Finance Bill (HC Bill 102)

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(c) two or more individuals carrying on a business in partnership control
all of them.

(3) A body corporate is to be taken to control another body corporate if—

(a) it is empowered by or under legislation to control that body’s activities,
5or

(b) it is that body’s holding company within the meaning of section 1159
of, and Schedule 6 to, the Companies Act 2006.

(4) An individual or individuals are to be taken to control a body corporate if the
individual or individuals (were the individual or individuals a company)
10would be that body’s holding company within the meaning of section 1159 of,
and Schedule 6 to, the Companies Act 2006.

59 Commencement

(1) This Part comes into force—

(a) so far as it confers powers to make regulations, on the day on which this
15Act is passed, and

(b) for all other purposes, on such day as the Commissioners may by
regulations made by statutory instrument appoint.

(2) Regulations under subsection (1)(b) may appoint different days for different
purposes.

20Part 4 Administration, avoidance and enforcement

Reporting and record-keeping

60 Digital reporting and record-keeping for income tax etc

(1) TMA 1970 is amended as set out in subsections (2) and (3).

(2) 25After section 12B insert—

“Digital reporting and record-keeping

12C Digital reporting and record-keeping

Schedule A1 (digital reporting and record-keeping) has effect.”

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(3) Before Schedule 1AA insert—

Section 12C

“Schedule A1 Digital reporting and record-keeping
Part 1 Application
5Application: persons

1 (1) This Schedule applies to a person within the charge to income tax
who, otherwise than in partnership, carries on (or has carried on)—

(a) a trade, profession or vocation the profits of which are
chargeable to income tax under Part 2 of ITTOIA 2005,

(b) 10a property business the profits of which are chargeable to
income tax under Part 3 of ITTOIA 2005, or

(c) any other activity which may give rise to profits or other
income chargeable to income tax under Part 2 or 3 of ITTOIA
2005.

(2) 15This is subject to paragraph 2.

2 (1) This Schedule does not apply to—

(a) the trustees of a charitable trust, or

(b) the trustees of an exempt unauthorised unit trust (within the
meaning of the Unauthorised Unit Trusts (Tax) Regulations
202013 (S.I. 2013/2819S.I. 2013/2819)),

unless the trustees elect for this Schedule to apply to them.

(2) This Schedule does not apply to a person in respect of an excluded
activity unless the person elects for this Schedule to apply to the
person in respect of the excluded activity.

(3) 25The following are excluded activities—

(a) the underwriting business of a member of Lloyd’s (within the
meaning of section 184 of the Finance Act 1993),

(b) holding shares in respect of which a distribution may be
made which is chargeable to income tax under Part 3 of
30ITTOIA 2005 by virtue of section 548(6) of CTA 2010
(distributions to shareholders in real estate investment
trusts), and

(c) participating in an open-ended investment company which
may make distributions chargeable to income tax under Part
353 of ITTOIA 2005 by virtue of regulation 69Z18 of the
Authorised Investment Funds (Tax) Regulations 2006 (S.I.
2006/964) (property income distributions).

(4) The Commissioners may by regulations make provision about
elections under this paragraph and the withdrawal of such elections,
40including provision—

(a) about how an election may be made or withdrawn, and

(b) about the period for which an election or withdrawal has
effect.

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Application: partnerships

3 (1) This Schedule applies to a partnership if one or more of the partners
is within the charge to income tax.

(2) This is subject to paragraph 4.

4 (1) 5If all the activities of a partnership which may give rise to profits or
income are excluded activities, this Schedule does not apply to the
partnership unless the partnership elects for this Schedule to apply
to it.

(2) The following are excluded activities—

(a) 10the underwriting business of a Lloyd’s partnership (as
defined in section 184(1) of the Finance Act 1993),

(b) holding shares in respect of which a distribution may be
made which is chargeable to income tax under Part 3 of
ITTOIA 2005 by virtue of section 548(6) of CTA 2010
15(distributions to shareholders in real estate investment
trusts), and

(c) participating in an open-ended investment company which
may make distributions chargeable to income tax under Part
3 of ITTOIA 2005 by virtue of regulation 69Z18 of the
20Authorised Investment Funds (Tax) Regulations 2006 (S.I.
2006/964) (property income distributions).

(3) The Commissioners may by regulations make provision about
elections under this paragraph and the withdrawal of such elections,
including provision—

(a) 25about how an election may be made or withdrawn, and

(b) about the period for which an election or withdrawal has
effect.

