Finance Bill (HC Bill 47)

Finance BillPage 620

(5) At the end insert—

(5) Paragraph 6A(4) to (5) applies to determine whether a failure
involves an offshore matter, an offshore transfer or a domestic
matter for the purposes of this paragraph.

(6) 5In this paragraph “relevant failure” means a failure to comply with
a relevant obligation.”

7 In paragraph 13 (amount of reduction for disclosure), for the Table in sub-
paragraph (3) substitute—

“Standard % Minimum %
for prompted
disclosure
Minimum %
10for unprompted
disclosure
30% case A: 10%
case B: 20%
case A: 0%
case B: 10%
70% 35% 20%
100% 50% 1530%”

8 After paragraph 13 insert—

13A (1) If a person who would otherwise be liable to a penalty of a
percentage shown in column 1 of the Table (a “standard
percentage”) has made a disclosure, HMRC must reduce the
20standard percentage to one that reflects the quality of the
disclosure.

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

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

(b) 25for an unprompted disclosure, in column 3 of the Table.

(3) Where the Table shows a different minimum for case A and case
B—

(a) the case A minimum applies if HMRC becomes aware of
the failure less than 12 months after the time when the tax
30first becomes unpaid by reason of the failure;

(b) otherwise, the case B minimum applies.

Standard % Minimum %
for prompted
disclosure
Minimum %
for unprompted
disclosure
30% case A: 10%
case B: 20%
35case A: 0%
case B: 10%
37.5% case A: 12.5%
case B: 25%
case A: 0%
case B: 12.5%

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Standard % Minimum %
for prompted
disclosure
Minimum %
for unprompted
disclosure
45% case A: 15%
case B: 30%
case A: 0%
5case B:15%
60% case A: 20%
case B: 40%
case A: 0%
case B: 20%
70% 45% 30%
87.5% 53.75% 35%
100% 60% 1040%
105% 62.5% 40%
125% 72.5% 50%
140% 80% 50%
150% 85% 55%
200% 110% 1570%”

Amendments to Schedule 55 to the Finance Act 2009 (c.10)2009 (c.10)

9 Schedule 55 to FA 2009 (penalty for failure to make returns etc) is amended
as follows

10 (1) Paragraph 14 (reductions for disclosure) is amended as follows.

(2) 20At the beginning insert—

(A1) In this paragraph, “relevant information” means information
which has been withheld by a failure to make a return.”

(3) In sub-paragraph (1)—

(a) after “6(3) or (4)” insert “where P discloses relevant information that
25involves a domestic matter”;

(b) for the words from “information which” to the end substitute
“relevant information”.

(4) After sub-paragraph (1) insert—

(1A) Paragraph 15A provides for reductions in the penalty under
30paragraph 6(3) or (4) where P discloses relevant information that
involves an offshore matter or an offshore transfer.

(1B) Sub-paragraph (2) applies where—

(a) P is liable to a penalty under paragraph 6(3) or (4) and P
discloses relevant information that involves a domestic
35matter, or

(b) P is liable to a penalty under any of the other provisions
mentioned in sub-paragraph (1) and P discloses relevant
information.”

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(5) After sub-paragraph (2) insert—

(2A) Sub-paragraph (2B) applies where P is liable to a penalty under
paragraph 6(3) or (4) and P discloses relevant information that
involves an offshore matter or an offshore transfer.

(2B) 5P discloses relevant information by—

(a) telling HMRC about it,

(b) giving HMRC reasonable help in quantifying any tax
unpaid by reason of its having been withheld,

(c) allowing HMRC access to records for the purpose of
10checking 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
(2B)(d).

(2D) 15Regulations 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
of Commons.”

(6) 20At the end insert—

(5) Paragraph 6A(4) to (5) applies to determine whether relevant
information involves an offshore matter, an offshore transfer or a
domestic matter for the purposes of this paragraph.”

