Finance Bill (HC Bill 47)

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(c) the liability to tax which would have been shown on the return
(within the meaning of Schedule 55 to FA 2009),

according to whether the original penalty was incurred under paragraph 1
of Schedule 24, paragraph 1 of Schedule 41 or paragraph 6 of Schedule 55.

5Potential lost revenue: enabling Q to commit relevant offence

4 (1) The potential lost revenue in a case where P is liable to a penalty under
paragraph 1 for enabling Q to commit a relevant offence is the same amount
as the potential lost revenue applicable for the purposes of the
corresponding relevant civil penalty (determined in accordance with the
10relevant sub-paragraph of paragraph 5).

(2) Where Q’s offending conduct is—

(a) an offence of cheating the public revenue involving offshore activity,
or

(b) an offence under section 106A of TMA 1970 involving offshore
15activity,

the corresponding relevant civil penalty is the penalty which Q is liable for
as a result of that offending conduct.

(3) Where Q’s offending conduct is an offence under section 106B, 106C or 106D
of TMA 1970, the corresponding relevant civil penalty is—

(a) 20for an offence under section 106B of TMA 1970, a penalty under
paragraph 1 of Schedule 41 to FA 2008,

(b) for an offence under section 106C of TMA 1970, a penalty under
paragraph 6 of Schedule 55 to FA 2009, and

(c) for an offence under section 106D of TMA 1970, a penalty under
25paragraph 1 of Schedule 24 to FA 2007.

(4) In determining any amount of potential lost revenue for the purposes of this
paragraph, the fact Q has been prosecuted for the offending conduct is to be
disregarded.

Potential lost revenue: enabling Q to engage in conduct incurring relevant civil penalty

5 (1) 30The potential lost revenue in a case where P is liable to a penalty under
paragraph 1 for enabling Q to engage in conduct that makes Q liable (if the
applicable conditions are met) to a relevant civil penalty is to be determined
as follows.

(2) In the case of a penalty under paragraph 1 of Schedule 24 to FA 2007
35involving an offshore matter or an offshore transfer, the potential lost
revenue is the amount that under that Schedule is the potential lost revenue
in respect of Q’s conduct.

(3) In the case of a penalty under paragraph 1 of Schedule 41 to FA 2008 in
relation to a failure to comply with section 7(1) of TMA 1970 involving
40offshore activity, the potential lost revenue is the amount that under that
Schedule is the potential lost revenue in respect of Q’s conduct.

(4) In the case of a penalty under paragraph 6 of Schedule 55 to FA 2009
involving offshore activity, the potential lost revenue is the liability to tax
which would have been shown in the return in question (within the meaning
45of that Schedule).

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Treatment of potential lost revenue attributable to both offshore tax evasion or non-compliance
and other tax evasion or non-compliance

6 (1) This paragraph applies where any amount of potential lost revenue in a case
falling within paragraph 4 or 5 is attributable not only to Q’s offshore tax
5evasion or non-compliance but also to any other tax evasion or non-
compliance by Q.

(2) In that case the potential lost revenue in respect of Q’s offshore tax evasion
or non-compliance is to be taken for the purposes of assessing the penalty to
which P is liable as being or (as the case may be) including such share as is
10just and reasonable of the amount mentioned in sub-paragraph (1).

Reduction of penalty for disclosure etc by P

7 (1) If P (who would otherwise be liable to a penalty under paragraph 1)—

(a) makes a disclosure to HMRC of—

(i) a matter relating to an inaccuracy in a document, a supply of
15false information or a failure to disclose an under-
assessment,

(ii) P’s enabling of actions by Q that constituted (or might
constitute) a relevant offence or that made (or might make) Q
liable to a relevant penalty, or

(iii) 20any other matter HMRC regard as assisting them in relation
to the assessment of P’s liability to a penalty under paragraph
1, or

(b) assists HMRC in any investigation leading to Q being charged with
a relevant offence or found liable to a relevant penalty,

25HMRC must reduce the penalty to one that reflects the quality of the
disclosure or assistance.