Nominated partners

5 (1) Requirements imposed by regulations under this Schedule on a
30partnership are to be met by a nominated partner.

(2) A “nominated partner” is a partner nominated for the purposes of
this Schedule—

(a) by the partners, or

(b) by the Commissioners.

(3) 35A nomination, or a revocation of a nomination, by the partners does
not have effect until notice of the revocation or nomination is given
to HMRC.

(4) The Commissioners may by regulations make provision about
nominations and the revocation of nominations, including provision
40about the circumstances in which the Commissioners may nominate
a partner.

(5) In this Act references to a nominated partner are to a partner
nominated for the purposes of this Schedule.

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Part 2 Digital reporting and record-keeping
Interpretation

6 In this Part of this Schedule “business”—

(a) 5in relation to a person to whom this Schedule applies (see
paragraphs 1 and 2), means the activity by virtue of which
this Schedule applies to the person (and if more than one,
means each of them), and

(b) in relation to a partnership to which this Schedule applies
10(see paragraphs 3 and 4), means any activity of the
partnership.

Periodic updates

7 (1) The Commissioners may by regulations require a person or
partnership to whom this Schedule applies to provide to HMRC, by
15electronic communications, specified information about the business
of the person or partnership.

(2) The information which may be specified includes any information
(“financial information”) relevant to calculating profits, losses or
income of the business, including information about receipts and
20expenses.

(3) The regulations may require information to be provided at or for
specified intervals, times or periods.

(4) The regulations may not require financial information about the
business to be provided more often than once every 3 months.

25End of period statement

8 (1) The Commissioners may by regulations require a person to whom
this Schedule applies to provide to HMRC, by electronic
communications, a statement containing specified information about
the person’s business in relation to each relevant period.

(2) 30“Relevant period” means—

(a) in relation to a business the profits or income of which are
chargeable to income tax under Chapter 2 of Part 2 of ITTOIA
2005, a basis period (see Chapter 15 of that Part), and

(b) otherwise, a tax year.

(3) 35The information which may be specified includes any information
relevant to calculating profits, losses or income of the business for the
relevant period, including information about receipts and expenses.

(4) Regulations under this paragraph may require the statement to
include a declaration to the effect that the information included in it
40is correct and complete.

(5) An end of period statement for a tax year must be provided to HMRC
at or before—

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(a) the time at which the person delivers a return under section
8 or 8A for the tax year (see section 8(7)(c) and 8A(7)(c)), or

(b) if earlier, the end of 31 January following the tax year.

(6) In this Act—

(a) 5references to an end of period statement are to a statement
required by regulations under this paragraph;

(b) references to an end of period statement for a tax year are to
an end of period statement for that tax year or, where the
relevant period is a basis period, for the basis period for that
10tax year.

Facility for complying with notice to file under section 8 or 8A

9 The Commissioners may by regulations make provision for the
establishment and use of a facility enabling a person to whom this
Schedule applies to file or deliver, by electronic communications—

(a) 15anything which under section 8(1AB) may be required to be
filed or delivered by a notice to file under section 8;

(b) anything which under section 8A(1AB) may be required to be
filed or delivered by a notice to file under section 8A.

Partnership return

10 (1) 20The Commissioners may by regulations require a partnership to
which this Schedule applies to provide to HMRC, by electronic
communications, a return containing specified information about the
partnership’s business in relation to each tax year.

(2) The information which may be specified includes any information
25which is or may be required to be included in a section 12AA
partnership return, including information in respect of any partners
within the charge to corporation tax.

(3) In particular, the information which may be specified includes the
information required to be included in a section 12AA partnership
30return by section 12AB (partnership statements).

(4) Regulations under this paragraph may require the return to include
a declaration to the effect that the information included in it is correct
and complete.

(5) A Schedule A1 partnership return for a tax year must be provided to
35HMRC on or before 31 January following the tax year.

(6) In this Act—

(a) references to a Schedule A1 partnership return are to a return
required by regulations under this paragraph, and

(b) references to a partnership statement, in relation to a
40Schedule A1 partnership return, are to information required
to be included in the return by virtue of sub-paragraph (3).

(7) In the Taxes Acts, unless the contrary intention appears, a reference
(whether general or specific) to a return under, or a return required
under, this Act includes a reference to a Schedule A1 partnership
45return.

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Record-keeping

11 (1) The Commissioners may by regulations require a person or
partnership to whom this Schedule applies to—

(a) keep specified records relating to the business in electronic
5form, and

(b) preserve those records in electronic form for a specified
period.

