Finance Bill

House of Lords

Session 2013 - 14
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Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 33 — Annual tax on enveloped dwellings: returns, enquiries, assessments and appeals
Part 2 — Duty to keep and preserve records
408

      (7)
A notice under sub-paragraph (5)(b) must be given to HMRC.
Part 2
Duty to keep and preserve records
Duty to keep and preserve records
5     (1)
A person who is required to deliver a return for a chargeable period must—
5
(a)
keep any records that may be needed to enable the person to deliver
a correct and complete return, and
(b)
preserve those records in accordance with this paragraph.
      (2)
The records must be preserved until the end of the later of the relevant day
and the date on which—
10
(a)
an enquiry into the return is completed, or
(b)
if there is no enquiry, an officer of Revenue and Customs no longer
has power to enquire into the return.
      (3)
“The relevant day” means—
(a)
the sixth anniversary of the last day of the chargeable period, or
15
(b)
any earlier day that may be specified in writing by the
Commissioners for Her Majesty’s Revenue and Customs.
      (4)
Different days may be specified for different purposes under sub-paragraph
(3)(b).
      (5)
The records required to be kept and preserved under this paragraph
20
include—
(a)
details of any relevant transaction (including any contract or
conveyance and any supporting maps, plans or similar documents
and records of relevant payments, receipts and financial
arrangements);
25
(b)
records of any valuation of the single-dwelling interest relevant to its
value on any day in the chargeable period.
      (6)
The Commissioners for Her Majesty’s Revenue and Customs may by
regulations—
(a)
provide that the records required to be kept under this paragraph do,
30
or do not, include records specified in the regulations;
(b)
specify supporting documents that are required to be kept under this
paragraph.
      (7)
Regulations under this paragraph may make provision by reference to
things specified in a notice published by the Commissioners for Her
35
Majesty’s Revenue and Customs in accordance with the regulations (and not
withdrawn by a subsequent notice).
      (8)
“Supporting documents” includes accounts, books, deeds, contracts,
vouchers and receipts.
Preservation of information etc
40
6
The duty under paragraph 5 to preserve records may be satisfied—
(a)
by preserving them in any form and by any means, or

Finance Bill
Schedule 33 — Annual tax on enveloped dwellings: returns, enquiries, assessments and appeals
Part 3 — Enquiry into return
409

(b)
by preserving the information contained in them in any form and by
any means, subject to any conditions or exceptions specified in
writing by the Commissioners for Her Majesty’s Revenue and
Customs.
Penalty for failure to keep and preserve records
5
7     (1)
A person who fails to comply with paragraph 5 in relation to a chargeable
period is liable to a penalty not exceeding £3,000, subject to the following
exception.
      (2)
No penalty is incurred if an officer of Revenue and Customs is satisfied that
any facts that it is reasonable to require should be proved to HMRC, and that
10
would have been proved by the records, are proved by other documentary
evidence provided to them.
Part 3
Enquiry into return
Notice of enquiry
15
8     (1)
An officer of Revenue and Customs may enquire into a return if sub-
paragraph (2) has been complied with.
      (2)
Notice of the intention to make an enquiry must be given—
(a)
to the person by whom or on whose behalf the return was delivered
(“the relevant person”);
20
(b)
before the end of the period of 12 months after the relevant date.
      (3)
The relevant date is—
(a)
the filing date, if the return was delivered on or before that date;
(b)
the date on which the return was delivered, if the return was
delivered after the filing date;
25
(c)
the date on which the amendment was made, if the return is
amended under paragraph 3 (amendment by person making the
return).
      (4)
A return that has been the subject of one notice under this paragraph may
not be the subject of another, except a notice given in consequence of an
30
amendment (or another amendment) of the return under paragraph 3.
      (5)
A notice under this paragraph is referred to as a “notice of enquiry”.
Scope of enquiry
9     (1)
An enquiry extends to anything contained in the return, or required to be
contained in the return, that relates—
35
(a)
to the question whether the relevant person is chargeable to tax with
respect to the interest to which the return relates for the chargeable
period concerned, or
(b)
to the amount of tax chargeable on the relevant person with respect
to that interest for that period.
40

Finance Bill
Schedule 33 — Annual tax on enveloped dwellings: returns, enquiries, assessments and appeals
Part 3 — Enquiry into return
410

      (2)
Sub-paragraph (3) applies if the notice of enquiry is given as a result of the
amendment of a return under paragraph 3 (amendment by person making
the return)—
(a)
at a time when it is no longer possible to give a notice of enquiry
under paragraph 8(3)(a) or (b), or
5
(b)
after an enquiry into the return has been completed.
      (3)
The enquiry is limited to—
(a)
matters to which the amendment relates, and
(b)
matters affected by the amendment.
Amendment of self assessment during enquiry to prevent loss of tax
10
10    (1)
If at a time when an enquiry is in progress into a return an officer of Revenue
and Customs forms the opinion—
(a)
that the amount stated in the self assessment contained in the return
as the amount of tax payable is insufficient, and
(b)
that unless the assessment is immediately amended there is likely to
15
be a loss of tax to the Crown,