(2) But the penalty may not be reduced—

(a) in the case of unprompted disclosure or assistance, below whichever
is the higher of—

(i) 3010% of the potential lost revenue, or

(ii) £1,000, or

(b) in the case of prompted disclosure or assistance, below whichever is
the higher of—

(i) 30% of the potential lost revenue, or

(ii) 35£3,000.

8 (1) This paragraph applies for the purposes of paragraph 7.

(2) P discloses a matter by—

(a) telling HMRC about it,

(b) giving HMRC reasonable help in relation to the matter (for example
40by quantifying an inaccuracy in a document, an inaccuracy
attributable to the supply of false information or withholding of
information or an under-assessment), and

(c) allowing HMRC access to records for any reasonable purpose
connected with resolving the matter (for example for the purpose of
45ensuring that an inaccuracy in a document, an inaccuracy
attributable to the supply of false information or withholding of
information or an under-assessment is fully corrected).

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(3) P assists HMRC in relation to an investigation leading to Q being charged
with a relevant offence or found liable to a relevant penalty by—

(a) assisting or encouraging Q to disclose all relevant facts to HMRC,

(b) allowing HMRC access to records, or

(c) 5any other conduct which HMRC considers assisted them in
investigating or assessing Q’s liability to such a penalty.

(4) Disclosure or assistance by P—

(a) is “unprompted” if made at a time when P has no reason to believe
that HMRC have discovered or are about to discover Q’s offshore tax
10evasion or non-compliance (including any inaccuracy in a document,
supply of false information or withholding of information, or under-
assessment), and

(b) otherwise is “prompted”.

(5) In relation to disclosure or assistance, “quality” includes timing, nature and
15extent.

9 (1) If they think it right because of special circumstances, HMRC may reduce a
penalty under paragraph 1.

(2) In sub-paragraph 1 “special circumstances” does not include—

(a) ability to pay, or

(b) 20the fact that a potential loss of revenue from one taxpayer is balanced
by a potential overpayment by another.

(3) In sub-paragraph (1) the reference to reducing a penalty includes a reference
to—

(a) staying a penalty, or

(b) 25agreeing a compromise in relation to proceedings for a penalty.

Procedure for assessing penalty, etc

10 (1) Where a person is found liable for a penalty under paragraph 1 HMRC
must—

(a) assess the penalty,

(b) 30notify the person, and

(c) state in the notice the period in respect of which the penalty is
assessed.

(2) A penalty must be paid before the end of the period of 30 days beginning
with the day on which notification of the penalty is issued.

(3) 35An assessment of a penalty—

(a) is to be treated for procedural purposes in the same way as an
assessment to tax (except in respect of a matter expressly provided
for by this Schedule), and

(b) may be enforced as if it were an assessment to tax.

(4) 40A supplementary assessment may be made in respect of a penalty if an
earlier assessment operated by reference to an underestimate of the liability
to tax that would have been shown in a return.

(5) Sub-paragraph (6) applies if—

(a) an assessment in respect of a penalty is based on a liability to tax that
45would have been shown on a return, and

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(b) that liability is found by HMRC to have been excessive.

(6) HMRC may amend the assessment so that it is based upon the correct
amount.

(7) But an amendment under sub-paragraph (6)—

(a) 5does not affect when the penalty must be paid, and

(b) may be made after the last day on which the assessment in question
could have been made under paragraph 11.

11 An assessment of a person as liable to a penalty under paragraph 1 may not
take place more than 2 years after the fulfilment of the conditions mentioned
10in paragraph 1(1) (in relation to that person) first came to the attention of an
officer of Revenue and Customs.

Appeals

12 A person may appeal against—

(a) a decision of HMRC that a penalty under paragraph 1 is payable by
15that person, or

(b) a decision of HMRC as to the amount of a penalty under paragraph
1 payable by the person.

13 (1) An appeal under paragraph 12 is to be treated in the same way as an appeal
against an assessment to the tax at stake (including by the application of any
20provision about bringing the appeal by notice to HMRC, about HMRC
review of the decision or about determination of the appeal by the First-tier
Tribunal or Upper Tribunal).

