 33 of Schedule 4 to ITEPA 2003
before 6 April 2014.

Part 4 Enterprise management incentives

Amendments to Schedule 5 to ITEPA 2003

215 10Schedule 5 to ITEPA 2003 (enterprise management incentives) is amended
as follows.

216 (1) Paragraph 44 (notice of option to be given to HMRC) is amended as follows.

(2) In sub-paragraph (2) omit paragraph (b) and the “and” before it.

(3) In sub-paragraph (4) for “each of sub-paragraphs (5) and (6)” substitute
15“sub-paragraph (5)”.

(4) In sub-paragraph (5)—

(a) after paragraph (a) omit “and”, and

(b) after paragraph (b) insert , and

(c) that the individual to whom the option has been
20granted has made and signed a written declaration
within sub-paragraph (6) and that the declaration
is held by the employer company.

(5) After sub-paragraph (5) insert—

(5A) The employer company must—

(a) 25retain the declaration mentioned in sub-paragraph (5)(c)
and, if requested to do so by an officer of Revenue and
Customs, produce it to such an officer before the end of the
period of 7 days after the day on which the request is
made, and

(b) 30give a copy of that declaration to the individual before the
end of the period of 7 days after the day on which the
declaration is signed by the individual.

(6) After sub-paragraph (7) insert—

(8) The notice, and any information supporting it, must be given
35electronically.

(9) But, if an officer of Revenue and Customs considers it appropriate
to do so, the officer may allow the employer company to give the
notice or any supporting information in another way; and, if the
officer does so, the notice or information must be given in that
40other way.

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

(a) must prescribe how notices and supporting information
are to be given electronically;

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

217 For paragraph 52 (annual returns) substitute—

52 (1) This paragraph applies in relation to a company whose shares are
5(or have been) subject to qualifying options.

(2) The company must give to Her Majesty’s Revenue and Customs
(“HMRC”) a return for each tax year falling (wholly or partly) in
the company’s qualifying option period.

(3) The company’s “qualifying option period” is the period—

(a) 10beginning when the first qualifying option to which the
company’s shares are subject is granted, and

(b) ending when the termination condition is met.

(4) “The termination condition” is met when the company’s shares—

(a) are no longer subject to qualifying options, and

(b) 15will no longer become subject to qualifying options.

(5) The return for a tax year must—

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

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

(6) 20The information which may be required under sub-paragraph
(5)(a) includes (in particular) information to enable HMRC to
determine the liability to tax, including capital gains tax, of any
person who has been granted a qualifying option to which the
company’s shares are subject.

(7) 25If 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
30should 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
35to HMRC without delay.

52A (1) A return under paragraph 52, and any information accompanying
the return, must be given electronically.

(2) But, if HMRC consider it appropriate to do so, HMRC may allow
a company to give a return or any accompanying information in
40another way; and, if HMRC do so, the return or information must
be given in that other way.

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

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

(b) 45may make different provision for different cases or
circumstances.

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218 (1) Paragraph 53 (compliance with time limits) is amended as follows.

(2) In sub-paragraph (1)—

(a) after “a person” insert “(“P”)”, and

(b) in paragraphs (a) and (b) for “the person” substitute “P”.

(3) 5After sub-paragraph (2) insert—

(3) For the purposes of sub-paragraph (1)—

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

(b) where P relies on any other person to do anything, that is
10not a reasonable excuse unless P took reasonable care to
avoid the failure.

219 After paragraph 57 insert—

Penalties

57A A company is liable for a penalty of £500 if the company fails—

(a) 15to produce a declaration to an officer of Revenue and
Customs as required by paragraph 44(5A)(a) before the
end of the period mentioned in that provision, or

(b) to provide a copy of a declaration to an individual as
required by paragraph 44(5A)(b) before the end of the
20period mentioned in that provision,

and Her Majesty’s Revenue and Customs (“HMRC”) decide that
such a penalty should be payable.

57B (1) This paragraph applies if a company fails to give a return for a tax
year (containing, or accompanied by, all required information) on
25or before the date mentioned in paragraph 52(5)(b) (“the date for
delivery”).

(2) The 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
30for a further penalty of £300.

(4) If the company’s failure continues after the end of the period of 6
months 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-
35paragraph if—

(a) the company’s failure continues after the end of the period
of 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
40respect of which the penalty is payable.

(The company may be liable for more than one penalty under this
sub-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
45sub-paragraph (5)(c).

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

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

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

57C (1) This paragraph applies if a return under paragraph 52, or any
information accompanying such a return—

(a) 10is given otherwise than in accordance with paragraph 52A,
or

(b) contains a material inaccuracy—

(i) which is careless or deliberate, or

(ii) which is not corrected as required by paragraph
1552(7).

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

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

(4) For the purposes of sub-paragraph (1)(b)(i) an inaccuracy is
20careless if it is due to a failure by the company to take reasonable
care.

57D (1) This paragraph applies if a company is liable for a penalty under
this Part.

(2) HMRC must assess the penalty and notify the company of the
25assessment.

