Childcare Payments Bill (HL Bill 56)

any warning notice given to the person in respect of the assessment
before the notice of appeal is given is of no effect.

46 Penalties for dishonestly obtaining top-up payments, etc

(1) A person (“P”) is liable to a penalty under this section if—

(a) 5for the purpose of obtaining a relevant payment for P or another (see
subsection (2)), P does, or omits to do, any act, and

(b) P’s conduct involves dishonesty.

(2) The following payments are “relevant payments”—

(a) a top-up payment;

(b) 10a payment from a childcare account.

(3) The amount of the penalty may not exceed—

(a) £3,000, or

(b) the sum of any relevant amounts obtained as mentioned in subsection
(1),

15whichever is greater.

(4) In subsection (3) “relevant amount” means—

(a) in the case of a top-up payment, the amount of the payment, and

(b) in the case of a payment from a childcare account, an amount equal to
the top-up element of the payment.

20(For provision about calculating the top-up element of a payment, see section
21.)

(5) Regulations may amend subsection (3)(a) so as to substitute a different amount
for the amount for the time being specified there.

(6) Where—

(a) 25a body corporate is liable to a penalty under this section, and

(b) the liability is attributable (wholly or partly) to the dishonesty of a
person falling within subsection (7),

that person (as well as the body corporate) is liable to a penalty under this
section.

(7) 30The persons are—

(a) a director, manager, secretary or similar officer of the body corporate;

(b) any person who was purporting to act in such a capacity.

(8) Where the affairs of a body corporate are managed by its members, subsection
(6) applies in relation to the acts and defaults of a member, in connection with
35that management, as if the member were a director of the body corporate.

(9) Where—

(a) a Scottish firm is liable to a penalty under this section, and

(b) the liability is attributable (wholly or partly) to the dishonesty of a
partner of the firm or a person purporting to act as such a partner,

40that person (as well as the firm) is liable to a penalty under this section.

47 Assessment and enforcement of penalties

(1) Where a person becomes liable to a penalty under this Act—

(a) HMRC may assess the penalty, and

(b) if they do so, they must notify the person.

(2) No assessment of a penalty may be made under this section after—

(a) the end of the period specified in subsection (3), or

(b) 5if earlier, the end of the period of 12 months beginning with the day on
which HMRC first believed, or had reasonable grounds for believing,
that the person was liable to the penalty.

(3) The period referred to in subsection (2)(a) is—

(a) the period of 4 years beginning with the day on which the person
10became liable to the penalty, or

(b) in a case where the person became liable to the penalty as a result of the
person’s dishonesty, the period of 20 years beginning with that day.

(4) Where a person is notified of an assessment under this section, the penalty
payable as a result of the assessment must be paid—

(a) 15in a case where the person does not apply for a review of the penalty
within the period specified in section 57(2)(a), before the end of that
period,

(b) in a case where the person applies for a review of the penalty but does
not give notice of an appeal against the penalty, before the end of the
20period in which notice of such an appeal could have been given, or

(c) in a case where notice of such an appeal has been given, on the day on
which the appeal is determined or withdrawn.

(5) A penalty under this Act may be enforced as if it were income tax charged in
an assessment and due and payable.

25See also section 53 (recovery of debts from childcare accounts).

See also section 53 (recovery of debts from childcare accounts).

48 Double jeopardy

A person is not liable to a penalty under this Act in respect of anything in
respect of which the person has been convicted of an offence.

30Other enforcement powers

49 Disqualification orders

(1) HMRC may make a disqualification order in relation to a person if condition
A, B or C is met.

(2) Condition A is that, on more than one occasion in the period of 4 years ending
35with the day on which the disqualification order is made, the person—

(a) has become liable to a penalty under this Act, and

(b) has been notified of the penalty.

(3) Condition B is that—

(a) the person (“P”) has done, or omitted to do, any act for the purpose of
40obtaining a relevant payment for P or another (see subsection (4)),

(b) P’s conduct involved dishonesty, and

(c) as a result P has been convicted of an offence or has been notified of a
penalty under section 46.

(4) The following payments are “relevant payments”—

(a) a top-up payment;

(b) a payment from a childcare account.

