Finance (No. 2) Bill (HL Bill 156)

(iv) using a method agreed with an officer of Revenue and
Customs.

(4) In sub-paragraph (3) “relevant information” means information relating to
offshore tax that—

(a) 5had the requisite notice been given in time and the person given a
notice to make and deliver a tax return, would have been required to
be included in the tax return, and

(b) would have enabled or assisted HMRC to calculate the offshore tax
due.

(5) 10Offshore tax non-compliance consisting of a failure to make or deliver a
return or other document may be corrected by giving HMRC the relevant
information by—

(a) making or delivering the requisite return or document,

(b) using the digital disclosure service or any other service provided by
15HMRC as a means of correcting tax non-compliance,

(c) communicating it to an officer of Revenue and Customs in the course
of an enquiry into the person’s tax affairs, or

(d) using a method agreed with an officer of Revenue and Customs.

(6) In subsection (5) “relevant information” means information relating to
20offshore tax that—

(a) should have been included in the return or other document, and

(b) would have enabled or assisted HMRC to calculate the offshore tax
due.

(7) Offshore tax non-compliance consisting of making and delivering a return
25or other document containing an inaccuracy may be corrected by giving
HMRC the relevant information by—

(a) in the case of an inaccurate tax document, amending the document
or delivering a new document,

(b) using the digital disclosure service or any other service provided by
30HMRC as a means of correcting tax non-compliance,

(c) communicating it to an officer of Revenue and Customs in the course
of an enquiry into the person’s tax affairs, or

(d) using a method agreed with an officer of Revenue and Customs.

(8) In sub-paragraph (7) “relevant information” means information relating to
35offshore tax that—

(a) should have been included in the return but was not (whether due to
an omission or the giving of inaccurate information), and

(b) would have enabled or assisted HMRC to calculate the offshore tax
due.

(9) 40In this paragraph “offshore tax”, in relation to any offshore tax non-
compliance, means tax corresponding to the offshore PLR in respect of the
non-compliance.

Part 2 Amount of penalty

Amount of penalty

13 (1) The penalty payable under paragraph 1 is 200% of the offshore PLR
5attributable to the uncorrected offshore tax non-compliance (subject to any
reduction under a provision of this Part of this Schedule).

(2) In this Part of this Schedule “the uncorrected offshore tax non-compliance”
means—

(a) the relevant offshore tax non-compliance, in a case where none of it
10is corrected within the RTC period, or

(b) so much of the relevant offshore tax non-compliance as has not been
corrected within the RTC period, in a case where part of it is
corrected within that period.

Offshore PLR

14 (1) 15In this Schedule “offshore PLR”, in relation to any offshore tax non-
compliance means the potential loss of revenue attributable to that non-
compliance, to be determined as follows.

(2) The potential lost revenue attributable to any offshore tax non-compliance is
(subject to sub-paragraphs (4) and (5)) —

(a) 20if the non-compliance is a failure to notify chargeability, the potential
lost revenue under the applicable provisions of paragraph 7 of
Schedule 41 to FA 2008 (or, where the original offshore tax non-
compliance took place before 1 April 2010, the amount referred to in
section 7(8) of TMA 1970),

(b) 25if the non-compliance is a failure to deliver a return or other
document, the amount of the liability to tax under the applicable
provisions of paragraph 24 of Schedule 55 to FA 2009 (or, where the
original offshore tax non-compliance took place before 1 April 2011,
the amount of liability to tax that would have been shown in the
30return as defined in section 93(9) of TMA 1970), and

(c) if the non-compliance is delivering a return or other document
containing an inaccuracy, the potential lost revenue under the
applicable provisions of paragraphs 5 to 8 of Schedule 24 to FA 2007
(or, where the original offshore tax non-compliance took place before
351 April 2008, the difference described in section 95(2) of TMA 1970).

(3) In sub-paragraphs (4) and (5) “combined tax non-compliance” is tax non-
compliance that—

(a) involves an offshore matter or an offshore transfer, but

(b) also involves an onshore matter.

