Finance (No. 2) Bill (HC Bill 155)

(4) In sub-paragraph (3), “flawed” means flawed when considered in the light
of the principles applied in proceedings for judicial review.

(5) In this paragraph “tribunal” means the First-tier Tribunal or the Upper
Tribunal (as appropriate by virtue of paragraph 17(1)).

5Part 5 General

Interpretation

19 (1) In this Schedule—

• “asset” has the same meaning as in TCGA 1992 (but also includes
  10currency in sterling);

• “asset-based income tax” has the meaning given in paragraph 2(7);

• “HMRC” means Her Majesty’s Revenue and Customs;

• “investigation period” has the meaning given in paragraph 6(4);

• “offshore PLR” has the meaning given in paragraph 5;

• 15“standard amount of the asset-based penalty” has the meaning given in
  paragraph 7;

• “standard offshore tax penalty” has the meaning given in paragraph 2.

(2) Terms used in relation to a penalty imposed under Schedule 24 to FA 2007,
Schedule 41 to FA 2008 or Schedule 55 to FA 2009 have the same meaning as
20in the Schedule under which the penalty was imposed.

(3) References in this Schedule to capital gains tax do not include capital gains
tax payable by companies in respect of chargeable gains accruing to them to
the extent that those gains are NRCGT gains in respect of which the
companies are chargeable to capital gains tax under section 14D or 188D of
25TCGA 1992 (see section 1(2A)(b) of that Act).

Consequential amendments etc

20 (1) In section 103ZA to TMA 1970 (disapplication of sections 100 to 103 in case
of certain penalties), omit the “or” at the end of paragraph (g), and at the end
insert “, or

(i) 30Schedule 22 to the Finance Act 2016 (asset-based penalty)”.

(2) In section 107A of that Act (relevant trustees)—

(a) in subsection (2)(a), after “Schedule 55 to the Finance Act 2009” insert
“or Schedule 22 to the Finance Act 2016”;

(b) after subsection (3)(a) insert—

“(aa) 35in relation to a penalty under Schedule 22 to the
Finance Act 2016, or to interest under section 101 of
the Finance Act 2009 on such a penalty, the time when
the relevant act or omission occurred;”;

(c) in the words after paragraph (c), after “paragraph” insert “(aa) and”.

(3) 40In Schedule 24 to FA 2007 (penalties for errors), in paragraph 12 (interaction
with other penalties etc), in sub-paragraph (2A) at the end insert “or
Schedule 22 to FA 2016 (asset-based penalty)”.

(4) In Schedule 41 to FA 2008 (penalties for failure to notify), in paragraph 15
(interaction with other penalties etc), in sub-paragraph (1A) at the end insert
“or Schedule 22 to FA 2016 (asset-based penalty).”

(5) In Schedule 55 to FA 2009 (penalty for failure to make return etc), in
5paragraph 17 (interaction with other penalties etc), in sub-paragraph (2), at
the end insert “, or

(d) a penalty under Schedule 22 to FA 2016 (asset-based
penalty).”

21 Section 97A of TMA 1970 (two or more tax-geared penalties in respect of
10same tax) does not apply in relation to an asset-based penalty imposed
under this Schedule.

Section 155

SCHEDULE 23 Simple assessments

1 TMA 1970 is amended in accordance with paragraphs 2 to 8 of this Schedule.

2 15In section 7 (notice of liability to income tax and capital gains tax), after
subsection (2) insert—

“(2A) A person who—

(a) falls within subsection (1A) or (1B), and

(b) is notified of a simple assessment for the year of assessment,

20is not required to give notice under subsection (1) for that year unless
the person is chargeable to income tax or capital gains tax for the year
of assessment on any income or gain that is not included in the
assessment.”

3 After section 28G (determination of amount notionally chargeable where no
25NRCGT return delivered) insert—

“28H Simple assessments by HMRC: personal assessments

(1) HMRC may make a simple assessment for a year of assessment in
respect of a person (other than a person to whom section 28I applies)
if, when the assessment is made, the person is not excluded by
30subsection (2) in relation to that year.