(2) The records which may be specified are any records the
Commissioners consider relevant to ascertaining information
10required to be provided by regulations under this Part of this
Schedule.

(3) A requirement imposed by regulations under this paragraph is in
addition to, and not in place of, any other requirement that the
person or partnership keep and preserve records (or keep and
15preserve records in a particular form).

(4) Paragraph 5(1) (requirements imposed on partnership to be met by
nominated partner) does not apply to requirements imposed by
regulations under this paragraph.

12 (1) This paragraph applies where requirements imposed by regulations
20under paragraph 11 for any period are not complied with.

(2) The person, or in the case of a partnership each relevant partner, is
liable for a penalty.

(3) “Relevant partner” means any person who was a partner in the
partnership at any time during the period in question.

(4) 25The amount of the penalty must not exceed £3,000.

(5) A person or relevant partner is not liable to a penalty under this
paragraph in relation to a period if the person or relevant partner is
liable to a penalty under section 12B(5) in relation to that period.

Electronic communications and records: supplementary powers

13 (1) 30This paragraph applies to regulations under paragraphs 7, 8, 9, 10
and 11.

(2) The regulations may (amongst other things) make provision—

(a) as to the electronic form to be taken by information provided
and records kept or preserved,

(b) 35requiring persons to prepare and keep records of information
provided by means of electronic communications,

(c) for the production of the contents of records kept or
preserved in accordance with regulations under this Part of
this Schedule,

(d) 40as to conditions that must be complied with in connection
with the use of electronic communications or the keeping or
preservation of electronic records,

(e) for treating information as not having been provided or
records as not having been kept or preserved unless
45conditions are complied with,

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(f) for determining the time at which and person by whom
information is taken to have been delivered, and

(g) for authenticating information or records.

(3) The regulations may also make provision (which may include
5provision for the application of conclusive or other presumptions)
about the manner of proving for any purpose—

(a) whether any use of electronic communications is to be taken
as having resulted in the provision of information,

(b) the time at which information was provided,

(c) 10the person by whom information was provided,

(d) the contents of any information provided,

(e) the contents of any records, and

(f) any other matter for which provision may be made by the
regulations.

(4) 15The regulations may allow or require use to be made of
intermediaries in connection with—

(a) the provision of information by means of electronic
communications, and

(b) the authentication or security of anything transmitted by any
20such means.

(5) The regulations may—

(a) allow any authorisation or requirement for which the
regulations may provide to be given by means of a specific or
general direction given by the Commissioners, and

(b) 25provide that the conditions of an authorisation or
requirement are to be taken to be satisfied only where the
Commissioners are satisfied as to specified matters.

(6) The regulations may provide—

(a) that information provided must meet standards of accuracy
30and completeness set by specific or general directions given
by the Commissioners, and

(b) that failure to meet those standards may be treated as a
failure to provide the information, or as a failure to comply
with the requirements of the regulations.

35Part 3 Exemptions
Exemption for the digitally excluded

14 (1) The Commissioners must by regulations make provision—

(a) for a person to be exempt from requirements imposed by
40regulations under paragraphs 7, 8 and 11 if the
Commissioners are satisfied that the person is digitally
excluded, and

(b) for a partnership to be exempt from requirements imposed
by regulations under paragraphs 7, 10 and 11 if the
45Commissioners are satisfied that the partnership is digitally
excluded.

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(2) A person is digitally excluded if the digital exclusion condition is met
in relation to the person.

(3) A partnership is digitally excluded if the digital exclusion condition
is met in relation to each partner.

(4) 5The digital exclusion condition is met in relation to a person or
partner if—

(a) the person or partner is a practising member of a religious
society or order whose beliefs are incompatible with using
electronic communications or keeping electronic records, or

(b) 10for any reason (including age, disability or location) it is not
reasonably practicable for the person or partner to use
electronic communications or to keep electronic records.

Further exemptions

15 (1) The Commissioners may by regulations make provision for further
15exemptions.

(2) The exemptions for which provision may be made include
exemptions based on income or other financial criteria.

Part 4 Supplementary provision
20Appeals

16 (1) An appeal may be brought against any decision made by the
Commissioners, or by an officer of Revenue and Customs, under
regulations under this Schedule.

(2) Notice of an appeal under this paragraph must be given to HMRC
25within 30 days after the day on which notice of the decision is given.