(5) Condition C is that—

(a) 5the person (“P”) has done, or omitted to do, any act for the purpose of
obtaining a relevant benefit for P or another (see subsection (6)),

(b) P’s conduct involved dishonesty, and

(c) as a result P has been convicted of an offence.

(6) “Relevant benefit” means any benefit or other payment of a description
10specified in regulations.

(7) Where a disqualification order has effect in relation to a person—

(a) the person may not open a childcare account,

(b) no qualifying payments may be made into any childcare account held
by the person, and

(c) 15any declaration of eligibility made by the person for an entitlement
period for which the order has effect is not valid.

(8) A disqualification order has effect for the period specified in the order.

(9) But a disqualification order may not have effect for a period longer than 3
years.

(10) 20If HMRC make a disqualification order under this section, HMRC must give a
copy of the order to—

(a) the person in relation to whom the order is made, and

(b) any person or body which provides childcare accounts.

(11) HMRC may revoke a disqualification order made under this section.

50 25Power to exclude childcare from being qualifying childcare

(1) This section applies if—

(a) a person has done, or omitted to do, any act for the purpose of
obtaining a payment from a childcare account,

(b) the person’s conduct involved dishonesty, and

(c) 30as a result the person has been convicted of an offence or has been
notified of a penalty under section 46.

(2) HMRC may direct that any childcare provided by the person is not qualifying
childcare for the purposes of this Act.

(3) A direction under this section has effect for 12 months beginning with the day
35on which it is made.

(4) Regulations may amend subsection (3) so as to substitute a different period for
the period for the time being specified there.

(5) Where a direction under this section is made in relation to a person, the
direction also applies in relation to—

(a) 40any body corporate of which the person is a director or other officer,

(b) any body corporate of which the person is a member, if the affairs of the
body corporate are managed by its members, and

(c) any Scottish firm of which the person is a partner.

(6) HMRC must—

(a) give a copy of a direction under this section to—

(i) the person or persons in relation to whom it applies, and

(ii) any person or body which provides childcare accounts, and

(b) 5publish the direction in the way appearing to HMRC to be best
calculated to bring it to the attention of those who may be affected by it.

(7) HMRC may revoke a direction made under this section.

51 Power to charge interest

(1) Where—

(a) 10an amount has been assessed under section 41 or 47 as payable to
HMRC by a person under this Act, and

(b) some or all of the amount has not been paid to HMRC by the time
specified in section 41(5) or 47(4) (as the case may be),

HMRC may give the person a notice in writing requiring the person to pay
15interest on the amount that has not been paid (“the relevant debt”).

(2) If a notice is given to a person under this section, the relevant debt carries
interest for a period which—

(a) begins with the late payment interest start date (which may be earlier
than the day on which the notice is given), and

(b) 20ends with the specified day or, if earlier, the day on which the relevant
debt is paid.

(3) “The late payment interest start date” means—

(a) in the case of an amount assessed under section 41, the day on which
the person became liable to pay it;

(b) 25in the case of a penalty, the day after the last day of the period within
which the penalty is required to be paid in accordance with section
47(4).

(4) “The specified day”, in relation to a notice given to a person under this section,
means—

(a) 30the day specified in the notice, or

(b) where on that day the relevant debt has not been paid, the day specified
in a further notice given to the person by HMRC.

(5) The specified day must fall within the period of 6 months beginning with the
day on which the notice is given.

(6) 35Interest under this section is payable at the late payment interest rate.

(7) The “late payment interest rate” is—

(a) the rate provided for in regulations made by the Treasury under section
103(1) of the Finance Act 2009, or

(b) if there is more than one such rate, the lowest such rate.

(8) 40Where two or more persons—

(a) have been notified of an assessment under section 41 in respect of the
same amount, and

(b) have been given a notice under this section,

each of those persons is jointly and severally liable to pay interest on the
45relevant debt.

52 Deduction of recoverable amounts from tax credit awards

(1) This section applies where, as a result of a review of, or an appeal against, a tax
credits decision—

(a) a person is required to pay an amount (“the relevant debt”) to HMRC
5under section 35 or 36, and

(b) an amount of tax credit (“the award”) is payable to the person or to the
person and the person’s partner jointly.

(2) The relevant debt may be deducted from the award before it is paid.