(2) Subsection (1) does not apply to a person at any time in relation to
that year of assessment if—

(a) the person has delivered a return under section 8 for that
year, or

(b) 35the person is at that time subject to a requirement to make
and deliver such a return by virtue of a notice under section 8.

but nothing in this subsection prevents HMRC from giving the
person notice of a simple assessment at the same time as a notice
withdrawing a notice under section 8A.

(3) 40A simple assessment is—

(a) an assessment of the amounts in which the person is
chargeable to income tax and capital gains tax for the year of
assessment to which it relates, and

(b) an assessment of the amount payable by the person by way
of income tax for that year, that is to say, the difference
between the amount in which the person is assessed to
income tax under paragraph (a) and the aggregate amount of
5any income tax deducted at source;

but nothing in this subsection enables an assessment to show as
repayable any income tax which any provision of the Income Tax
Acts provides is not repayable.

(4) The amounts in which a person is chargeable to income tax and
10capital gains are net amounts, taking into account any relief or
allowance that is applicable.

(5) A simple assessment must be based on information relating to the
person that is held by HMRC (whether or not supplied by the person
to whom the assessment relates).

(6) 15The notice of a simple assessment required to be sent to the person
by section 30A(3) must (among other things)—

(a) include particulars of the income and gains, and any relief or
allowance, taken into account in the assessment, and

(b) state any amount payable by the person by virtue of section
2059BA (with particulars of how it may be paid and the date by
which it is payable).

(7) The tax to be assessed on a person by a simple assessment does not
include any tax which—

(a) is chargeable on the scheme administrator of a registered
25pension scheme under Part 4 of Finance Act 2004,

(b) is chargeable on the sub-scheme administrator of a sub-
scheme under Part 4 of the Finance Act 2004 as modified by
the Registered Pension Schemes (Splitting of Schemes)
Regulations 2006, or

(c) 30is chargeable on the person who is (or persons who are) the
responsible person in relation to an employer-financed
retirement benefits scheme under section 394(2) of ITEPA
2003.

(8) Nothing in this section prevents HMRC issuing more than one
35simple assessment to the same person in respect of the same year of
assessment (whether or not any earlier simple assessment for that
year is withdrawn).

(9) In this section references to a simple assessment are to an assessment
under this section.

28I 40Simple assessments by HMRC: trustees

(1) HMRC may make a simple assessment for a year of assessment in
respect of a settlement if, when the assessment is made, the relevant
trustees of the settlement are not excluded by subsection (2) in
relation to that year.

(2) 45Subsection (1) does not apply at any time in relation to that year of
assessment if—

(a) a return under section 8A has been delivered for that year by
the relevant trustees or any of them, or

(b) there is at that time a subsisting requirement to make and
deliver such a return by virtue of a notice under section 8A;

but nothing in this subsection prevents HMRC from giving notice of
a simple assessment at the same time as a notice withdrawing a
5notice under section 8A.

(3) A simple assessment is—

(a) an assessment of the amounts in which the relevant trustees
are chargeable to income tax and capital gains tax for the year
of assessment to which it relates, and

(b) 10an assessment of the amount payable by them by way of
income tax for that year, that is to say, the difference between
the amount in which they are assessed to income tax under
paragraph (a) and the aggregate amount of any income tax
deducted at source;

15but nothing in this subsection enables an assessment to show as
repayable any income tax which any provision of the Income Tax
Acts provides is not repayable.

(4) The amounts in which the relevant trustees are chargeable to income
tax and capital gains are net amounts, taking into account any relief
20or allowance that is applicable.

(5) A simple assessment must be based only on information relating to
the settlement that is held by HMRC (whether or not supplied by the
relevant trustees).

(6) The notice of a simple assessment required by section 30A(3) may be
25given to any one or more of the relevant trustees.

(7) That notice must (among other things)—

(a) include particulars of the income and gains, and any relief or
allowance, taken into account in the assessment, and

(b) state any amount payable by the relevant trustees by virtue
30of section 59BA (with particulars of how it may be paid and
the date by which it is payable).