the officer may by notice in writing to the relevant person amend the
assessment to make good the deficiency.
      (2)
If the enquiry is one that is limited by paragraph 9(2) and (3) to matters
arising from an amendment of the return, sub-paragraph (1) above applies
20
only so far as the deficiency is attributable to the amendment.
      (3)
For the purposes of this paragraph the period during which an enquiry is in
progress is the whole of the period—
(a)
beginning with the day on which the notice of enquiry is given, and
(b)
ending with the day on which the enquiry is completed.
25
Referral of questions to tribunal during enquiry
11    (1)
At any time when an enquiry is in progress into a return any question arising
in connection with the subject-matter of the return may be referred to the
tribunal for determination.
      (2)
Notice of the referral must be given to the tribunal jointly by the relevant
30
person and an officer of Revenue and Customs.
      (3)
More than one notice of referral may be given under this paragraph in
relation to an enquiry.
      (4)
For the purposes of this paragraph the period during which an enquiry is in
progress is the whole of the period—
35
(a)
beginning with the day on which the notice of enquiry is given, and
(b)
ending with the day on which the enquiry is completed.
Withdrawal of notice of referral
12
An officer of Revenue and Customs or the relevant person may withdraw a
notice of referral under paragraph 11.
40

Finance Bill
Schedule 33 — Annual tax on enveloped dwellings: returns, enquiries, assessments and appeals
Part 3 — Enquiry into return
411

Effect of referral on enquiry
13    (1)
While proceedings on a referral under paragraph 11 are in progress in
relation to an enquiry—
(a)
no closure notice may be given in relation to the enquiry, and
(b)
no application may be made for a direction to give a closure notice.
5
      (2)
Proceedings on a referral are “in progress” where—
(a)
notice of referral has been given and has not been withdrawn, and
(b)
the questions referred have not been finally determined.
      (3)
A question referred has been “finally determined” when—
(a)
it has been determined by the tribunal, and
10
(b)
there is no further possibility of the determination being varied or set
aside (disregarding any power to grant permission to appeal out of
time).
Effect of determination
14    (1)
A determination under paragraph 11 is binding on the parties to the referral
15
in the same way, and to the same extent, as a decision on a preliminary issue
in an appeal.
      (2)
The officer of Revenue and Customs conducting the enquiry must take the
determination into account—
(a)
in reaching conclusions on the enquiry, and
20
(b)
in the formulation of any amendments of the return that may be
required to give effect to those conclusions.
      (3)
The question determined may not be reopened on an appeal, except to the
extent that it could be reopened if it had been determined as a preliminary
issue in that appeal.
25
Tribunal to which referrals are made
15    (1)
Where the question to be referred under paragraph 11 is of the market value
of any single-dwelling interest, the referral is to be made to—
(a)
the Upper Tribunal, if the land is in England and Wales;
(b)
the Lands Tribunal for Scotland, if the land is in Scotland;
30
(c)
the Lands Tribunal for Northern Ireland, if the land is in Northern
Ireland.
      (2)
In any other case a referral under paragraph 11 is to be made to—
(a)
the First-tier Tribunal, or
(b)
where determined by or under Tribunal Procedure Rules, the Upper
35
Tribunal.
      (3)
References to “the tribunal” in paragraphs 11 and 13 are to be read
accordingly.
Completion of enquiry
16    (1)
An enquiry under paragraph 8 is completed when an officer of Revenue and
40
Customs informs the relevant person by a notice (a “closure notice”) that the
enquiry is complete and states the conclusions reached in the enquiry.

Finance Bill
Schedule 33 — Annual tax on enveloped dwellings: returns, enquiries, assessments and appeals
Part 4 — HMRC determination where no return delivered
412

      (2)
A closure notice must either—
(a)
state that in the officer’s opinion no amendment of the return is
required, or
(b)
make the amendments of the return required to give effect to the
officer’s conclusions.
5
      (3)
A closure notice takes effect when it is issued.
Direction to complete enquiry
17    (1)
The relevant person may apply to the tribunal for a direction that a closure
notice is to be given within a specified period.
      (2)
The tribunal hearing the application must give a direction unless satisfied
10
that HMRC have reasonable grounds for not giving a closure notice within
that period.
      (3)
In this paragraph “the tribunal” means—
(a)
the First-tier Tribunal, or
(b)
where determined by or under Tribunal Procedure Rules, the Upper
15
Tribunal.
Part 4
HMRC determination where no return delivered
Determination of tax chargeable if no return delivered
18    (1)
This paragraph applies where condition A or condition B is met.
20
      (2)
Condition A is that—
(a)
an officer of Revenue and Customs has reason to believe that a
person (“P”) is chargeable to tax for a chargeable period in respect of
a single-dwelling interest,
(b)
P has not made an annual tax on enveloped dwellings return for the
25
period in respect of the interest, and
(c)
the relevant filing date has passed.
      (3)
Condition B is that—
(a)
an officer of Revenue and Customs has reason to believe that
additional tax is payable by a person (“P”) under section 163(2) for a
30
chargeable period in respect of a single-dwelling interest,
(b)
P has not made a return of the adjusted chargeable amount for the
period in respect of the interest, and
(c)
the relevant filing date has passed.
      (4)
“The relevant filing date” means the date by which the officer believes a
35
return was required to be delivered.
      (5)
The officer may make a determination (an “HMRC determination”) to the
best of the officer’s information and belief of the amount of tax to which P is
chargeable for the period concerned with respect to the interest.
      (6)
Notice of the determination must be given to P and must state the date on
40
which it is issued.