(3) The requirement to pay the relevant debt is discharged to the extent that it is
10deducted from the award under this section.

(4) In this section “tax credits decision” means a decision not to make an award of
a tax credit or to terminate such an award.

(5) This section ceases to have effect when the repeal of Part 1 of the Tax Credits
Act 2002 made by Schedule 14 to the Welfare Reform Act 2012 has fully come
15into force.

53 Recovery of debts from childcare accounts

(1) This section applies where—

(a) an amount has been assessed under section 41 or 47 as payable to
HMRC under this Act by a person who holds a childcare account in
20respect of a child,

(b) the assessment was made as a result of something done, or omitted to
be done, in connection with that account or any other childcare account
which the person has held in respect of the child, and

(c) some or all of the amount assessed (“the relevant debt”) has not been
25paid to HMRC by the time specified in section 41(5) or 47(4) (as the case
may be).

(2) HMRC may direct the account provider to pay a specified amount from the
account to HMRC in order to discharge the whole or part of the relevant debt.

“Specified” means specified in the direction.

30“Specified” means specified in the direction.

(3) The account provider must comply with a direction given under this section.

(4) Subsections (5) to (8) apply in a case where the relevant debt consists of an
amount of recoverable top-up payments.

In this section an “amount of recoverable top-up payments” means an amount
35which a person is liable to pay HMRC under any of sections 35 to 39 or section
40(1) (recovery of top-up payments).

In this section an “amount of recoverable top-up payments” means an amount
which a person is liable to pay HMRC under any of sections 35 to 39 or section
40(1) (recovery of top-up payments).

(5) 40HMRC may make a direction under this section only if the childcare account is
not active at the time of the direction (see section 17(3)).

(6) Where the account provider makes a payment to HMRC in accordance with
the direction, the account provider must make a payment from the childcare
account to the account-holder of the appropriate qualifying amount.

(7) 45“The appropriate qualifying amount”, in relation to a direction under this
section, is the amount which, if paid into a childcare account, would entitle the
account-holder to a top-up payment equal to—

(a) the amount specified in the direction, or

(b) if that amount is greater than the top-up element of the funds held in
the account, the top-up element of those funds.

(For provision about calculating the top-up element of funds held in an
account, see section 21.)

(8) 5If the amount specified in the direction is greater than the top-up element of the
funds, the difference is to be deducted from the appropriate qualifying amount
by the account provider and paid to HMRC in accordance with the direction.

(9) Subsections (10) to (13) apply in a case where the relevant debt consists of any
amount other than an amount of recoverable top-up payments.

(10) 10HMRC may not specify in the direction an amount which is greater than the
relevant percentage of the funds held in the account.

(11) The “relevant percentage” is the percentage given by—

(12) 15Where the account provider makes a payment to HMRC in accordance with
the direction, the account provider must make a payment from the childcare
account to HMRC of the corresponding top-up amount.

(13) “The corresponding top-up amount”, in relation to a payment made in
accordance with a direction under this section, is R% of the amount of the
20payment, where R is the percentage for the time being specified in section 1(4).

(14) If a direction is made under this section both in respect of an amount of
recoverable top-up payments and in respect of any other amount—

(a) any amount payable to HMRC in accordance with the direction made
in respect of that other amount is to be set off against the amount
25payable to the account-holder by virtue of subsection (6), and

(b) any amount payable to HMRC by virtue of subsection (12) is to be set
off against the amount payable to HMRC in accordance with the
direction made in respect of the amount of recoverable top-up
payments.

(15) 30If the Commissioners provide childcare accounts, a direction under this section
may not be made in respect of any fees charged in connection with a childcare
account in accordance with section 15(8).

(16) This section does not affect any other power of HMRC to recover amounts that
are due and payable to HMRC.

54 35Set-off

(1) This section applies where—

(a) an amount (“the relevant debt”) is due and payable to HMRC under
this Act by a person who holds a childcare account in respect of a child,

(b) the childcare account is not active (see section 17(3)), and

(c) 40the relevant debt consists of an amount which the person is liable to pay
HMRC under any of sections 35 to 39 or section 40(1) (recovery of top-
up payments) as a result of something done, or omitted to be done, in
connection with that account or any other childcare account which the
person has held in respect of the child.