(3) Subject to sub-paragraph (4), the assessment must be made no
later than 12 months after the date on which the company becomes
liable for the penalty.

(4) In the case of a penalty under paragraph 57C(1)(b), the assessment
30must be made no later than—

(a) 12 months after the date on which HMRC become aware of
the inaccuracy, and

(b) 6 years after the date on which the company becomes liable
for the penalty.

(5) 35A penalty payable under this Part must be paid—

(a) no later than 30 days after the date on which the notice
under sub-paragraph (2) is given to the company, or

(b) if notice of appeal is given against the penalty under
paragraph 57E(1) or (2), no later than 30 days after the date
40on which the appeal is determined or withdrawn.

(6) The penalty may be enforced as if it were corporation tax or, if the
company is not within the charge to corporation tax, income tax
charged in an assessment and due and payable.

(7) Sections 100 to 103 of TMA 1970 do not apply to a penalty under
45this Part.

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57E (1) A company may appeal against a decision of HMRC that the
company is liable for a penalty under this Part.

(2) A company may appeal against a decision of HMRC as to the
amount of a penalty payable by the company under this Part.

(3) 5Notice of appeal must be given to HMRC no later than 30 days
after the date on which the notice under paragraph 57D(2) is given
to the company.

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

(5) 10On an appeal under sub-paragraph (2) which is notified to the
tribunal, the tribunal may—

(a) affirm the amount of the penalty decided, or

(b) substitute another amount for that amount.

(6) Subject to this paragraph and paragraph 57D, the provisions of
15Part 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 to corporation tax or, if the company
is not within the charge to corporation tax, income tax.

Other amendment: section 98 of TMA 1970

220 20In the second column of the Table in section 98 of TMA 1970 (special returns
etc) omit the entry for paragraph 52 of Schedule 5 to ITEPA 2003.

Commencement and transitional provision

221 This Part is treated as having come into force on 6 April 2014.

222 The amendments made by paragraph 216 above have no effect in relation to
25options granted before 6 April 2014.

223 (1) The amendment made by paragraph 217 above has effect so as to require
returns for the tax year 2014-15 and subsequent tax years.

(2) It has effect in relation to companies whose qualifying option periods begin
before 6 April 2014 (as well as those whose qualifying option periods begin
30on or after that date).

(3) It does not affect the duty of a company to deliver a return for a tax year
earlier than the tax year 2014-15 in accordance with paragraph 52 of
Schedule 5 to ITEPA 2003 as that paragraph stood before its substitution;
and the effect of the amendment made by paragraph 220 above is limited
35accordingly.

(4) In paragraphs 57B(1) and 57C(1) of Schedule 5 to ITEPA 2003 (as inserted by
paragraph 219 above) the reference to a return is to a return under
paragraph 52 of that Schedule as substituted.

224 The amendment made by paragraph 218(3) above does not affect a
40reasonable excuse which began before 6 April 2014.

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Part 5 Other employee share schemes

Amendments to Chapter 1 of Part 7 of ITEPA 2003

225 Chapter 1 of Part 7 of ITEPA 2003 (employment income: income and
5exemptions relating to securities: general) is amended as follows.

226 (1) Section 421J (duty to provide information) is amended as follows.

(2) Omit subsections (3), (7), (8), (11) and (12).

(3) In subsection (10) for “by, or by a notice under,” substitute “by a notice
under”.

227 10After section 421J insert—

421JA Annual returns

(1) This section applies in relation to a person who is (or has been) a
responsible person (see section 421L) in relation to reportable events
(see section 421K).

(2) 15The person must give to Her Majesty’s Revenue and Customs
(“HMRC”) a return for each tax year falling (wholly or partly) in the
person’s reportable event period.

(3) The person’s “reportable event period” is the period—

(a) beginning when the first reportable event occurs in relation
20to which the person is a responsible person, and

(b) ending when the person will no longer be a responsible
person in relation to reportable events.

(4) The return for a tax year must—

(a) contain, or be accompanied by, such information as HMRC
25may require, and

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

(5) The information which may be required under subsection (4)(a)
includes (in particular) information to enable HMRC to determine
the liability to tax, including capital gains tax, of any employee.

(6) 30If the person 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 should
35not 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 person must give an amended return correcting the position to
40HMRC without delay.

(7) A person’s return for a tax year under this section need not contain,
or be accompanied by, duplicate information and a person is not

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required to give a return for a tax year under this section if it would
only contain, or be accompanied by, duplicate information.

(8) “Duplicate information” means information which is contained in or
accompanies—

(a) 5a return which another person gives for the tax year under
this section, or

(b) a return which any person gives for the tax year under any of
the following provisions—

(i) paragraph 81B of Schedule 2 (annual return for
10Schedule 2 SIP);

(ii) paragraph 40B of Schedule 3 (annual return for
Schedule 3 SAYE option scheme);

(iii) paragraph 28B of Schedule 4 (annual return for
Schedule 4 CSOP scheme);

(iv) 15paragraph 52 of Schedule 5 (annual return for
company whose shares are subject to qualifying
options under the EMI code).

