Finance Bill (HL Bill 123)

continued    Part 9 continued    

revenue nature of the tax year 2020-21 (irrespective of its treatment for
accounting purposes).

(4)But sub-paragraph (3) does not apply to an amount of a coronavirus support
payment made under the self-employment income support scheme in
5respect of a partner of a firm where the amount is distributed amongst the
partners (rather than being retained by the partner).

(5)An amount of a coronavirus support payment made under the self-
employment income support scheme in respect of a partner of a firm that is
retained by the partner (rather than being distributed amongst the partners)
10is not to be treated as a receipt of the firm.

(6)Accordingly—

(a)the receipt is not to be included in the calculation of the firm’s profits
for the purposes of determining the share of profits or losses for each
partner of the firm (see sections 849 to 850E of ITTOIA 2005 and
15sections 1259 to 1265 of CTA 2009), and

(b)the receipt is then to be added to the partner’s share.

Exemptions, reliefs and deductions

4(1)An amount of a coronavirus support payment that relates only to mutual
activities of a business that carries on a mutual trade is to be treated as if it
20were income arising from those activities (and accordingly the amount is not
taxable).

(2)A coronavirus support payment is to be ignored when carrying out the
calculation—

(a)in section 528(1) of ITA 2007 (incoming resources limit for charitable
25exemptions);

(b)in section 482(1) of CTA 2010 (incoming resources limit for charitable
companies);

(c)in section 661CA(1) of CTA 2010 (income condition for community
amateur sports clubs).

(3)30A coronavirus support payment made under an employment-related
scheme is to be ignored when carrying out the calculation—

(a)in section 662(2) of CTA 2010 (exemption from corporation tax for
UK trading income of community amateur sports clubs);

(b)in section 663(2) of that Act (exemption from corporation tax for UK
35property income community amateur sports clubs).

(4)No relief under Chapter 1 of Part 6A of ITTOIA 2005 (trading allowance) is
given to an individual on an amount of a coronavirus support payment
made under the self-employment income support scheme brought into
account under paragraph 1(2) as profits of that tax year.

(5)40For the purposes of that Part, such an amount is to be ignored when
calculating the individual’s “relevant income” for that tax year under
Chapter 1 of that Part.

(6)Neither section 57 of ITTOIA 2005 nor section 61 of CTA 2009 (deductions
for pre-trading expenses) (including as they apply by virtue of sections 272
45and 272ZA of ITTOIA 2005 and section 210 of CTA 2009) apply to
employment costs where an amount of a coronavirus support payment
made under an employment-related scheme relates to those costs.

Charge where employment costs deductible by another

5(1)Income tax is charged on an amount of a coronavirus support payment
made under an employment-related scheme if conditions A and B are met.

(2)Condition A is that the amount is neither brought into account under
5paragraph 1(2) in calculating the profits of a business carried on by the
person entitled to the payment as an employer nor treated, by virtue of
paragraph 2(3) or (4), as a post-cessation receipt arising from the carrying on
of such a business.

(3)Condition B is that expenses incurred by another person in respect of the
10same employment costs which are the subject of the coronavirus support
payment and to which the amount relates are deductible—

(a)in calculating the profits of a business carried on by that other person
(for income or corporation tax purposes), or

(b)in calculating the liability of that other person to tax charged under
15section 242 or 349 of ITTOIA 2005 or section 188 or 280 of CTA 2009
(post-cessation receipts).

(4)Tax is charged under sub-paragraph (1) on the whole of the amount to which
that sub-paragraph applies.

(5)The person liable for tax charged under sub-paragraph (1) is the person
20entitled to the coronavirus support payment as an employer.

(6)Section 3(1) of CTA 2009 (exclusion of charge to income tax) does not apply
to an amount of a coronavirus support payment that is charged under this
paragraph.

Charge where no business carried on

6(1)25Tax is charged on an amount of a coronavirus support payment, other than
a payment made under an employment-related scheme or the self-
employment income support scheme, if—

(a)the amount is neither brought into account under paragraph 1(2) in
calculating the profits of a business nor treated as a post-cessation
30receipt by virtue of paragraph 2(3) or (4), and

(b)at the time the coronavirus support payment was received, the
recipient did not carry on a business whose profits are charged to tax
and to which the payment could be referable.

(2)In this paragraph “tax” means—

(a)35corporation tax, in the case of a company that (apart from this
paragraph) is chargeable to corporation tax, or to any amount
chargeable as if it was corporation tax, or

(b)income tax, in any other case.