(2) If the account-holder makes a withdrawal from the childcare account, the
amount payable to HMRC under section 22 (the “corresponding top-up
amount” of the withdrawal) is to be set off against the relevant debt.

(3) In a case where the whole or part of the corresponding top-up amount of a
5withdrawal (“the set-off amount”) is set off against the relevant debt, so much
of the withdrawal as generated the set-off amount is to be ignored for the
purposes of section 19(8).

55 Order in which payments are taken to discharge debts

(1) This section applies where an amount (a “relevant debt”) is due and payable to
10HMRC under this Act by a person.

(2) For the purposes of this section—

(a) a relevant debt is within this paragraph if it consists of a penalty or
other amount not falling with paragraph (b) or (c),

(b) a relevant debt is within this paragraph if it consists of an amount of
15recoverable top-up payments, and

(c) a relevant debt is within this paragraph if it consists of an amount of
interest payable under section 51.

(3) In determining whether a relevant debt is an amount of recoverable top-up
payments for the purposes of section 53 or 54, any amount paid to HMRC by
20the person in the discharge of a relevant debt is to be taken to have discharged
a relevant debt within paragraph (b) of subsection (2) only if any relevant debt
within paragraph (a) of that subsection has been discharged.

(4) Any amount paid to HMRC by the person in the discharge of a relevant debt is
to be taken to have discharged any relevant debt within paragraph (c) of
25subsection (2) only if any relevant debt within paragraph (a) or (b) of that
subsection has been discharged.

(5) Any amount paid to HMRC in accordance with a direction under section 53
made in respect of a relevant debt within paragraph (b) or (c) of subsection (2)
is to be taken to have discharged any relevant debt within paragraph (c) only
30if any relevant debt within paragraph (b) has been discharged.

(6) In this section an “amount of recoverable top-up payments” means an amount
which a person is liable to pay HMRC under any of sections 35 to 39 or section
40(1) (recovery of top-up payments).

Reviews and appeals

56 35Appealable decisions

(1) A person who is affected by an appealable decision (see subsection (3)) may
appeal against the decision.

(2) But a person may not appeal against any decision unless—

(a) the person has applied under section 57 for a review of the decision,
40and

(b) either—

(i) the person has been notified of the conclusion on the review, or

(ii) the person has not been notified of the conclusion on the review
and the period for notifying the person of that conclusion has
ended.

(3) The following decisions are “appealable decisions”—

(a) 5a decision not to open a childcare account;

(b) a decision that a declaration of eligibility is not valid;

(c) a decision as to whether or not to make or revoke an account restriction
order under section 24;

(d) a decision to give a person a notice under section 26;

(e) 10a decision to give a person a disqualification notice under section 34;

(f) a decision to make an assessment, or to make an assessment of a
particular amount, under section 41;

(g) a decision to assess a penalty, or to assess a penalty of a particular
amount, under section 47;

(h) 15a decision to make a disqualification order under section 49;

(i) a decision to make a direction under section 50;

(j) a decision to give a person a notice under section 51;

(k) a decision to give a direction under section 53.

(4) Where a person is notified of an appealable decision under this Act, the
20notification must include details of the person’s right to apply for a review of
the decision and to appeal against the decision.

(5) The effect of an appealable decision falling within paragraph (d), (f), (g), (j) or
(k) of subsection (3) is suspended by—

(a) the making of an application for a review of the decision, or

(b) 25the making of an appeal against the decision.

(6) The effect of any other appealable decision is not suspended by the making of
such an application or appeal.

57 Review of decisions

(1) A person who is affected by an appealable decision (“the applicant”) may
30apply to the Commissioners for Her Majesty’s Revenue and Customs for a
review of the decision.

(2) The application must be made—

(a) within the period of 30 days beginning with the day on which the
applicant was notified of the decision, or

(b) 35if the period for making the application has been extended under
section 58, within the extended period.

(3) The application must—

(a) be made in writing,

(b) contain sufficient information to identify the applicant and the
40decision, and

(c) set out the reasons for seeking a review of the decision.

(4) If an application for a review of a decision is made to the Commissioners in
accordance with this section, the Commissioners must review the decision.