(4) 40Any combined tax non-compliance is to be treated for the purposes of this
Schedule as if it were two separate acts of tax non-compliance, namely—

(a) the combined tax non-compliance so far as it involves an offshore
matter or an offshore transfer (which is then offshore tax non-
compliance within the meaning of this Schedule), and

(b) 45the combined tax non-compliance so far as it involves an onshore
matter.

(5) The potential lost revenue attributable to the offshore tax non-compliance
referred to in sub-paragraph (4)(a) is to be taken to be such share of the
potential lost revenue attributable to the combined tax non-compliance as is
just and reasonable.

5Reduction of penalty for disclosure etc by person liable to penalty

15 (1) This paragraph provides for a reduction in a penalty under paragraph 1 for
any uncorrected relevant offshore tax non-compliance if the person (“P”)
who is liable to the penalty discloses any matter mentioned in sub-
paragraph (2) that is relevant to the non-compliance or its correction or to the
10assessment or enforcement of the offshore tax attributable to it.

(2) The matters are—

(a) chargeability to income tax or capital gains tax (where the tax non-
compliance is a failure to notify chargeability),

(b) a missing tax return,

(c) 15an inaccuracy in a document,

(d) a supply of false information or a withholding of information, or

(e) a failure to disclose an under-assessment.

(3) A person discloses a matter for the purposes of this paragraph only by—

(a) telling HMRC about it,

(b) 20giving HMRC reasonable help in relation to the matter (for example
by quantifying an inaccuracy in a document),

(c) informing HMRC of any person who acted as an enabler of the
relevant offshore tax non-compliance or the failure to correct it, and

(d) allowing HMRC access to records—

(i) 25for any reasonable purpose connected with resolving the
matter (for example for the purpose of ensuring that an
inaccuracy in a document is fully corrected), and

(ii) for the purpose of ensuring that HMRC can identify all
persons who may have acted as an enabler of the relevant
30offshore tax non-compliance or the failure to correct it.

(4) Where a person liable to a penalty under paragraph 1 discloses a matter
HMRC must reduce the penalty to one that reflects the quality of the
disclosure.

(5) But the penalty may not be reduced below 100% of the offshore PLR.

(6) 35In relation to disclosure or assistance, “quality” includes timing, nature and
extent.

(7) For the purposes of sub-paragraph (3) a person “acted as an enabler” of
relevant offshore tax non-compliance by another if the person encouraged,
assisted or otherwise facilitated the conduct by the other person that
40constituted the offshore tax non-compliance.

16 (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) 45the 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) agreeing a compromise in relation to proceedings for a penalty.

5Procedure for assessing penalty, etc

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

(a) assess the penalty,

(b) notify the person, and

(c) 10state in the notice—

(i) the uncorrected relevant offshore tax non-compliance to
which the penalty relates, and

(ii) the tax period to which that offshore tax non-compliance
relates.

(2) 15A 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) An 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
20for by this Schedule),

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

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

(4) A supplementary assessment may be made in respect of a penalty if an
earlier assessment operated by reference to an underestimate of the liability
25to 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 offshore
tax that would have been shown on a return, and

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

(6) 30HMRC may amend the assessment so that it is based upon the correct
amount.

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

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

(b) may be made after the last day on which the assessment in question
35could have been made under paragraph 18.

18 (1) An assessment of a penalty under paragraph 1 in respect of uncorrected
relevant offshore tax non-compliance must be made before the end of the
relevant period for that non-compliance.

(2) If the non-compliance consists of a failure to notify chargeability, the
40relevant period is the period of 12 months beginning with—

(a) the end of the appeal period for the assessment of tax unpaid by
reason of the failure, or

(b) if there is no such assessment, the date on which the amount of tax
unpaid by reason of the failure is ascertained.

(3) If the non-compliance consists of a failure to submit a return or other
document, the relevant period is the period of 12 months beginning with—

(a) the end of the appeal period for the assessment of the liability to tax
which would have been shown in the return, or

(b) 5if there is no such assessment, the date on which that liability is
ascertained.

