Finance Bill (HC Bill 57)

(4) In this paragraph “the appropriate fraction”, in relation to a joint account,
means—

(5) 5In this paragraph “priority order” means such order as the deposit-taker
considers appropriate, but the deposit-taker must ensure—

(a) that accounts other than joint accounts always have a higher priority
than joint accounts, and

(b) subject to paragraph (a), that any rule set out in the hold notice under
10paragraph 4(2)(d) is adhered to.

(6) In this paragraph “reverse priority order” means the reverse of the order
determined under sub-paragraph (5).

(7) In this paragraph references to an amount standing to the credit of an
account are to be read subject to any regulations under paragraph 19(2)(d).

15Duty to notify HMRC and account holders etc

7 (1) This paragraph applies where a deposit-taker receives a hold notice.

(2) If the deposit-taker determines that there are one or more affected accounts
(see paragraph 5(7)) as a result of the hold notice, the deposit-taker must
give HMRC a notice which sets out—

(a) 20prescribed information about each of the affected accounts held by P,

(b) the amount of the held amount in relation to each such account,

(c) if any of the affected accounts is a joint account held by P and one or
more other persons, prescribed information about the other person
or persons, and

(d) 25any other prescribed information.

(3) The notice under sub-paragraph (2) must be given within the period of 5
working days beginning with the day on which the deposit-taker complies
with paragraph 5(1).

(4) If the deposit-taker determines that there are no affected accounts as a result
30of the hold notice, it must give HMRC a notice which—

(a) states that this is the case, and

(b) sets out any other prescribed information.

(5) The notice under sub-paragraph (4) must be given within the period of 5
working days beginning with the day on which the deposit-taker makes that
35determination.

(6) If HMRC receives a notice under sub-paragraph (2) it must as soon as
reasonably practicable—

(a) give P—

(i) a copy of the hold notice, and

(ii) 40a notice under sub-paragraph (7), and

(b) in relation to each affected account, give a notice to each person
within sub-paragraph (9) explaining that a hold notice has been
given in respect of the account, the effect of the hold notice so far as
it relates to the account and the effect of paragraphs 9 to 11.

(7) A notice under this sub-paragraph must comply with the following
requirements—

(a) the notice must specify the particular relevant sums (see paragraph
2) to which the hold notice relates;

(b) 5the details given for that purpose must include a statement, to the
best of HMRC’s knowledge, of the amount of each of those sums
(that is, the unpaid amount) at the date of the notice;

(c) the notice must state the total of the amounts stated under paragraph
(b) (if more than one), and

(d) 10the notice must state that the notified sum for the purposes of the
hold notice (see paragraph 4(4)) is equal to—

(i) the total amount specified under paragraph (c) or,

(ii) if paragraph (c) is not applicable, the amount specified under
paragraph (b) as the amount of the relevant sum to which the
15hold notice relates.

(8) In this Part of this Schedule “the notified sum”, in relation to a hold notice,
means the amount identified as such (or that is to be identified as such) in
the notice under sub-paragraph (7).

(9) The persons mentioned in sub-paragraph (6)(b) are—

(a) 20in the case of a joint account, any holder of the account other than P,
and

(b) any person (not falling within paragraph (a)) who is an interested
third party in relation to the affected account,

in respect of whom prescribed information has been provided under sub-
25paragraph (2)(c) or sufficient information has otherwise been given in the
notice under sub-paragraph (2) to enable HMRC to give a notice.

(10) After the deposit-taker has complied with paragraph 5(1), the deposit-taker
may, in relation to any affected account, give a notice to—

(a) P,

(b) 30if the account is a joint account, any other holder of the account, and

(c) any person (not falling within paragraph (b)) who is an interested
third party in relation to the account,

which states that a hold notice has been received by the deposit-taker in
respect of the account and the effect of that notice so far as it relates to that
35account.

(11) In this Part of this Schedule “interested third party”, in relation to a relevant
account, means a person other than P who has a beneficial interest in—

(a) an amount standing to the credit of the account, or

(b) an amount which has been transferred from that account to a
40suspense account.

(12) But, in relation to a hold notice, an interest which comes into existence after
any arrangements under paragraph 5(3) have been put into place is treated
as not being a beneficial interest for the purposes of sub-paragraph (11).