(3) The notice of appeal must—

(a) be in writing, and

(b) specify the grounds of appeal.

Interpretation

17 30Any power in this Schedule to require the provision of information
includes power to require the provision of accounts, statements and
documents relating to that information.

Regulations

18 (1) Regulations under this Schedule may—

(a) 35make provision which applies generally or only for specified
cases or purposes;

(b) make different provision for different cases or purposes;

(c) include incidental, supplemental, consequential, saving,
transitional or transitory provision;

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(d) make provision for matters to be specified by the
Commissioners in accordance with the regulations.

(2) Sub-paragraph (1)(d) does not apply to any interval, time or period
specified by virtue of paragraph 7(3) (which may be specified only by
5the regulations).

(3) Regulations under this Schedule may make provision for a person or
partnership to whom this Schedule applies, but who would not
otherwise be subject to a requirement imposed by the regulations, to
elect to be subject to that requirement.

(4) 10Regulations under this Schedule may provide that, for the purposes
of any provision of this Schedule or of the regulations, a change in
the accounting date of a business is to be disregarded (and its period
of account determined accordingly).

(5) The power to make regulations under this Schedule is exercisable by
15statutory instrument.

(6) A statutory instrument containing regulations under this Schedule is
subject to annulment in pursuance of a resolution of the House of
Commons.”

(4) Subsections (1) to (3) come into force on such day as the Treasury may by
20regulations made by statutory instrument appoint.

(5) Regulations under subsection (4) may appoint different days for different
purposes.

61 Digital reporting and record-keeping for income tax etc: further amendments

(1) Schedule 14 contains provision amending TMA 1970 and other Acts.

(2) 25The Commissioners for Her Majesty’s Revenue and Customs may by
regulations amend or modify any provision of the Taxes Acts in consequence
of the provision made by section 60 or Schedule 14.

(3) Regulations under subsection (2) may make transitional, transitory or saving
provision.

(4) 30Regulations under subsection (2) must be made by statutory instrument.

(5) A statutory instrument containing regulations under subsection (2) may not be
made unless a draft of the instrument has been laid before, and approved by a
resolution of, the House of Commons.

(6) Subsections (1) to (5) and Schedule 14 come into force on such day as the
35Treasury may by regulations made by statutory instrument appoint.

(7) Regulations under subsection (6) may appoint different days for different
purposes.

62 Digital reporting and record-keeping for VAT

(1) Schedule 11 to VATA 1994 (administration, collection and enforcement) is
40amended as set out in subsections (2) to (4).

(2) In paragraph 2 (accounting and payment)—

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(a) in sub-paragraph (1) for “and the making of returns” substitute “, the
making of returns and the submission of information”;

(b) after sub-paragraph (11) insert—

(11A) Regulations under this paragraph may include incidental,
5supplemental, consequential, saving, transitional or
transitory provision.”

(3) In paragraph 6 (duty of taxable person to keep records)—

(a) omit sub-paragraph (4);

(b) at the end insert—

(5) 10The Commissioners may by regulations make provision
about the form in which, and means by which, records are to
be kept and preserved.

(6) Regulations under sub-paragraph (5) may—

(a) make different provision for different cases;

(b) 15provide for any provision of the regulations to be
subject to conditions or exceptions specified in
writing by the Commissioners;

(c) include incidental, supplemental, consequential,
saving, transitional or transitory provision.

(7) 20If regulations under sub-paragraph (5) make provision
requiring records to be kept or preserved in electronic form
they must make provision for a taxable person to be exempt
from those requirements for any month (“the current
month”) if—

(a) 25the value of the person’s taxable supplies, in the
period of one year ending with the month before the
current month, was less than the VAT threshold, and

(b) the person was not subject to those requirements in
the month before the current month.

(8) 30The regulations may modify the exemption for cases where a
business or part of a business carried on by a taxable person
is transferred to another person as a going concern.

(9) The “VAT threshold” means the amount specified in
paragraph 1(1)(a) of Schedule 1 on the first day of the current
35month.

(10) Regulations under sub-paragraph (5) requiring records to be
kept or preserved in electronic form may (among other
things) make provision—

(a) as to the electronic form in which records are to be
40kept or preserved,

(b) for the production of the contents of records kept or
preserved in accordance with the regulations,

(c) as to conditions that must be complied with in
connection with the keeping or preservation of
45electronic records,

(d) for treating records as not having been kept or
preserved unless conditions are complied with,

(e) for authenticating records,