(4) If the non-compliance consists of making and delivering a tax document
containing an inaccuracy, the relevant period is the period of 12 months
beginning with—

(a) 10the end of the appeal period for the decision correcting the
inaccuracy, or

(b) if there is no assessment to the tax concerned within paragraph (a),
the date on which the inaccuracy is corrected.

(5) In this paragraph references to the appeal period are to the period during
15which—

(a) an appeal could be brought, or

(b) an appeal that has been brought has not been finally determined or
withdrawn.

Appeals

19 20A person may appeal against—

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

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

20 (1) 25An appeal under paragraph 19 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
provision 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) 30Sub-paragraph (1) does not apply—

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

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

21 (1) 35On an appeal under paragraph 19(a) that is notified to the tribunal, the
tribunal may affirm or cancel HMRC’s decision.

(2) On an appeal under paragraph 19(b) that is notified to the tribunal, the
tribunal may—

(a) affirm HMRC’s decision, or

(b) 40substitute for that decision another decision that HMRC had power
to make.

(3) If the tribunal substitutes its own decision for HMRC’s, the tribunal may
rely on paragraph 15 or 16 (or both)—

(a) to the same extent as HMRC (which may mean applying the same
45percentage reduction as HMRC to a different starting point),

(b) to a different extent, but only if the tribunal thinks that HMRC’s
decision 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) 5In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal
(as appropriate by virtue of paragraph 20(1)).

Reasonable excuse

22 (1) Liability to a penalty under paragraph 1 does not arise in relation to a
particular failure to correct any relevant offshore tax non-compliance within
10the RTC period if the person concerned (P) satisfies HMRC or the relevant
tribunal (as the case may be) that there is a reasonable excuse for the failure.

(2) For this purpose—

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

(b) 15where P relied on any other person to do anything, that cannot be a
reasonable excuse unless P took reasonable care to avoid the failure,

(c) where P had a reasonable excuse but the excuse has ceased, P is to be
treated as continuing to have the excuse if the failure is remedied
without unreasonable delay after the excuse ceased, and

(d) 20reliance on advice is to be taken automatically not to be a reasonable
excuse if it is disqualified under sub-paragraph (3).

(3) Advice is disqualified (subject to sub-paragraph (4) if—

(a) the advice was given to P by an interested person,

(b) the advice was given to P as a result of arrangements made between
25an interested person and the person who gave the advice,

(c) the person who gave the advice did not have appropriate expertise
for giving the advice,

(d) the advice failed to take account of all P’s individual circumstances
(so far as relevant to the matters to which the advice relates), or

(e) 30the advice was addressed to, or was given to, a person other than P.

(4) Where advice would otherwise be disqualified under any of paragraphs (a)
to (d) of sub-paragraph (3) the advice is not disqualified if at the end of the
RTC period P—

(a) has taken reasonable steps to find out whether or not the advice falls
35within that paragraph, and

(b) reasonably believes that it does not.

(5) In sub-paragraph (3) “an interested person” means, in relation to any
relevant offshore tax non-compliance—

(a) a person (other than P) who participated in relevant avoidance
40arrangements or any transaction forming part of them, or

(b) a person who for any consideration (whether or not in money)
facilitated P’s entering into relevant avoidance arrangements.

(6) In sub-paragraph (5) “avoidance arrangements” means arrangements as
respects which, in all the circumstances, it would be reasonable to conclude
45that their main purpose, or one of their main purposes, is the obtaining of a
tax advantage.

(7) Where any relevant offshore tax non-compliance arose originally because
information was submitted to HMRC on the basis that particular avoidance
arrangements had an effect which they did not have, those avoidance
arrangements are “relevant avoidance arrangements” in relation to that tax
5non-compliance.