(2) Sub-paragraph (1) does not apply—

(a) so as to require the person bringing the appeal to pay a penalty
25before an appeal against the assessment of the penalty is determined,

(b) in respect of any other matter expressly provided for by this
Schedule.

14 (1) On an appeal under paragraph 12(a) that is notified to the tribunal, the
tribunal may affirm or cancel HMRC’s decision.

(2) 30On an appeal under paragraph 12(b) that is notified to the tribunal, the
tribunal may—

(a) affirm HMRC’s decision, or

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

(3) 35If the tribunal substitutes its own decision for HMRC’s, the tribunal may
rely on paragraph 7 or 9 (or both)—

(a) to the same extent as HMRC (which may mean applying the same
percentage reduction as HMRC to a different starting point),

(b) to a different extent, but only if the tribunal thinks that HMRC’s
40decision in respect of the application of that paragraph was flawed.

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

(5) In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal
(as appropriate by virtue of paragraph 13(1).

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Double jeopardy

15 A person is not liable to a penalty under paragraph 1 in respect of conduct
for which the person—

(a) has been convicted of an offence, or

(b) 5has been assessed to a penalty under any provision other than
paragraph 1.

Application of provisions of TMA 1970

16 Subject to the provisions of this Part of this Schedule, the following
provisions of TMA 1970 apply for the purposes of this Part of this Schedule
10as they apply for the purposes of the Taxes Acts—

(a) section 108 (responsibility of company officers),

(b) section 114 (want of form), and

(c) section 114 (delivery and service of documents).

Interpretation of Part 1

17 (1) 15This paragraph applies for the purposes of this Schedule.

(2) References to an assessment to tax, in relation to inheritance tax, are to a
determination.

Part 2 Application of Schedule 36 to FA 2008: information powers

20General application of information and inspection powers to suspected enablers

18 (1) Schedule 36 to FA 2008 (information and inspection powers) applies for the
purpose of checking a relevant person’s position as regards liability for a
penalty under paragraph 1 as it applies for checking a person’s tax position,
subject to the modifications in paragraphs 19 to 21.

(2) 25In this Part of this Schedule “relevant person” means a person an officer of
Revenue and Customs has reason to suspect has or may have enabled
offshore tax evasion or non-compliance by another person so as to be liable
to a penalty under paragraph 1.

General modifications

19 30In its application for the purpose mentioned in paragraph 18(1) Schedule 36
to FA 2008 has effect as if—

(a) any provisions which can have no application for that purpose, or
are specifically excluded by paragraph 20, were omitted,

(b) references to “the taxpayer” were references to the relevant person
35whose position as regards liability for a penalty under paragraph 1
is to be checked, and references to “a taxpayer” were references to a
relevant person,

(c) references to a person’s “tax position” are to the relevant person’s
position as regards liability for a penalty under paragraph 1,

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(d) references to prejudice to the assessment or collection of tax included
a reference to prejudice to the investigation of the relevant person’s
position as regards liability for a penalty under paragraph 1,

(e) references to information relating to the conduct of a pending appeal
5relating to tax were references to information relating to the conduct
of a pending appeal relating to an assessment of liability for a penalty
under paragraph 1.

Specific modifications

20 The following provisions are excluded from the application of Schedule 36
10to FA 2008 for the purpose mentioned in paragraph 18(1)—

(a) paragraph 24 (exception for auditors),

(b) paragraph 25 (exception for tax advisers),

(c) paragraphs 26 and 27 (provisions supplementary to paragraphs 24
and 25),

(d) 15paragraphs 50 and 51 (tax-related penalty).

21 In the application of Schedule 36 to FA 2008 for the purpose mentioned in
paragraph 18(1), paragraph 10A (power to inspect business premises of
involved third parties) has effect as if the reference in sub-paragraph (1) to
the position of any person or class of persons as regards a relevant tax were
20a reference to the position of a relevant person as regards liability for a
penalty under paragraph 1.