Finance Bill
Schedule 33 — Annual tax on enveloped dwellings: returns, enquiries, assessments and appeals
Part 5 — HMRC assessments
413

      (7)
No HMRC determination may be made more than 4 years after the end of
the chargeable period to which it relates.
Determination to have effect as a self assessment
19    (1)
A determination under paragraph 18 has effect for enforcement purposes as
if it were a self assessment made by P.
5
      (2)
In sub-paragraph (1) “for enforcement purposes” means for the purposes of
section 165 and Schedule 12 to FA 2003 (collection and recovery of tax etc).
      (3)
Nothing in this paragraph affects any liability of a person to a penalty for
failure to deliver a return.
Determination superseded by actual self assessment
10
20    (1)
If after an HMRC determination has been made P delivers a return for the
chargeable period with respect to the interest in question, the self assessment
included in that return supersedes the determination.
      (2)
Sub-paragraph (1) does not apply to a return delivered—
(a)
more than 4 years after the power to make the determination first
15
became exercisable, or
(b)
more than 12 months after the date of the determination,

whichever is the later.
      (3)
Where—
(a)
proceedings have been begun for the recovery of any tax charged by
20
an HMRC determination, and
(b)
before the proceedings are concluded the determination is
superseded by a self assessment,

the proceedings may be continued as if they were proceedings for the
recovery of so much of the tax charged by the self assessment as is due and
25
payable and has not yet been paid.
Part 5
HMRC assessments
Assessment where loss of tax discovered
21    (1)
Sub-paragraph (2) applies if an officer of Revenue and Customs discovers
30
that—
(a)
an amount of tax that ought to have been assessed under this Part of
this Act as tax chargeable on a person for a chargeable period with
respect to a single-dwelling interest has not been assessed,
(b)
an assessment of the tax chargeable on a person for a chargeable
35
period in respect of a single-dwelling interest is or has become
insufficient, or
(c)
relief has been given that is or has become excessive.
      (2)
An officer of Revenue and Customs may make an assessment (a “discovery
assessment”) in the amount or further amount that ought in the officer’s
40
opinion to be charged in order to make good to the Crown the loss of tax.

Finance Bill
Schedule 33 — Annual tax on enveloped dwellings: returns, enquiries, assessments and appeals
Part 5 — HMRC assessments
414

      (3)
The functions of an officer of Revenue and Customs under this paragraph
are also exercisable by the Commissioners for Her Majesty’s Revenue and
Customs.
Assessment to recover excessive repayment of tax
22    (1)
If an amount of tax has been, but ought not to have been, repaid to a person
5
that amount may be assessed and recovered as if it were unpaid tax.
      (2)
If the repayment was made with interest, the amount assessed and
recovered may include the amount of interest that ought not to have been
paid.
References to “the taxpayer”
10
23
In paragraphs 24 to 27 “taxpayer” means—
(a)
in relation to an assessment under paragraph 21, the chargeable
person;
(b)
in relation to an assessment under paragraph 22, the person
mentioned in paragraph 22(1).
15
Conditions for making assessment where return has been delivered
24    (1)
If the taxpayer has delivered a return in respect of the interest in question for
the chargeable period in question, an assessment under paragraph 21 or 22
may only be made in the two cases specified in sub-paragraphs (2) and (3).

See also the further restriction in sub-paragraph (7).
20
      (2)
The first case is where the situation mentioned in paragraph 21(1) or 22(1)
was brought about carelessly or deliberately by—
(a)
the taxpayer,
(b)
a person acting on behalf of the taxpayer, or
(c)
a person who was a partner of the taxpayer at the relevant time.
25
      (3)
The second case is where it could not reasonably have been expected that an
officer of Revenue and Customs in possession of the information made
available to HMRC before the relevant time would be aware at the relevant
time of the situation mentioned in paragraph 21(1) or 22(1).
      (4)
In sub-paragraph (3) “the relevant time” means the time HMRC—
30
(a)
ceased to be entitled to give a notice of enquiry into the return, or
(b)
completed their enquiries into the return.
      (5)
For this purpose information is regarded as made available to HMRC if—
(a)
it is contained in a return delivered by the taxpayer,
(b)
it is contained in any documents produced or information provided
35
to an officer of Revenue and Customs for the purposes of an enquiry
into any such return,
(c)
it is information the existence and relevance of which officers of
Revenue and Customs could reasonably have been expected to infer
from information made available as mentioned in paragraph (a) or
40
(b), or
(d)
it is information the existence and relevance of which was notified to
an officer of Revenue and Customs by the taxpayer or a person acting
on the taxpayer’s behalf.