Cancellation or variation of effects of hold notice

8 (1) 45Where a hold notice has been given to a deposit-taker HMRC may, by a
notice given to the deposit-taker (a “notice of cancellation or variation”)—

(a) cancel the hold notice,

(b) cancel the effect of the hold notice in relation to one or more
accounts, or

(c) cancel the effect of the hold notice in relation to any part of the held
amount standing to the credit of a particular account or accounts.

5In this sub-paragraph references to the effect of a hold notice are to its effect
by virtue of paragraph 5(4).

(2) Where HMRC gives a notice under sub-paragraph (1) it must give a copy of
that notice to—

(a) P, and

(b) 10any other person who HMRC considers is affected by the giving of
the notice of cancellation or variation and is—

(i) a person who holds a relevant account of which P is also a
holder and in respect of whom prescribed information is
provided under paragraph 7(2)(c), or

(ii) 15an interested third party in relation to a relevant account in
respect of whom sufficient information has been given in the
notice under paragraph 7(2) to enable HMRC to give a notice.

(3) Where the deposit-taker is given a notice under sub-paragraph (1), it must
as soon as reasonably practicable and, in any event, within the period of 5
20working days beginning with the day the notice is given—

(a) if the notice is given under sub-paragraph (1)(a), cancel the
arrangements made under paragraph 5(3) as a result of the notice,
and

(b) if the notice is given under sub-paragraph (1)(b) or (c), make such
25adjustments to those arrangements as are necessary to give effect to
the notice.

Making objections to hold notice

9 (1) Where a hold notice is given to a deposit-taker, a person within sub-
paragraph (2) may by a notice given to HMRC (a “notice of objection”) object
30against the hold notice.

(2) The persons who may object are—

(a) P,

(b) any interested third party in relation to an affected account, and

(c) any person (not falling within paragraph (a) or (b)) who is a holder
35of an affected account which is a joint account,

but only P may object on the ground in sub-paragraph (3)(a).

(3) An objection may only be made on one or more of the following grounds—

(a) that the debts to which the hold notice relates (see paragraph 7(7)(a))
have been wholly or partly paid,

(b) 40that at the time when the hold notice was given, either there was no
sum that was a relevant sum in relation to P or P did not hold any
account with the deposit-taker,

(c) that the hold notice is causing or will cause exceptional hardship to
the person making the objection or another person, or

(d) 45that there is an interested third party in relation to one or more of the
affected accounts.

(4) A notice of objection must state the grounds of the objection.

(5) Objections under this paragraph may only be made within the period of 30
days beginning with—

(a) in the case of—

(i) P, or

(ii) 5a person within sub-paragraph (2)(b) or (c) who has not been
given a notice under paragraph 7(6)(b),

the day on which a copy of the hold notice is given to P under
paragraph 7(6)(a), and

(b) in the case of a person given a notice under paragraph 7(6)(b), the
10day on which that notice is given.

(6) Sub-paragraph (5) does not apply if HMRC agree to the notice of objection
being given after the end of the period mentioned in that sub-paragraph.

(7) HMRC must agree to a notice of objection being given after the end of that
period if the following conditions are met—

(a) 15the person seeking to make the objection has made a request in
writing to HMRC to agree to the notice of objection being given;

(b) HMRC is satisfied that there was reasonable excuse for not giving the
notice before the relevant time limit, and

(c) HMRC is satisfied that the person complied with paragraph (a)
20without unreasonable delay after the reasonable excuse ceased.

(8) If a request of the kind referred to in sub-paragraph (7)(a) is made, HMRC
must by a notice inform the person making the request whether or not
HMRC agrees to the request.

(9) Nothing in Part 5 of TMA 1970 (appeals and other proceedings) applies to
25an objection under this paragraph.

Consideration of objections

10 (1) HMRC must consider any objections made under paragraph 9 within 30
working days of being given the notice of objection.

(2) Having considered the objections, HMRC must decide whether—

(a) 30to cancel the hold notice,

(b) to cancel the effect of the hold notice in relation to the held amount,
or any part of the held amount, in respect of a particular account or
accounts, or

(c) to dismiss the objection.

(3) 35HMRC must give a notice stating its decision to—

(a) P,

(b) each person other than P who objected, and

(c) any other person who HMRC considers is affected by the decision
and is—

(i) 40a person who holds a relevant account of which P is also a
holder and in respect of whom prescribed information is
provided under paragraph 7(2)(c), or

(ii) an interested third party in relation to a relevant account in
respect of whom sufficient information has been given in the
45notice under paragraph 7(2) to enable HMRC to give a notice.