(8) In sub-paragraph (6)—

(a) “arrangements” includes any agreement, understanding, scheme,
transaction or series of transactions (whether or not legally
enforceable), and

(b) 10a “tax advantage” includes—

(i) relief or increased relief from tax,

(ii) repayment or increased repayment of tax,

(iii) avoidance or reduction of a charge to tax or an assessment to
tax,

(iv) 15avoidance of a possible assessment to tax,

(v) deferral of a payment of tax or advancement of a repayment
of tax.

Double jeopardy

23 (1) Where by reason of any conduct a person—

(a) 20has been convicted of an offence, or

(b) is liable to a penalty otherwise than under paragraph 1 for which the
person has been assessed (and the assessment has not been
successfully appealed against or withdrawn),

that conduct does not give rise to liability to a penalty under paragraph 1.

(2) 25In sub-paragraph (1) the reference to a penalty otherwise than under
paragraph 1—

(a) includes a penalty under paragraph 6 of Schedule 55 to FA 2009, but
does not include penalties under any other provision of that
Schedule, and

(b) 30includes a penalty under subsection (5) of section 93 of TMA 1970
but, does not include penalties under any other provision of that
section.

(3) But the aggregate of—

(a) the amount of a penalty under paragraph 1, and

(b) 35the amount of a penalty under paragraph 5 of Schedule 55 which is
determined by reference to a liability to tax,

must not exceed 200% of that liability to tax.

(4) In sub-paragraph (1) “conduct” includes a failure to act.

Application of provisions of TMA 1970

24 40Subject 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
as they apply for the purposes of the Taxes Acts—

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

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

(c) 45section 115 (delivery and service of documents).

Part 3 Further provisions relating to the requirement to correct

Extension of period for assessment etc of offshore tax

25 (1) This paragraph applies where—

(a) 5at the end of the tax year 2016-17 a person has relevant offshore tax
non-compliance to correct, and

(b) the last day on which it would (disregarding this paragraph) be
lawful for HMRC to assess the person to any offshore tax falls within
the period beginning with 6 April 2017 and ending with 4 April 2021.

(2) 10The period in which it is lawful for HMRC to assess the person to the
offshore tax is extended by virtue of this paragraph to end with 5 April 2021.

(3) In this paragraph “offshore tax”, in relation to any relevant offshore tax non-
compliance, means tax corresponding to the offshore PLR in respect of the
non-compliance.

15Further penalty in connection with offshore asset moves

26 (1) Schedule 21 to FA 2015 (penalties in connection with offshore asset moves)
is amended as follows.

(2) In paragraph 2 (original penalties triggering penalties under Schedule 21)
omit “and” after paragraph (b) and after paragraph (c) insert “, and

(d) 20a penalty under paragraph 1 of Schedule 29 to FA 2017
(requirement to correct relevant offshore tax non-
compliance).””

(3) In paragraph 3 (meaning of deliberate failure), after paragraph (c) insert—

“(d) in the case of a penalty within paragraph 2(d), P was aware
25at any time during the RTC period that at the end of the
2016-17 tax year P had relevant offshore tax non-
compliance to correct;

and terms used in paragraph (d) have the same meaning as in
Schedule 29 to FA 2017.””

(4) 30In paragraph 5 (meaning of “relevant time”), after sub-paragraph (4)
insert—

“(5) Where the original penalty is under paragraph 1 of Schedule 29 to
FA 2017, the relevant time is the time when that Schedule comes
into force.””

35Asset-based penalty in addition to penalty under paragraph 1

27 (1) Schedule 22 to FA 2016 (asset-based penalty for offshore inaccuracies and
failures) is amended as follows.

(2) In paragraph 2 (meaning of standard offshore penalty)—

(a) in sub-paragraph (1) for “or (4)” substitute “(4) or (4A)”,

(b) 40after sub-paragraph (4) insert—

“(4A) A penalty falls within this paragraph if—

(a) it is imposed on a person under paragraph 1 of
Schedule 29 to FA 2017 (requirement to correct
relevant offshore tax non-compliance),

(b) the person was aware at any time during the RTC
5period that at the end of the 2016-17 tax year P had
relevant offshore tax non-compliance to correct,
and

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

(c) 10after sub-paragraph (5) insert—

“(5A) Sub-paragraph (5) does not apply to a penalty imposed
under paragraph 1 of Schedule 29 to FA 2017.””