11 In paragraph 15 (amount of reduction for disclosure), for the Table in sub-
25paragraph (2) substitute—

“Standard % Minimum %
for prompted
disclosure
Minimum %
for unprompted
disclosure
70% 35% 20%
100% 50% 3030%”

12 After paragraph 15 insert—

15A (1) If a person who would otherwise be liable to a penalty of a
percentage shown in column 1 of the Table (a “standard
percentage”) has made a disclosure, HMRC must reduce the
35standard percentage to one that reflects the quality of the
disclosure.

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

(a) in the case of a prompted disclosure, in column 2 of the
40Table, and

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

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Standard % Minimum %
for prompted
disclosure
Minimum %
for unprompted
disclosure
70% 45% 30%
87.5% 53.75% 535%
100% 60% 40%
105% 62.5% 40%
125% 72.5% 50%
140% 80% 50%
150% 85% 1055%
200% 110% 70%

(3) But HMRC must not under this paragraph reduce a penalty below
£300.”

SCHEDULE 22 Section 164 15Asset-based penalty for offshore inaccuracies and failures

Part 1 Liability for penalty

Circumstances in which asset-based penalty is payable

1 (1) An asset-based penalty is payable by a person (P) where—

(a) 20one or more standard offshore tax penalties have been imposed on P
in relation to a tax year (see paragraphs 2 and 3), and

(b) the potential lost revenue threshold is met in relation to that tax year
(see paragraph 4).

(2) But this is subject to paragraph 6 (restriction on imposition of multiple asset-
25based penalties in relation to the same asset).

Meaning of standard offshore tax penalty

2 (1) A standard offshore tax penalty is a penalty that falls within sub-paragraph
(2), (3) or (4).

(2) A penalty falls within this sub-paragraph if—

(a) 30it is imposed under paragraph 1 of Schedule 24 to FA 2007
(inaccuracy in taxpayer’s document),

(b) the inaccuracy for which the penalty is imposed involves an offshore
matter or an offshore transfer,

(c) it is imposed for deliberate action (whether concealed or not), and

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(d) the tax at stake is (or includes) capital gains tax, inheritance tax or
asset-based income tax.

(3) A penalty falls within this sub-paragraph if—

(a) it is imposed under paragraph 1 of Schedule 41 to FA 2008 (penalty
5for failure to notify),

(b) the failure for which the penalty is imposed involves an offshore
matter or an offshore transfer,

(c) it is imposed for a deliberate failure (whether concealed or not), and

(d) the tax at stake is (or includes) capital gains tax or asset-based income
10tax.

(4) A penalty falls within this sub-paragraph if—

(a) it is imposed under paragraph 6 of Schedule 55 to FA 2009 (penalty
for failure to make return more than 12 months after filing date),

(b) it is imposed for the withholding of information involving an
15offshore matter or an offshore transfer,

(c) it is imposed for a deliberate withholding of information (whether
concealed or not), and

(d) the tax at stake is (or includes) capital gains tax, inheritance tax or
asset-based income tax.

(5) 20In a case where the inaccuracy, failure or withholding of information for
which a penalty is imposed involves both an offshore matter or an offshore
transfer and a domestic matter, the standard offshore tax penalty is only that
part of the penalty that involves the offshore matter or offshore transfer.

(6) In a case where the tax at stake in relation to a penalty includes a tax other
25than capital gains tax, inheritance tax or asset-based income tax, the
standard offshore tax penalty is only that part of the penalty which relates to
capital gains tax, inheritance tax or asset-based income tax.

(7) “Asset-based income tax” means income tax that is charged under any of the
provisions mentioned in column 1 of the table in paragraph 13(2).

30Tax year to which standard offshore tax penalty relates

3 (1) Where a standard offshore tax penalty is imposed under paragraph 1 of
Schedule 24 to FA 2007, the tax year to which that penalty relates is—

(a) if the tax at stake as a result of the inaccuracy is income tax or capital
gains tax, the tax year to which the document containing the
35inaccuracy relates;

(b) if the tax at stake as a result of the inaccuracy is inheritance tax, the
year, beginning on 6 April and ending on the following 5 April, in
which the liability to tax first arose.

(2) Where a standard offshore tax penalty is imposed under paragraph 1 of
40Schedule 41 to FA 2008 for a failure to comply with an obligation specified
in the table in that paragraph, the tax year to which that penalty relates is the
tax year to which the obligation relates.