(3)Tax is charged under sub-paragraph (1) on the whole of the amount to which
40that sub-paragraph applies.

(4)The person liable for tax charged under sub-paragraph (1) is the recipient of
that amount.

(5)Where income tax is charged under sub-paragraph (1), sections 527 and 528
of ITA 2007 (exemption and income condition for charitable trusts) have

effect as if sub-paragraph (1) were a provision to which section 1016 of that
Act applies.

(6)Where corporation tax is charged under sub-paragraph (1), sections 481 and
482 of CTA 2010 (exemption and income condition for charitable companies)
5have effect as if sub-paragraph (1) were a provision to which section 1173 of
that Act applies.

Modification of the Tax Acts

7The Treasury may by regulations modify the application of any provision of
the Tax Acts that affects (or that otherwise would affect) the treatment of—

(a)10receipts brought into account under paragraph 1(2),

(b)amounts treated as post-cessation receipts under paragraph 2(3) or
(4), or

(c)amounts charged under paragraph 5(1) or 6(1).

Charge if person not entitled to coronavirus support payment

8(1)15A recipient of an amount of a coronavirus support payment is liable to
income tax under this paragraph if the recipient is not entitled to the amount
in accordance with the scheme under which the payment was made.

(2)But sub-paragraph (1) does not apply to an amount of a coronavirus support
payment made under a coronavirus business support grant scheme or the
20coronavirus statutory sick pay rebate scheme.

(3)For the purposes of this Schedule, references to a person not being entitled
to an amount include, in the case of an amount of a coronavirus support
payment made under the coronavirus job retention scheme, a case where the
person ceases to be entitled to retain the amount after it was received—

(a)25because of a change in circumstances, or

(b)because the person has not, within a reasonable period, used the
amount to pay the costs which it was intended to reimburse.

(4)Income tax becomes chargeable under this paragraph—

(a)in a case where the person was entitled to an amount of a
30coronavirus support payment paid under the coronavirus job
retention scheme but subsequently ceases to be entitled to retain it,
at the time the person ceases to be entitled to retain the amount, or

(b)in any other case, at the time the coronavirus support payment is
received.

(5)35The amount of income tax chargeable under this paragraph is the amount
equal to so much of the coronavirus support payment—

(a)as the recipient is not entitled to, and

(b)as has not been repaid to the person who made the coronavirus
support payment.

(6)40Where income tax which is chargeable under this paragraph is the subject of
an assessment (whether under paragraph 9 or otherwise)—

(a)paragraphs 1 to 6 do not apply to the amount of the coronavirus
support payment that is the subject of the assessment,

(b)that amount is not, for the purposes of Step 1 of the calculation in
45section 23 of ITA 2007 (calculation of income tax liability), to be

treated as an amount of income on which the taxpayer is charged to
income tax (but see paragraph 10 which makes further provision
about the application of that section), and

(c)that amount is not to be treated as income of a company for the
5purposes of section 3 of CTA 2009 (and accordingly the exclusion of
the application of the provisions of the Income Tax Acts to the
income of certain companies does not apply to the receipt of an
amount charged under this paragraph).

(7)No loss, deficit, expense or allowance may be taken into account in
10calculating, or may be deducted from or set off against, any amount of
income tax charged under this paragraph.

(8)In calculating profits or losses for the purposes of corporation tax, no
deduction is allowed in respect of the payment of income tax charged under
this paragraph.

(9)15For the purposes of this paragraph and paragraphs 9(4) and 14, a firm is not
to be regarded as receiving an amount of a coronavirus support payment
made under the self-employment income support scheme in respect of a
partner of that firm that is retained by the partner (rather than being
distributed amongst the partners).

20Assessments of income tax chargeable under paragraph 8

9(1)If an officer of Revenue and Customs considers (whether on the basis of
information or documents obtained by virtue of the exercise of powers
under Schedule 36 to FA 2008 or otherwise) that a person has received an
amount of a coronavirus support payment to which the person is not
25entitled, the officer may make an assessment in the amount which ought in
the officer’s opinion to be charged under paragraph 8.

(2)An assessment under sub-paragraph (1) may be made at any time, but this
is subject to sections 34 and 36 of TMA 1970.

(3)Parts 4 to 6 of TMA 1970 contain other provisions that are relevant to an
30assessment under sub-paragraph (1) (for example, section 31 makes
provision about appeals and section 59B(6) makes provision about the time
to pay income tax payable by virtue of an assessment).