(8) The tax to be assessed by a simple assessment does not include any
tax which—

(a) is chargeable on the scheme administrator of a registered
35pension scheme under Part 4 of Finance Act 2004,

(b) is chargeable on the sub-scheme administrator of a sub-
scheme under Part 4 of the Finance Act 2004 as modified by
the Registered Pension Schemes (Splitting of Schemes)
Regulations 2006, or

(c) 40is chargeable on the person who is (or persons who are) the
responsible person in relation to an employer-financed
retirement benefits scheme under section 394(2) of ITEPA
2003.

(9) Nothing in this section prevents HMRC issuing more than one
45simple assessment in respect of the same settlement and the same
year of assessment (whether or not any earlier simple assessment for
that year is withdrawn).

(10) In this section references to a “simple assessment” are to an
assessment under this section.

(11) In this Act references to the person to whom a simple assessment
relates are, in relation to one made under this section, to the relevant
5trustees of the settlement to which it relates.

28J Power to withdraw a simple assessment

(1) HMRC may withdraw a simple assessment by notice to the person to
which it relates.

(2) An assessment that has been withdrawn ceases to have effect (and is
10to be taken as never having had any effect).”

4 In section 31 (appeals: right to appeal), before subsection (4) insert—

“(3A) In the case of a simple assessment, the right to appeal under
subsection (1)(d) does not apply unless and until the person
concerned has—

(a) 15raised a query about the assessment under section 31AA, and

(b) been given a final response to that query.”

5 (1) Section 31A (appeals: notice of appeal) is amended as follows.

(2) In subsection (4), after “this Act” insert “(other than an appeal against a
simple assessment)”.

(3) 20After subsection (4) insert—

“(4A) In relation to an appeal under section 31(1)(d) against a simple
assessment—

(a) the specified date is the date on which the person concerned
is given notice under section 31AA of the final response to the
25query the person is required by section 31(3A) to make, and

(b) the relevant officer of the Board is the officer by whom the
notice of assessment was given.”

6 After section 31A (notice of appeal) insert—

“31AA Taxpayer’s right to query simple assessment

(1) 30This section applies where a person has been given notice of a simple
assessment.

(2) The person may query the simple assessment by notifying HMRC
of—

(a) a belief that the assessment is or may be incorrect, and

(b) 35the reasons for that belief.

(3) The person may exercise the power to query the simple assessment
at any time within—

(a) the period of 60 days after the date on which the notice of
assessment was issued, or

(b) 40such longer period as HMRC may allow.

(4) If the simple assessment is queried, HMRC must—

(a) consider the query and the matters raised by it, and

(b) give a final response to the query.

(5) The person may at any time withdraw a query (which terminates
HMRC’s duties under subsection (4)).

(6) If it appears to HMRC that—

(a) they need time to consider the matters raised by the query, or

(b) 5further information (whether from the person or anyone else)
is required,

HMRC may postpone the simple assessment in whole or part
(according to how much of it is being queried by the person).

(7) If the simple assessment is postponed in whole or part, HMRC must
10notify the person in writing—

(a) whether the assessment is postponed in whole or part, and

(b) if it is postponed in part, of the amount that remains payable
under the assessment.

(8) While the simple assessment is postponed the person is under no
15obligation to pay—

(a) the payable amount specified in the notice of assessment (if
the whole assessment is postponed), or

(b) the postponed part of the payable amount so specified (if the
assessment is postponed in part).

(9) 20After considering the query the final response must be to—

(a) confirm the simple assessment,

(b) give the person an amended simple assessment (which
supersedes the original assessment), or

(c) withdraw the simple assessment (without replacing it).

(10) 25HMRC must notify the person in writing of their final response.

(11) This section does not apply to an amended simple assessment given
as a final response to the query.

(12) Nothing in this section affects—

(a) a person’s right to request an explanation from HMRC of a
30simple assessment or the information on which it is based, or

(b) HMRC’s power to give a person such explanation or
information as they consider appropriate,

whether as part of the querying process under this section or
otherwise.

(13) 35In subsection (12) “person” means a person who has been given
notice of a simple assessment”.

7 (1) Section 59B (payment of income tax and capital gains tax) is amended as
follows.

(2) In the heading, at end insert “: assessments other than simple assessments”.

(3) 40In subsection (6), after “9” insert “, 28H or 28I”.

8 After section 59B insert—

“59BA Payment of income tax and capital gains tax: simple assessments

(1) This section applies where a person has been given a simple
assessment in relation to a year of assessment.