(3) Where a standard offshore tax penalty is imposed under paragraph 6 of
Schedule 55 to FA 2009 for a failure to make a return or deliver a document
45specified in the table of paragraph 1 of that Schedule, the tax year to which
that penalty relates is—

Finance BillPage 625

(a) if the tax at stake is income tax or capital gains tax, the tax year to
which the return or document relates;

(b) if the tax at stake is inheritance tax, the year, beginning on 6 April
and ending on the following 5 April, in which the liability to tax first
5arose.

Potential lost revenue threshold

4 (1) The potential lost revenue threshold is reached where the offshore PLR in
relation to a tax year exceeds £25,000.

(2) The Treasury may by regulations change the figure for the time being
10specified in sub-paragraph (1).

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

(4) A statutory instrument containing regulations under sub-paragraph (2) is
subject to annulment in pursuance of a resolution of the House of Commons.

(5) 15Regulations under sub-paragraph (2)

(a) may make different provision for different purposes;

(b) may contain supplemental, incidental, consequential, transitional
and transitory provision.

Offshore PLR

5 (1) 20The offshore PLR, in relation to a tax year, is the total of—

(a) the potential lost revenue (in the case of a standard offshore tax
penalty imposed under Schedule 24 to FA 2007 or Schedule 41 to FA
2008), and

(b) the liability to tax (in the case of a standard offshore tax penalty
25imposed under Schedule 55 to FA 2009),

by reference to which all of the standard offshore tax penalties imposed on
P in relation to the tax year are assessed.

(2) Sub-paragraphs (3) to (5) apply where—

(a) a penalty is imposed on P under paragraph 1 of Schedule 24 to FA
302007, paragraph 1 of Schedule 41 to FA 2008 or paragraph 6 of
Schedule 55 to FA 2009, and

(b) the potential lost revenue or liability to tax by reference to which the
penalty is assessed relates to a standard offshore tax penalty and one
or more other penalties.

35In this paragraph, such a penalty is referred to as a “combined penalty”.

(3) Only the potential lost revenue or liability to tax relating to the standard
offshore tax penalty is to be taken into account in calculating the offshore
PLR.

(4) Where the calculation of the potential lost revenue or liability to tax by
40reference to which a combined penalty is assessed depends on the order in
which income or gains are treated as having been taxed, for the purposes of
calculating the offshore PLR—

(a) income and gains relating to domestic matters are to be taken to have
been taxed before income and gains relating to offshore matters and
45offshore transfers;

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(b) income and gains relating to taxes that are not capital gains tax,
inheritance tax or asset-based income tax are to be taken to have been
taxed before income and gains relating to capital gains tax,
inheritance tax and asset-based income tax.

(5) 5In a case where it cannot be determined—

(a) whether income or gains relate to an offshore matter or offshore
transfer or to a domestic matter, or

(b) whether income or gains relate to capital gains tax, asset-based
income tax or inheritance tax or not,

10for the purposes of calculating the offshore PLR, the potential lost revenue
or liability to tax relating to the standard offshore tax penalty is to be taken
to be such share of the total potential lost revenue or liability to tax by
reference to which the combined penalty was calculated as is just and
reasonable.

(6) 15Sub-paragraph (7) applies where—

(a) a standard offshore tax penalty or a combined penalty is imposed on
P, and

(b) there are two or more taxes at stake, including capital gains tax and
asset-based income tax.

(7) 20Where the calculation of the potential lost revenue or liability to tax by
reference to which the penalty is assessed depends on the order in which
income or gains are treated as having been taxed, for the purposes of
calculating the offshore PLR, income and gains relating to asset-based
income tax are to be taken to have been taxed before income and gains
25relating to capital gains tax.

Restriction on imposition of multiple asset-based penalties in relation to the same asset

6 (1) Sub-paragraphs (2) and (3) apply where—

(a) a standard offshore tax penalty has been imposed on P, and

(b) the potential lost revenue threshold is met,

30in relation to more than one tax year falling within the same investigation
period.