(4) HMRC must, by a notice to the deposit-taker—

(a) if it makes a decision under sub-paragraph (2)(a), cancel the hold
notice;

(b) if it makes a decision under sub-paragraph (2)(b), cancel the effect of
the hold notice in relation to the accounts or amounts in question.

(5) 5HMRC must give each person to whom HMRC is required to give a notice
under sub-paragraph (3) a copy of any notice given to the deposit-taker
under sub-paragraph (4).

(6) Where the deposit-taker is given a notice under sub-paragraph (4), it must
as soon as reasonably practicable and, in any event, within the period of 5
10working days beginning with the day the notice is given—

(a) if the notice is given under sub-paragraph (4)(a), cancel the
arrangements mentioned in paragraph 5(3), or

(b) if the notice is given under sub-paragraph (4)(b), make such
adjustments to those arrangements as are necessary to give effect to
15the notice.

(7) In this paragraph references to the effect of a hold notice are to its effect by
virtue of paragraph 5(4).

Appeals

11 (1) Where HMRC makes a decision under paragraph (b) or (c) of paragraph
2010(2), a person within sub-paragraph (2) may appeal against the hold notice.

(2) The persons who may appeal are—

(a) P,

(b) any interested third party in relation to an affected account, and

(c) any person not falling within paragraph (a) or (b) who is a holder of
25an affected account which is a joint account.

(3) An appeal may only be made on one or more of the grounds set out in
paragraph 9(3) (and for this purpose the reference in paragraph 9(3)(c) to
“the objection” is to be read as a reference to the appeal).

(4) An appeal under sub-paragraph (1) must be made—

(a) 30in England and Wales, to the county court, and

(b) in Northern Ireland, to a county court.

(5) An appeal under this paragraph may only be made within the period of 30
days beginning—

(a) in the case of a person given a notice of HMRC’s decision under
35paragraph 10(3), with the day on which that notice is given to that
person, and

(b) in the case of any person within sub-paragraph (2)(b) or (c) to whom
such a notice has not been given, the day on which P is given such a
notice.

(6) 40A notice of appeal must state the grounds of appeal.

(7) On an appeal under this paragraph, the court may—

(a) cancel the hold notice,

(b) cancel the effect of the hold notice in relation to the held amount, or
any part of the held amount, in respect of a particular account or
45accounts, or

(c) dismiss the appeal.

(8) Where the deposit-taker is served with an order made by the court under
sub-paragraph (7)(a) or (b), the deposit-taker must as soon as reasonably
practicable and, in any event, within the period of 5 working days beginning
5with the day the notice is given take such steps as are necessary to give effect
to the order.

(9) Where an appeal on the ground that the hold notice is causing or will cause
the person making the appeal or another person exceptional hardship (or a
further appeal following such an appeal) is pending, the court to which the
10appeal is made may, on an application made by the person who made the
appeal—

(a) suspend the effect of the hold notice if adequate security is provided
in respect of so much of the notified sum as remains unpaid,

(b) suspend the effect of the hold notice in relation to a particular
15account if adequate security is provided in respect of the held
amount in relation to that account, or

(c) suspend the effect of the hold notice in relation to any part of the held
amount standing to the credit of a particular account, if adequate
security is provided in respect of that part.

(10) 20In this paragraph references to the effect of a hold notice are to its effect by
virtue of paragraph 5(4).

(11) Nothing in Part 5 of TMA 1970 (appeals and other proceedings) applies to
an appeal under this paragraph.

Deduction notice

12 (1) 25If it appears to HMRC that a person in respect of whom a hold notice given
to a deposit-taker is in force—

(a) has failed to pay a relevant sum, and

(b) holds an account (or more than one account) with the deposit-taker
in respect of which there is a held amount in relation to that sum,

30HMRC may give the deposit-taker a deduction notice in respect of that
person.

(2) A “deduction notice” is a notice which—

(a) specifies the name of the person concerned,

(b) specifies one or more affected accounts held by that person with the
35deposit-taker, and

(c) in relation to each such specified account requires the deposit-taker
to deduct and pay a qualifying amount (see sub-paragraph (6)) to the
Commissioners by a day specified in the notice.