(5) On a review under this section, the Commissioners may—

(a) uphold the decision,

(b) vary the decision, or

(c) cancel the decision.

(6) If the applicant makes any representations to the Commissioners at a stage
5which gives the Commissioners a reasonable opportunity to consider them, the
Commissioners must take account of them when carrying out the review.

(7) Where—

(a) the Commissioners notify the applicant of further information or
evidence which they may need for carrying out the review, and

(b) 10the information or evidence is not provided to them within the period
of 15 days beginning with the day on which the notice is given,

the review may proceed without that information or evidence.

(8) The Commissioners must notify the applicant of the matters set out in
subsection (9) within—

(a) 15the period of 30 days beginning with the day on which the
Commissioners received the application for the review,

(b) if the applicant has been given a notice under subsection (7), the period
of 45 days beginning with that day, or

(c) such other period as the applicant and the Commissioners may agree.

(9) 20The matters referred to in subsection (8) are—

(a) the conclusion on the review,

(b) if the conclusion is that the decision is varied, details of the variation,
and

(c) the reasons for the conclusion.

(10) 25If the Commissioners do not comply with subsection (8), the review is to be
treated as having concluded that the decision is upheld.

In such a case, the Commissioners must notify the applicant of that conclusion.

In such a case, the Commissioners must notify the applicant of that conclusion.

58 Extension of time limit for applications for review

(1) 30A person who wishes to make an application for a review under section 57 may
apply to the Commissioners for an extension of the period for making the
application.

(2) An application under this section—

(a) must be made before the end of the period of 6 months beginning with
35the day after the last day of the period mentioned in section 57(2)(a)
(“the standard period”), and

(b) must set out the reasons for seeking the extension.

(3) The Commissioners may grant an extension under this section if they are
satisfied that—

(a) 40due to special circumstances, it was not practicable for the person to
make the application under section 57 within the standard period, and

(b) it is reasonable in all the circumstances to grant the extension.

(4) If an application under this section is refused, it may not be renewed.

59 Exercise of right of appeal

(1) An appeal under section 56 is to the appropriate tribunal.

(2) “The appropriate tribunal” means—

(a) the First-tier Tribunal, or

(b) 5in Northern Ireland, the appeal tribunal.

(3) “Appeal tribunal” means an appeal tribunal constituted under Chapter 1 of
Part 2 of the Social Security (Northern Ireland) Order 1998 (S.I. 1998/1506S.I. 1998/1506 (N.I.
10)).

(4) Regulations may provide for any provision contained in or made under the
10following legislation to apply in relation to appeals under section 56, with such
modifications as may be specified in regulations—

(a) Chapter 2 of Part 1 of the Social Security Act 1998 (social security
appeals: Great Britain);

(b) Chapter 2 of Part 2 of the Social Security (Northern Ireland) Order 1998
15(social security appeals: Northern Ireland);

(c) section 54 of the Taxes Management Act 1970 (settling of appeals by
agreement).

60 Powers of tribunal

(1) This section applies where a person is appealing to the Tribunal under section
2056 against an appealable decision.

(2) In a case where the appealable decision is a decision under section 47 to assess
a penalty, or to assess a penalty of a particular amount, the Tribunal may do
any of the following—

(a) uphold the penalty;

(b) 25set aside the penalty;

(c) substitute for the penalty a penalty of an amount decided by the
Tribunal.

(3) In any other case, the Tribunal must either—

(a) dismiss the appeal, or

(b) 30quash the whole or part of the decision to which the appeal relates.

(4) The Tribunal may act as mentioned in subsection (3)(b) only to the extent that
it is satisfied that the decision was wrong on one or more of the following
grounds—

(a) that the decision was based, wholly or partly, on an error of fact;

(b) 35that the decision was wrong in law.

(5) If the Tribunal quashes the whole or part of a decision, it may either—

(a) refer the matter back to HMRC with a direction to reconsider and make
a new decision in accordance with its ruling, or

(b) substitute its own decision for that of HMRC.

40This is subject to section 61(8).

(6) The Tribunal may not direct HMRC to take any action which they would not
otherwise have the power to take in relation to the decision.

(7) A decision of the Tribunal made by virtue of this section has the same effect as,
and may be enforced in the same manner as, a decision of HMRC.