(2) Only one asset-based penalty is payable by P in the investigation period in
relation to any given asset.

(3) The asset-based penalty is to be charged by reference to the tax year in the
35investigation period with the highest offshore PLR.

(4) An “investigation period” is—

(a) the period starting with the day on which this Schedule comes into
force and ending with the last day of the last tax year before P was
notified of an asset-based penalty in respect of an asset, and

(b) 40subsequent periods beginning with the day after the previous period
ended and ending with the last day of the last tax year before P is
notified of a subsequent asset-based penalty in respect of the asset,

and different investigation periods may apply in relation to different assets.

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Part 2 Amount of penalty

Standard amount of asset-based penalty

7 (1) The standard amount of the asset-based penalty is the lower of—

(a) 510% of the value of the asset, and

(b) offshore PLR x 10.

(2) See also—

(a) paragraphs 8 and 9, which provide for reductions in the standard
amount, and

(b) 10Part 3, which makes provision about the identification and valuation
of the asset.

Reductions for disclosure and co-operation

8 (1) HMRC must reduce the standard amount of the asset-based penalty where
P does all of the following things—

(a) 15makes a disclosure of the inaccuracy or failure relating to the
standard offshore tax penalty;

(b) provides HMRC with a reasonable valuation of the asset;

(c) provides HMRC with information or access to records that HMRC
requires from P for the purposes of valuing the asset.

(2) 20A reduction under sub-paragraph (1) must reflect the quality of the
disclosure, valuation and information provided (and for these purposes
“quality” includes timing, nature and extent).

(3) The Treasury must make regulations setting out the maximum amount of
the penalty reduction under sub-paragraph (1).

(4) 25The maximum amount may differ according to whether the case involves
only unprompted disclosures or involves prompted disclosures.

(5) A case involves only unprompted disclosures where—

(a) in a case where the asset-based penalty relates to only one standard
offshore tax penalty, that standard offshore tax penalty was reduced
30on the basis of an unprompted disclosure, or

(b) in a case where the asset-based penalty relates to more than one
standard offshore tax penalty, all of those standard offshore tax
penalties were reduced on the basis of unprompted disclosures.

(6) A case involves prompted disclosures where any of the standard offshore
35tax penalties to which the asset-based penalty relates was reduced on the
basis of a prompted disclosure.

(7) Regulations under sub-paragraph (3) are to be made by statutory
instrument.

(8) A statutory instrument containing regulations under sub-paragraph (3) is
40subject to annulment in pursuance of a resolution of the House of Commons.

(9) Regulations under sub-paragraph (3)

(a) may make different provision for different purposes;

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(b) may contain supplemental, incidental, consequential, transitional
and transitory provision.

Special reduction

9 (1) If HMRC think it right because of special circumstances, they may reduce
5the standard amount of the asset-based penalty.

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

(a) ability to pay, or

(b) the fact that a potential loss of revenue from one taxpayer is balanced
by a potential over-payment by another.

(3) 10In sub-paragraph (1) the reference to reducing a penalty includes a reference
to—

(a) staying a penalty, and

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

Part 3 15Identification and valuation of assets

Introduction

10 (1) This Part makes provision about the identification and valuation of the asset
for the purposes of calculating the amount of the asset-based penalty.

(2) An asset-based penalty may relate to more than one asset.

(3) 20The identification and valuation of the asset is to be determined—

(a) under paragraph 11 where the principal tax at stake is capital gains
tax,

(b) under paragraph 12 where the principal tax at stake is inheritance
tax, and

(c) 25under paragraph 13 where the principal tax at stake is asset-based
income tax.

See also paragraph 14 (jointly held assets).

(4) The principal tax at stake—

(a) in a case where the standard offshore tax penalty (or penalties)
30relates to only one type of tax, is the tax to which that standard
offshore tax penalty (or penalties) relates;

(b) in a case where the standard offshore tax penalty (or penalties) relate
to more than one type of tax, is the tax which gives rise to the highest
offshore PLR value.

(5) 35The offshore PLR value, in relation to a type of tax, is the potential lost
revenue or liability to tax by reference to which the part of the penalty
relating to that type of tax was assessed.