421JB Returns to be given electronically

(1) A return under section 421JA, and any information accompanying
20the return, must be given electronically.

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

(3) 25The Commissioners for Her Majesty’s Revenue and Customs—

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

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

421JC 30 Penalties for late returns

(1) This section applies if a person fails to give a return under section
421JA for a tax year (containing, or accompanied by, all required
information) on or before the date mentioned in section 421JA(4)(b)
(“the date for delivery”).

(2) 35The person is liable for a penalty of £100.

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

(4) If the person’s failure continues after the end of the period of 6
40months beginning with the date for delivery, the person is liable for
a further penalty of £300.

(5) The person is liable for a further penalty under this subsection if—

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

(b) 45HMRC decide that such a penalty should be payable, and

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

(The person may be liable for more than one penalty under this
subsection.)

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

(7) The period specified in the notice under subsection (5)(c)

(a) may begin earlier than the date on which the notice is given,
10but

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

(8) 15Liability for a penalty under this section does not arise if the person
satisfies HMRC (or, on an appeal under section 421JF, the tribunal)
that there is a reasonable excuse for the person’s failure.

(9) For the purposes of subsection (8)

(a) an insufficiency of funds is not a reasonable excuse, unless
20attributable to events outside the person’s control,

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

(c) where the person had a reasonable excuse for the failure but
25the excuse ceased, the person is to be treated as having
continued to have the excuse if the failure is remedied
without unreasonable delay after the excuse ceased.

421JD Penalty if information not given correctly

(1) This section applies if a return under section 421JA, or any
30information accompanying such a return—

(a) is given otherwise than in accordance with section 421JB, or

(b) contains a material inaccuracy—

(i) which is careless or deliberate, or

(ii) which is not corrected as required by section
35421JA(6).

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

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

(4) For the purposes of subsection (1)(b)(i) an inaccuracy is careless if it
40is due to a failure by the person in question to take reasonable care.

421JE Assessment of penalties

(1) This section applies if a person is liable for a penalty under section
421JC or 421JD.

(2) HMRC must assess the penalty and notify the person of the
45assessment.

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(3) Subject to subsection (4), the assessment must be made no later than
12 months after the date on which the person becomes liable for the
penalty.

(4) In the case of a penalty under section 421JD(1)(b), the assessment
5must be made no later than—

(a) 12 months after the date on which HMRC become aware of
the inaccuracy, and

(b) 6 years after the date on which the person becomes liable for
the penalty.

(5) 10A penalty payable under this Part must be paid—

(a) no later than 30 days after the date on which the notice under
subsection (2) is given to the person, or

(b) if notice of appeal is given against the penalty under section
421JF(1) or (2), no later than 30 days after the date on which
15the appeal is determined or withdrawn.

(6) The penalty may be enforced as if it were income tax or, if the person
is a company within the charge to corporation tax, corporation tax
charged in an assessment and due and payable.

(7) Sections 100 to 103 of TMA 1970 do not apply to a penalty under
20section 421JC or 421JD.

421JF Appeals

(1) A person may appeal against a decision of HMRC that the person is
liable for a penalty under section 421JC or 421JD.

(2) A person may appeal against a decision of HMRC as to the amount
25of a penalty payable by the person under section 421JC or 421JD.

(3) Notice of appeal must be given to HMRC no later than 30 days after
the date on which the notice under section 421JE(2) is given to the
person.

(4) On an appeal under subsection (1) which is notified to the tribunal,
30the tribunal may affirm or cancel the decision.

(5) On an appeal under subsection (2) which is notified to the tribunal,
the tribunal may—

(a) affirm the amount of the penalty decided, or

(b) substitute another amount for that amount.

(6) 35Subject to this section and section 421JE, the provisions of Part 5 of
TMA 1970 relating to appeals have effect in relation to an appeal
under this section as they have effect in relation to an appeal against
an assessment to income tax or, if the person is a company within the
charge to corporation tax, corporation tax.

228 40In section 421K (reportable events) in subsection (1) for “section 421J (duty
to provide information)” substitute “sections 421J and 421JA (duties to
provide information and annual returns)”.

229 In section 421L (responsible persons) in subsection (1) for “section 421J (duty
to provide information)” substitute “sections 421J and 421JA (duties to
45provide information and annual returns)”.

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Other amendment: section 98 of TMA 1970

230 In the second column of the Table in section 98 of TMA 1970 (special returns
etc) omit the entry for section 421J(3) of ITEPA 2003.

Commencement and transitional provision

231 5This Part is treated as having come into force on 6 April 2014.

232 The amendments made by paragraphs 226 and 230 above have no effect in
relation to reportable events occurring before 6 April 2014.

233 (1) Section 421JA of ITEPA 2003 (as inserted by paragraph 227 above) has effect
so as to require returns for the tax year 2014-15 and subsequent tax years.

(2) 10That section has effect in relation to persons whose reportable event periods
begin before 6 April 2014 (as well as those whose reportable event periods
begin on or after that date).