(4)Where income tax is chargeable under paragraph 8 in relation to an amount
of a coronavirus support payment received by a firm—

(a)35an assessment (under sub-paragraph (1) or otherwise) may be made
on any of the partners in respect of the total amount of tax that is
chargeable,

(b)each of the partners is jointly and severally liable for the tax so
assessed, and

(c)40if the total amount of tax that is chargeable is included in a return
under section 8 of TMA 1970 made by one of the partners, the other
partners are not required to include the tax in returns made by them
under that section.

Calculation of income tax liability

10(1)45Section 23 of ITA 2007 (calculation of income tax liability) applies in relation
to a person liable to income tax charged under paragraph 8 as if that

paragraph were included in the lists of provisions in subsections (1) and (2)
of section 30 of that Act (amounts of tax added at step 7).

(2)For the purposes of paragraph 7(2) of Schedule 41 to FA 2008, a relevant
obligation relating to income tax charged under paragraph 8 of this Schedule
5relates to a tax year if the income tax became chargeable in that tax year.

(3)But this paragraph does not apply to a company to which paragraph 11
(companies chargeable to corporation tax) applies.

Calculation of tax liability: companies chargeable to corporation tax

11(1)This paragraph applies where a person liable to income tax charged under
10paragraph 8 is a company that is chargeable to corporation tax, or to any
amount chargeable as if it was corporation tax, in relation to a period within
which the income tax became chargeable.

(2)Part 5A of TMA 1970 (payment of tax) applies in relation to that company as
if—

(a)15the reference to “corporation tax” in subsection (1) of section 59D
(general rule as to when corporation tax is due and payable)
included income tax charged under paragraph 8 of this Schedule;

(b)an amount of income tax charged under paragraph 8 of this Schedule
were an amount within subsection (6) of section 59F (arrangements
20for paying tax on behalf of group members);

(c)any reference in section 59G (managed payment plans) to
“corporation tax” included income tax charged under paragraph 8 of
this Schedule.

(3)Part 9 of that Act (interest on overdue tax) applies in relation to that
25company as if—

(a)the references in section 86 (interest on overdue income tax and
capital gains tax) to “income tax” did not include income tax charged
under paragraph 8 of this Schedule;

(b)in subsection (1) of section 87A (interest on overdue corporation tax)
30the reference to “corporation tax” included income tax charged
under paragraph 8 of this Schedule.

(4)Schedule 18 to FA 1998 (company tax returns etc.) applies in relation to that
company as if—

(a)any reference in that Schedule to “tax”, other than the references in
35paragraph 2 of that Schedule (duty to give notice of chargeability),
included income tax charged under paragraph 8 of this Schedule,
and

(b)in paragraph 8(1) of that Schedule (calculation of tax payable), at the
end there were inserted—

40“Sixth step

Add any amount of income tax chargeable under
paragraph 8 of Schedule 16 to the Finance Act 2020.”

(5)But the modifications of that Schedule are to be ignored for the purposes of
the Corporation Tax (Instalment Payments) Regulations 1998 (S.I. 1998/
453175).

(6)Schedule 41 to FA 2008 applies in relation to that company as if —

(a)the references to “income tax” in paragraph 7(2) did not include
income tax charged under paragraph 8 of this Schedule;

(b)the reference to “corporation tax” in paragraph 7(3) included income
5tax charged under paragraph 8 of this Schedule;

(but see paragraph 13(5) of this Schedule which has the effect that paragraph
7 of that Schedule does not apply in certain circumstances).

(7)For the purposes of paragraph 7(3) of Schedule 41 to FA 2008 (as modified
by sub-paragraph (6)), a relevant obligation relating to income tax charged
10under paragraph 8 of this Schedule relates to an accounting period if the
income tax became chargeable in that period.

Notification of liability under paragraph 8

12(1)Section 7 of TMA 1970 (notice of liability to income tax and capital gains tax)
applies in relation to income tax chargeable under paragraph 8 as provided
15for in sub-paragraphs (2) to (5).

(2)Subsection (1) has effect as if paragraph (b) (and the “and” before it) were
omitted.

(3)Subsection (1) has effect as if the reference to “the notification period” were
to the period commencing on the day on which the income tax became
20chargeable and ending on the later of—

(a)the 90th day after the day on which this Act is passed, or

(b)the 90th day after the day on which the income tax became
chargeable.

(4)Subsection (3)(c) has effect as if after “child benefit charge” there were
25inserted “or to income tax under paragraph 8 of Schedule 16 to the Finance
Act 2020”.

(5)In relation to income tax chargeable under paragraph 8 in relation to an
amount of a coronavirus support payment received by a firm, the duty in
subsection (1) (as it has effect by virtue of sub-paragraphs (2) and (3)) is
30taken to have been complied with by each of the partners if one of the
partners has complied with it.