(6) The rules in paragraph 5(2) to (7) apply for the purposes of calculating the
offshore PLR value, in relation to a type of tax, as they apply for the purposes
40of calculating the offshore PLR.

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Capital gains tax

11 (1) This paragraph applies where the principal tax at stake is capital gains tax.

(2) The asset is the asset that is the subject of the disposal (or deemed disposal)
on or by reference to which the capital gains tax to which the standard
5offshore penalty relates is charged.

(3) For the purposes of calculating the amount of the asset-based penalty, the
value of the asset is to be taken to be the consideration for the disposal of the
asset that would be used in the computation of the gain under TCGA 1992
(other than in a case where sub-paragraph (4) applies).

(4) 10In a case where the disposal on or by reference to which the capital gains tax
is charged is a part disposal of an asset, the asset-based penalty is to be
calculated by reference to the full market value of the asset immediately
before the part disposal took place.

(5) Terms used in this paragraph have the same meaning as in TCGA 1992.

15Inheritance tax

12 (1) This paragraph applies where the principal tax at stake is inheritance tax.

(2) The asset is the property the disposition of which gave rise to the transfer of
value by reason of which the inheritance tax to which the standard offshore
penalty relates became chargeable.

(3) 20For the purposes of calculating the amount of the asset-based penalty, the
value of the property is to be the value of the property used by HMRC in
assessing the liability to inheritance tax.

(4) Terms used in this paragraph have the same meaning as in IHTA 1984.

Asset-based income tax

13 (1) 25This paragraph applies where the principal tax at stake is asset-based
income tax.

(2) Where the standard offshore tax penalty relates to income tax charged under
a provision shown in column 1 of the Table, the asset is the asset mentioned
in column 2 of the Table.

Provision under which income tax is
charged
30Asset
Chapters 3, 7 and 10 of Part 3 of
ITTOIA 2005 (property
businesses)
The estate, interest or right in or
over the land that generates the
income for the business (see
35sections 264 to 266 of ITTOIA
2005)

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Provision under which income tax is
charged
Asset
Chapter 8 of Part 3 of ITTOIA
2005 (rent receivable in
connection with a s.12(4)
concern)
The estate, interest or right in or
over the land that generates the
5rent receivable in connection
with a UK section 12(4) concern
(see sections 335 and 336 of
ITTOIA 2005)
Chapters 2 and 2A of Part 4 of
ITTOIA 2005 (interest and
disguised interest)
The asset that generates the
10interest
Chapters 3 to 5 of Part 4 of
ITTOIA 2005 (dividends etc)
The shares or other securities in
relation to which the dividend or
distribution is paid
Chapter 7 of Part 4 of ITTOIA
2005 (purchased life annuity
payments)
15The annuity that gives rise to the
payments
Chapter 8 of Part 4 of ITTOIA
2005 (profits from deeply
discounted securities)
The deeply discounted securities
that are disposed of (see sections
20427 to 430 of ITTOIA 2005)
Chapter 9 of Part 4 of ITTOIA
2005 (gains from contracts for life
insurance etc)
The policy or contract from
which the gain is treated as
arising
Chapter 11 of Part 4 of ITTOIA
2005 (transactions in deposits)
The deposit right which is
25disposed of (see sections 551 and
552 of ITTOIA 2005)
Chapter 2 of Part 5 of ITTOIA
2005 (receipts from intellectual
property)
The intellectual property, know-
how or patent rights which
generate the income (see sections
30579, 583 and 587 of ITTOIA 2005)
Chapter 4 of Part 5 of ITTOIA
2005 (certain telecommunication
rights: non-trading income)
The relevant telecommunication
right from which the income
derives (see section 614 of
ITTOIA 2005)
Chapter 5 of Part 5 of ITTOIA
2005 (settlements: amounts
treated as income of settlor)
35The settlement which gives rise
to the income or capital sums
treated as income of a settlor

(3) For the purposes of calculating the amount of the asset-based penalty, the
asset is to be valued as follows.