Part 3 Publishing details of persons found liable to penalties

Naming etc of persons assessed to penalty or penalties under paragraph 1

22 (1) 25The Commissioners for Her Majesty’s Revenue and Customs (“the
Commissioners”) may publish information about a person if—

(a) in consequence of an investigation the person has been found to have
incurred one or more penalties under paragraph 1 (and has been
assessed or is the subject of a contract settlement), and

(b) 30the potential lost revenue in relation to the penalty (or the aggregate
of the potential lost revenue in relation to each of the penalties)
exceeds £25,000.

(2) The Commissioners may also publish information about a person if the
person has been found to have incurred 5 or more penalties under
35paragraph 1 in any 5 year period.

(3) The information that may be published is—

(a) the person’s name (including any trading name, previous name or
pseudonym),

(b) the person’s address (or registered office),

(c) 40the nature of any business carried on by the person,

(d) the amount of the penalty or penalties in question,

(e) the periods or times to which the actions giving rise to the penalty or
penalties relate,

(f) any other information that the Commissioners consider it
45appropriate to publish in order to make clear the person’s identity.

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(4) The information may be published in any manner that the Commissioners
consider appropriate.

(5) Before publishing any information the Commissioners must—

(a) inform the person that they are considering doing so, and

(b) 5afford the person the opportunity to make representations about
whether it should be published.

(6) No information may be published before the day on which the penalty
becomes final or, where more than one penalty is involved, the latest day on
which any of the penalties becomes final.

(7) 10No information may be published for the first time after the end of the
period of one year beginning with that day.

(8) No information may be published if the amount of the penalty—

(a) is reduced under paragraph 7 to—

(i) 10% of the potential lost revenue (in a case of unprompted
15disclosure or assistance), or

(ii) 30% of potential lost revenue (in a case of prompted
disclosure or assistance),

(b) would have been reduced to 10% or 30% of potential lost revenue but
for the imposition of the minimum penalty,

(c) 20is reduced under paragraph 9 to nil or stayed.

(9) For the purposes of this paragraph a penalty becomes final—

(a) if it has been assessed, when the time for any appeal or further
appeal relating to it expires or, if later, any appeal or final appeal
relating to it is finally determined, and

(b) 25if a contract settlement has been made, at the time when the contract
is made.

(10) In this paragraph “contract settlement”, in relation to a penalty, means a
contract between the Commissioners and the person under which the
Commissioners undertake not to assess the penalty or (if it has been
30assessed) not to take proceedings to recover it.

23 (1) The Treasury may by regulations amend paragraph 22(1) to vary the amount
for the time being specified in paragraph (b).

(2) Regulations under this paragraph are to be made by statutory instrument.

(3) A statutory instrument under this paragraph is subject to annulment in
35pursuance of a resolution of the House of Commons.

SCHEDULE 21 Section 162 Penalties relating to offshore matters and offshore transfers

Amendments to Schedule 24 to the Finance Act 2007 (c. 11)2007 (c. 11)

1 Schedule 24 to FA 2007 (penalties for errors) is amended as follows.

2 (1) 40Paragraph 9 (reductions for disclosure) is amended as follows.

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(2) For sub-paragraph (A1) substitute—

(A1) Paragraph 10 provides for reductions in penalties—

(a) under paragraph 1 where a person discloses an inaccuracy
that involves a domestic matter,

(b) 5under paragraph 1A where a person discloses a supply of
false information or withholding of information, and

(c) under paragraph 2 where a person discloses a failure to
disclose an under-assessment.

(A2) Paragraph 10A provides for reductions in penalties under
10paragraph 1 where a person discloses an inaccuracy that involves
an offshore matter or an offshore transfer.

(A3) Sub-paragraph (1) applies where a person discloses—

(a) an inaccuracy that involves a domestic matter,

(b) a careless inaccuracy that involves an offshore matter,

(c) 15a supply of false information or withholding of
information, or

(d) a failure to disclose an under-assessment.”

(3) In sub-paragraph (1), in the words before paragraph (a), for the words from
“an inaccuracy” to “under-assessment” substitute “the matter”.

(4) 20After sub-paragraph (1) insert—

(1A) Sub-paragraph (1B) applies where a person discloses—

(a) a deliberate inaccuracy (whether concealed or not) that
involves an offshore matter, or

(b) an inaccuracy that involves an offshore transfer.