(2) Subject to subsection (3), the difference between—

(a) the amount of income tax and capital gains tax for that year
contained in the simple assessment, and

(b) the aggregate of any payments on account made by the
5person in respect of that year (whether under section 59A or
59AA or otherwise) and any income tax which in respect of
that year has been deducted at source,

is payable by that person as mentioned in subsection (4) or (5).

(3) Nothing in subsection (2) is to be read as requiring the repayment
10any income tax which any provision of the Income Tax Acts provides
is not repayable.

(4) In a case where the person is given notice of the simple assessment
after the 31st October next after the year of assessment, the difference
is payable at the end of the period of 3 months after the day on which
15that notice was given.

(5) In any other case the difference is payable on or before the 31st
January next after the end of the year of assessment.

(6) Section 59B(7) (which explains references to income tax deducted at
source) applies for the purposes of this section.

(7) 20PAYE regulations may provide that, for the purpose of determining
the amount of the difference mentioned in subsection (2), any
necessary adjustments in respect of matters prescribed in the
regulations shall be made to the amount of tax deducted at source
under PAYE regulations.”

9 (1) 25Schedule 56 to FA 2009 (penalty for failure to make payments on time) is
amended as follows.

(2) In the Table in paragraph 1, after item 1 insert—

(3) In paragraph 3(1)(a), after “items 1,” insert “1A,”.

Section 168(2) and (5)

SCHEDULE 24 Tax advantages constituting the grant of state aid

Part 1 Tax advantages to which section 168(2)applies

5Enhanced capital allowances

Creative tax reliefs

Research and development reliefs

5Part 2 Tax advantages to which section 168(5) applies

Section 172

25SCHEDULE 25 Office of Tax Simplification

Membership

1 (1) The OTS is to consist of not more than eight members.

(2) The members of the OTS must include—

(a) 30a chair,

(b) a tax director (see sub-paragraph (5)),

(c) a representative of Her Majesty’s Revenue and Customs, and

(d) a representative of the Treasury.

(3) The additional members, if any, are to be nominated by the chair.

(4) The members of the OTS are to be appointed by the Chancellor of the
Exchequer.

(5) A person may be appointed as a tax director of the OTS only if the
5Chancellor of the Exchequer is satisfied that the person has the necessary
qualifications and experience to direct the manner in which the OTS
discharges its functions.

(6) The Chancellor of the Exchequer must consult the chair of the OTS before
appointing a person as a tax director (subject to paragraph 3(3)).

10Term of office

2 (1) A person holds and vacates office as a member of the OTS in accordance
with the terms of the appointment, subject to the following provisions.

(2) A period of appointment may not exceed 5 years.

(3) A person who ceases to be a member of the OTS is eligible for re-
15appointment.

Appointment of initial members

3 (1) Sub-paragraphs (2) and (3) apply where a person (“P”) appointed under
paragraph 1(2)(a) or (b) was, immediately before the appointment, the chair
or tax director (as the case may be) of the non-statutory Office of Tax
20Simplification.

(2) P’s period of appointment is to be taken to have begun with the appointment
of P as the chair or tax director (as the case may be) of the non-statutory
Office of Tax Simplification.

(3) The requirement in paragraph 1(6) does not apply where P was,
25immediately before P’s appointment under paragraph 1(2)(b), the tax
director of the non-statutory Office of Tax Simplification.

Termination of appointments

4 A member of the OTS may at any time resign by giving written notice to the
Chancellor of the Exchequer.

5 (1) 30The Chancellor of the Exchequer may terminate the appointment of a
member of the OTS by giving the member written notice.

(2) In the case of a member appointed for the purposes of paragraph 1(2)(a) or
(b) or (3), the Chancellor of the Exchequer may only terminate the
appointment if—

(a) 35the member has been absent from meetings of the OTS without the
OTS’s permission for a period of more than 3 months,

(b) the member becomes bankrupt (see sub-paragraph (3)),

(c) the member has failed to comply with the terms of the appointment,
or

(d) 40the member is, in the opinion of the Chancellor of the Exchequer,
unable, unfit or unwilling to carry out the member’s functions.

(3) A member becomes bankrupt if—