(4) 40In a case where the charge to income tax was triggered by a disposal of the
asset, the value of the asset is to be taken as its market value on the date of
disposal (and in the case of a part disposal, the value of the asset is to be
taken as its full market value immediately before the part disposal took
place).

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(5) In any other case—

(a) where P still owns the asset on the last day of the tax year to which
the standard offshore tax penalty relates, the value of the asset is to
be taken as its market value on that day;

(b) 5where P disposed of the asset during the course of the tax year to
which the standard offshore tax penalty relates, the value of the asset
is to be taken as its market value on the date of disposal;

(c) where P disposed of part of the asset during the course of the tax year
to which the standard offshore tax penalty relates, the value of the
10asset is to be taken as the market value of the part disposed on the
date (or dates) of disposal plus the market value of the part still
owned by the person on the last day of that tax year.

(6) But if the value of the asset, as determined in accordance with sub-
paragraphs (4) and (5), does not appear to HMRC to be a fair and reasonable
15value, then HMRC may value the asset for the purposes of this Schedule in
any other way which appears to them to be fair and reasonable.

(7) For the purposes of sub-paragraph (5)

(a) P owns an asset if P is liable to asset-based income tax in relation to
that asset;

(b) 20references to a disposal (and related expressions) have the same
meaning as in TCGA 1992.

(8) In this paragraph “market value” has the same meaning as in TCGA 1992
(see section 272 of that Act).

(9) Other terms used in this paragraph have the same meaning as in ITTOIA
252005.

Jointly held assets

14 (1) This paragraph applies where an asset-based penalty is chargeable in
relation to an asset that is jointly held by P and another person (A).

(2) The value of the asset is to be taken to be the value of P’s share of the asset.

(3) 30In a case where P and A—

(a) are married to, or are civil partners of, each other, and

(b) live together,

the asset is to be taken to be jointly owned by P and A in equal shares, unless
it appears to HMRC that this is not the case.

35Part 4 Procedure

Assessment

15 (1) Where a person (P) becomes liable for an asset-based penalty under
paragraph 1, HMRC must—

(a) 40assess the penalty,

(b) notify P, and

(c) state in the notice—

(i) the tax year to which the penalty relates, and

Finance BillPage 632

(ii) the investigation period within which that tax year falls (see
paragraph 6).

(2) A penalty under paragraph 1 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) 5An assessment—

(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),

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

(c) 10may be combined with an assessment to tax.

(4) An assessment of an asset-based penalty under paragraph 1 must be made
within the period allowed for making an assessment of the standard
offshore tax penalty to which the asset-based penalty relates (and where an
asset-based penalty relates to more than one standard offshore tax penalty,
15the assessment must be made within the latest of those periods).

(5) In this Part of this Schedule references to an assessment to tax, in relation to
inheritance tax, are to a determination.

Appeal

16 (1) P may appeal against a decision of HMRC that a penalty is payable by P.

(2) 20P may appeal against a decision of HMRC as to the amount of a penalty
payable by P.

17 (1) An appeal is to be treated in the same way as an appeal against an
assessment to the tax concerned (including by the application of any
provision about bringing the appeal by notice to HMRC, about HMRC
25review of the decision or about determination of the appeal by the First-tier
Tribunal or the Upper Tribunal).

(2) Sub-paragraph (1) does not apply—

(a) so as to require P to pay a penalty before an appeal against the
assessment of the penalty is determined, or

(b) 30in respect of any other matter expressly provided for by this
Schedule.

18 (1) On an appeal under paragraph 16(1), the tribunal may affirm or cancel
HMRC’s decision.

(2) On an appeal under paragraph 16(2), the tribunal may—

(a) 35affirm HMRC’s decision, or

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

(3) If the tribunal substitutes its decision for HMRC’s, the tribunal may rely on
paragraph 9

(a) 40to the same extent as HMRC (which may mean applying the same
percentage reduction as HMRC to a different starting point), or

(b) to a different extent, but only if the tribunal thinks that HMRC’s
decision in respect of the application of paragraph 9 was flawed.

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(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 (h), and at the end
insert , or

(j) 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)”.

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(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.

SCHEDULE 23 Section 166 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 8.

(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

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(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

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(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).

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(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