(1B) 25A person discloses the inaccuracy by—

(a) telling HMRC about it,

(b) giving HMRC reasonable help in quantifying the
inaccuracy,

(c) allowing HMRC access to records for the purpose of
30ensuring that the inaccuracy is fully corrected, and

(d) providing HMRC with additional information.

(1C) The Treasury must make regulations setting out what is meant by
“additional information” for the purposes of sub-paragraph
(1B)(d).

(1D) 35Regulations under sub-paragraph (1C) are to be made by statutory
instrument.

(1E) An instrument containing regulations under sub-paragraph (1C)
is subject to annulment in pursuance of a resolution of the House
of Commons.”

(5) 40At the end insert—

(4) Paragraph 4A(4) to (5) applies to determine whether an inaccuracy
involves an offshore matter, an offshore transfer or a domestic
matter for the purposes of this paragraph.”

3 In paragraph 10 (amount of reduction for disclosure), for the Table in sub-

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paragraph (2) substitute—

“Standard % Minimum %
for prompted
disclosure
Minimum %
for unprompted
disclosure
30% 15% 50%
70% 35% 20%
100% 50% 30%”

4 After paragraph 10 insert—

10A (1) If a person who would otherwise be liable to a penalty of a
10percentage shown in column 1 of the Table (a “standard
percentage”) has made a disclosure, HMRC must reduce the
standard percentage to one that reflects the quality of the
disclosure.

(2) But the standard percentage may not be reduced to a percentage
15that is below the minimum shown for it—

(a) in the case of a prompted disclosure, in column 2 of the
Table, and

(b) in the case of an unprompted disclosure, in column 3 of the
Table.

Standard % Minimum %
for prompted
disclosure
20Minimum %
for unprompted
disclosure
30% 15% 0%
37.5% 18.75% 0%
45% 22.5% 250%
60% 30% 0%
70% 45% 30%
87.5% 53.75% 35%
100% 60% 40%
105% 62.5% 3040%
125% 72.5% 50%
140% 80% 50%
150% 85% 55%
200% 110% 70%”

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Amendments to Schedule 41 to the Finance Act 2008 (c. 9)2008 (c. 9)

5 Schedule 41 to FA 2008 (penalties: failure to notify etc) is amended as
follows.

6 (1) Paragraph 12 (reductions for disclosure) is amended as follows.

(2) 5For sub-paragraph (1) substitute—

(1) Paragraph 13 provides for reductions in penalties—

(a) under paragraph 1 where P discloses a relevant failure that
involves a domestic matter, and

(b) under paragraphs 2 to 4 where P discloses a relevant act or
10failure.

(1A) Paragraph 13A provides for reductions in penalties under
paragraph 1 where P discloses a relevant failure that involves an
offshore matter or an offshore transfer.

(1B) Sub-paragraph (2) applies where P discloses—

(a) 15a relevant failure that involves a domestic matter,

(b) a non-deliberate relevant failure that involves an offshore
matter, or

(c) a relevant act or failure giving rise to a penalty under any
of paragraphs 2 to 4.”

(3) 20In sub-paragraph (2), for “a” substitute “the”.

(4) After sub-paragraph (2) insert—

(2A) Sub-paragraph (2B) applies where P discloses—

(a) a deliberate relevant failure (whether concealed or not)
that involves an offshore matter, or

(b) 25a relevant failure that involves an offshore transfer.

(2B) P discloses the failure by—

(a) telling HMRC about it,

(b) giving HMRC reasonable help in quantifying the tax
unpaid by reason of it,

(c) 30allowing HMRC access to records for the purpose of
checking how much tax is so unpaid, and

(d) providing HMRC with additional information.

(2C) The Treasury must make regulations setting out what is meant by
“additional information” for the purposes of sub-paragraph
35(2B)(d).

(2D) Regulations under sub-paragraph (2C) are to be made by statutory
instrument.

(2E) An instrument containing regulations under sub-paragraph (2C)
is subject to annulment in pursuance of a resolution of the House
40of Commons.”