(3) Where a deduction notice specifies a particular affected account—

(a) 40the deduction required to be made in relation to that account by
virtue of sub-paragraph (2)(c) must be made from the appropriate
account, that is to say—

(i) if the deposit-taker has by virtue of the hold notice
transferred an amount from the specified account into a
45suspense account, that suspense account, or

(ii) otherwise, the specified account, and

(b) the deposit-taker must not during the period in which the deduction
notice is in force do anything, or permit anything to be done (except
in accordance with paragraph (a)) that would reduce the amount
standing to the credit of the appropriate account below the balance
5required for the purpose of making that deduction.

(4) A deduction notice must explain the effect of sub-paragraph (4)(b) and
paragraph 13 (penalties).

(5) A deduction notice may not be given in respect of an account unless—

(a) the period for making an objection under paragraph 9 has expired
10and either no objections were made or any objection made has been
decided or withdrawn, and

(b) if objections were made and decided, the period for appealing under
paragraph 11 has expired and any appeal or further appeal has been
finally determined.

(6) 15In this paragraph “qualifying amount”, in relation to an affected account,
means an amount not exceeding the held amount in relation to that account
(as modified, where applicable, under paragraph 8(3)(b), 10(6)(b) or
11(7)(b)).

(7) The total of the qualifying amounts specified in the deduction notice must
20not exceed the unpaid amount of the notified sum (see paragraph 7(8)).

(8) HMRC must—

(a) give a copy of the deduction notice to the person in respect of whom
it is given, and

(b) in the case of each account in respect of which the notice is given,
25give a notice to each person within sub-paragraph (9) explaining that
a deduction notice has been given in respect of that account and the
effect of the deduction notice so far as it relates to that account.

(9) The persons mentioned in sub-paragraph (8)(b) are—

(a) if the account is a joint account, each person other than P who is a
30holder of the account, and

(b) any person (not falling within paragraph (a))—

(i) who is an interested third party in relation to the account
whom HMRC knows will be affected by the deduction
notice, and

(ii) 35about whom HMRC has sufficient information to enable it to
give the notice under sub-paragraph (8)(b).

(10) HMRC may, by a notice given to the deposit-taker, amend or cancel the
deduction notice, and where it does so it must—

(a) give a copy of the notice under this sub-paragraph to the person in
40respect of whom the deduction notice was given, and

(b) in the case of each account affected by the amendment or
cancellation, give a notice to each person within sub-paragraph (9)
explaining the effect of the amendment or cancellation so far as it
relates to that account.

(11) 45The deduction notice—

(a) comes into force at the time it is given to the deposit-taker, and

(b) ceases to be in force at the time—

(i) the deposit-taker is given a notice cancelling it under sub-
paragraph (10), or

(ii) the deposit-taker makes the final payment required by virtue
of sub-paragraph (2)(c).

5Penalties

13 (1) This paragraph applies to a deposit-taker who—

(a) fails to comply with an information notice,

(b) fails to comply with a hold notice or a deduction notice,

(c) fails to comply with an obligation under paragraph 7(2) in
10accordance with paragraph 7(3) (obligation to notify HMRC of
effects of hold notice),

(d) fails to comply with an obligation under paragraph 7(4) in
accordance with paragraph 7(5) (obligation to notify HMRC if no
affected accounts),

(e) 15fails to comply with an obligation under paragraph 8(3) (obligation
to cancel or modify effects of hold notice),

(f) fails to comply with an obligation under paragraph 10(6) (obligation
to cancel or adjust arrangements to give effect to HMRC’s decision of
objection), or

(g) 20following receipt of an information notice or hold notice in relation
to an account or accounts held with the deposit-taker by a person
(“the affected person”), makes a disclosure of information to the
affected person or any other person in circumstances where that
disclosure is likely to prejudice HMRC’s ability to use the provisions
25of this Part of this Schedule to recover a relevant sum owed by the
affected person.

(2) In sub-paragraph (1)(g), the reference to a disclosure of information does not
include the giving of a notice in accordance with paragraph 7(10) to the
affected person in respect of a hold notice.

(3) 30The deposit-taker is liable to a penalty of £300.

(4) If a failure within sub-paragraph (1)(a) to (f) continues after the day on
which notice is given under paragraph 14(1) of a penalty in respect of the
failure, the deposit-taker is liable to a further penalty or penalties not
exceeding £60 for each subsequent day on which the failure continues.

(5) 35A failure by a deposit-taker to do anything required to be done within a
limited period of time does not give rise to liability to a penalty under this
paragraph if the deposit-taker did it within such further time, if any, as
HMRC may have allowed.

(6) Liability to a penalty under this paragraph does not arise if the person
40satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that
there is a reasonable excuse for the failure or (as the case may be) disclosure.