(3) In paragraph 3 (tax year to which standard offshore penalty relates) after
sub-paragraph (3) insert—

“(4) 15Where a standard offshore penalty is imposed under paragraph 1
of Schedule 29 to FA 2017, the tax year to which that penalty
relates is—

(a) if the tax at stake in relation to the uncorrected relevant
offshore tax non-compliance is income tax or capital gains
20tax, the tax year or years to which the failure or inaccuracy
constituting the relevant offshore tax non-compliance in
question relates;

(b) if the tax at stake in relation to the uncorrected relevant
offshore tax non-compliance is inheritance tax, the year,
25beginning on 6 April and ending on the following 5 April,
in which the liability to tax first arose.

(5) In sub-paragraph (4) references to uncorrected relevant offshore
tax non-compliance are to the relevant offshore tax non-
compliance in respect of which the standard offshore penalty is
30imposed.””

(4) In paragraph 5 (meaning of offshore PLR), in sub-paragraph (1)(a) after “FA
2008” insert “or Schedule 29 to FA 2017”.

(5) In paragraph 6 (restriction on imposition of multiple asset-based penalties
for same asset) in sub-paragraph (1)(a) after “penalty” insert “(other than one
35imposed under paragraph 1 of Schedule 29 to FA 2017)”.

(6) After that paragraph insert—

“6A Where—

(a) a penalty has been imposed on a person under paragraph
1 of Schedule 29 to FA 2017, and

(b) 40the potential loss of revenue threshold has been met,

only one asset-based penalty is payable by the person in relation
to any given asset.””

(7) In paragraph 19(2) (interpretation: incorporation of definitions from other
legislation for “or Schedule 55 to FA 2009” substitute “Schedule 55 to FA
452009 or Part 1 of Schedule 29 to FA 2017”.

28 (1) TMA 1970 is amended as follows.

(2) In section 103ZA (disapplication of sections 100 to 103 in the case of certain
penalties) omit the “or” after paragraph (j) and after paragraph (k) insert “, or

(l) Schedule 29 to the Finance Act 2017.””

(3) In section 107A (relevant trustees)—

(a) 5in subsection (2)(a) after “Finance Act 2009” insert or Schedule 29 to
the Finance Act 2017”, and

(b) in subsection (3), after paragraph (c) insert—

“(d) in relation to—

(i) a penalty under Schedule 29 to the Finance
10Act 2017, or

(ii) interest under section 101 of the Finance Act
2009 on a penalty within sub-paragraph (i),

the end of the RTC period (within the meaning of
Schedule 29 to the Finance Act 2017);”.”

15Publishing details of persons assessed to penalty or penalties under paragraph 1

29 (1) The Commissioners for Her Majesty’s Revenue and Customs (“the
Commissioners”) may publish information about a person (P) if in
consequence of an investigation they consider that sub-paragraph (2) or (3)
applies in relation to P.

(2) 20This sub-paragraph applies if—

(a) P has been found to have incurred one or more relevant penalties
under paragraph 1 (and has been assessed or is the subject of a
contract settlement), and

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

(3) This sub-paragraph applies if P has been found to have incurred 5 or more
relevant penalties under paragraph 1.

(4) A penalty incurred by P under paragraph 1 is “relevant” if —

(a) 30P was aware at any time during the RTC period that at the end of the
2016-17 tax year the person had relevant offshore tax non-
compliance to correct, and

(b) the penalty relates to the failure to correct that non-compliance.

(5) The information that may be published is—

(a) 35P’s name (including any trading name, previous name or
pseudonym),

(b) P’s address (or registered office),

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

(d) the amount of the penalty or penalties,

(e) 40the offshore potential lost revenue in relation to the penalty or the
aggregate of the offshore potential lost revenue in relation to each of
the penalties,

(f) the periods or times to which the uncorrected relevant offshore tax
non-compliance relates,

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