(7) For the purposes of this paragraph—

(a) where the deposit-taker relies on any other person to do anything,
that is not a reasonable excuse unless the deposit-taker took
45reasonable care to avoid the failure or disclosure, and

(b) where the deposit-taker had a reasonable excuse for the failure but
the excuse has ceased, the deposit-taker is to be treated as having

continued to have the excuse if the failure is remedied without
unreasonable delay after the excuse ceased.

Assessment of penalty

14 (1) Where a deposit-taker becomes liable to a penalty under paragraph 13—

(a) 5HMRC must assess the penalty, and

(b) if HMRC does so, it must notify the deposit-taker in writing.

(2) An assessment of a penalty by virtue of paragraph (a) of paragraph 13(1)
must be made within the period of 12 months beginning with the day on
which the deposit-taker becomes liable to the penalty.

(3) 10An assessment of a penalty under any of paragraphs (b) to (g) of paragraph
13(1) must be made within the period of 12 months beginning with the latest
of the following—

(a) the day on which the deposit-taker became liable to the penalty,

(b) the end of the period in which notice of an appeal in respect of the
15hold notice could have been given, and

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

Appeal against penalty

15 (1) A deposit-taker may appeal against—

(a) 20a decision that a penalty is payable by the deposit-taker under
paragraph 13, or

(b) a decision as to the amount of such a penalty.

(2) Notice of an appeal must be given to HMRC before the end of the period of
30 days beginning with the day on which the notification under paragraph
2514 was given.

(3) Notice of an appeal must state the grounds of appeal.

(4) On an appeal under sub-paragraph (1)(a) that is notified to the tribunal (in
accordance with Part 5 of TMA 1970: see below) the tribunal may confirm or
cancel the decision.

(5) 30On an appeal under sub-paragraph (1)(b) that is notified to the tribunal, the
tribunal may—

(a) confirm the decision, or

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

(6) 35Subject to this paragraph and paragraph 16, the provisions of Part 5 of TMA
1970 relating to appeals have effect in relation to appeals under this
paragraph as they have effect in relation to an appeal against an assessment
to income tax.

Enforcement of penalty

16 (1) 40A penalty under paragraph 13 must be paid—

(a) before the end of the period of 30 days beginning with the day on
which the notification under paragraph 14 was given, or

(b) if notice of an appeal against the penalty is given, before the end of
the period of 30 days beginning with the day on which the appeal is
finally determined or withdrawn.

(2) A penalty under paragraph 13 may be enforced as if it were income tax
5charged in an assessment and due and payable.

Protection of deposit-takers acting in good faith

17 A deposit-taker is not liable for damages in respect of anything done in good
faith for the purposes of complying with a hold notice or a deduction notice.

Power to modify amounts and time limits

18 (1) 10The Commissioners may by regulations amend any of the following
provisions by substituting a different amount for the amount for the time
being specified there—

(a) paragraph 2(2) (requirement that relevant sum is a minimum
amount);

(b) 15paragraph 4(6) and (8) (threshold for safeguarded amount);

(c) paragraph 13(3) or (4) (level of penalties).

(2) The Commissioners may by regulations amend any of the following
provisions by substituting a different period for the period for the time being
specified there—

(a) 20paragraph 3(4) (time limit for complying with information notices);

(b) paragraph 5(2) (time limit for complying with hold notices);

(c) paragraph 7(3) or (5) (time limit for notifying HMRC of effects of
hold notice);

(d) paragraph 8(3) (cancellation etc of hold notice: time limit for
25cancelling or adjusting arrangements);

(e) paragraph 9(5) (time limit for making objections);

(f) paragraph 10(1) (time limit for consideration of objections);

(g) paragraph 10(6) (consideration of objections: time limit for cancelling
or adjusting arrangements);

(h) 30paragraph 11(8) (appeals: time limit for compliance with court
order).

Power to make further provision

19 (1) The Commissioners may by regulations make provision supplementing this
Part of this Schedule.

(2) 35The regulations may, in particular, make provision—

(a) about the manner in which a notice or a copy of a notice is to be given
under this Part of this Schedule, or the circumstances in which a
notice or a copy of a notice is to be treated as given, for the purposes
of this Part of this Schedule;

(b) 40specifying circumstances in which a notice under this Part of this
Schedule may not be given;

(c) specifying descriptions of account in respect of which a hold notice
or deduction notice has no effect;