(6)The reference in section 36(1A)(b) of TMA 1970 (20 year period for
assessment in a case involving a loss of income tax) to a failure to comply
with an obligation under section 7 of that Act is not to be taken as including
35a failure arising by virtue of the modification of that section by this
paragraph, unless the failure is one to which paragraph 13 applies.

Penalty for failure to notify: knowledge of non-entitlement to payment

13(1)This paragraph applies to a failure of a person to notify, under section 7 of
TMA 1970 (as modified by paragraph 12), a liability to income tax
40chargeable under paragraph 8 where the person knew, at the time the
income tax first became chargeable, that the person was not entitled to the
amount of the coronavirus support payment in relation to which the tax is
chargeable.

(2)Schedule 41 to FA 2008 (failure to notify) applies to a failure described in
45sub-paragraph (1) as follows.

(3)The failure is to be treated as deliberate and concealed.

(4)Accordingly, paragraph 6 of that Schedule has effect as if the references to a
penalty for “a deliberate but not concealed failure” or for “any other case”
were omitted.

(5)5For the purposes of that Schedule (except in a case falling within paragraph
14 of this Schedule), the “potential lost revenue” is to be treated as being the
amount of income tax which would have been assessable on the person at
the end of the last day of the notification period (see paragraph 12(3)).

Penalties: partnerships

14(1)10This paragraph applies to a failure to notify, under section 7 of TMA 1970 (as
modified by paragraph 12), a liability to income tax chargeable under
paragraph 8 by a partner of a firm that received the amount of the
coronavirus support payment in relation to which the tax is chargeable.

(2)For the purposes of paragraph 13(1) of this Schedule, each partner is taken
15to know anything that any of the other partners knows.

(3)Where a partner would be liable to a penalty under Schedule 41 to FA 2008
(whether in a case falling within paragraph 13 or otherwise), the partner is
instead jointly and severally liable with the other partners to a single penalty
under that Schedule for the failures by each of them to notify.

(4)20In a case not falling within paragraph 13, if the failure of at least one of the
partners—

(a)was deliberate and concealed, the single penalty is to be treated as a
penalty for a deliberate and concealed failure;

(b)was deliberate but not concealed, the single penalty is to be treated
25as a penalty for a deliberate but not concealed failure.

(5)For the purposes of Schedule 41 to FA 2008, the “potential lost revenue” is to
be treated as being the amount of income tax which would have been
assessable on any one of the partners (see paragraph 9(4)(a))—

(a)in a case falling within paragraph 13, at the end of the last day of the
30notification period, or

(b)in any other case, at the end of 31 January following the tax year in
which the amount of coronavirus support payment was received by
the firm.

(6)Paragraph 22 of that Schedule (limited liability partnerships: members’
35liability) does not apply.

Liability of officers of insolvent companies

15(1)This paragraph—

(a)provides for an individual to be jointly and severally liable to the
Commissioners for Her Majesty’s Revenue and Customs for a
40liability of a company to income tax charged under paragraph 8,
where a notice under sub-paragraph (2) is given to the individual,
and

(b)applies paragraphs 10 to 15 and 17 of Schedule 13 (joint liability
notices: tax avoidance, tax evasion and repeated insolvency and non-
45payment) to such a notice.

(2)An officer of Revenue and Customs may give a notice under this sub-
paragraph to an individual if it appears to the officer that conditions A to D
are met.

(3)Condition A is that—

(a)5the company is subject to an insolvency procedure, or

(b)there is a serious possibility of the company becoming subject to an
insolvency procedure.

(4)Condition B is that the company is liable to income tax under paragraph 8.

(5)Condition C is that the individual was responsible for the management of
10the company at the time the income tax first became chargeable and the
individual knew (at that time) that the company was not entitled to the
amount of the coronavirus support payment in relation to which the tax is
chargeable.

(6)Condition D is that there is a serious possibility that some or all of the
15income tax liability will not be paid.

(7)For the purposes of sub-paragraph (5) the individual is responsible for the
management of a company if the individual—

(a)is a director or shadow director of the company, or

(b)is concerned (whether directly or indirectly) in, or takes part in, the
20management of the company.

(8)A notice under sub-paragraph (2) must—

(a)specify the company to which the notice relates;

(b)set out the reasons for which it appears to the officer that conditions
A to D are met;

(c)25specify the amount of the income tax liability;

(d)state the effect of the notice;

(e)offer the individual a review of the decision to give the notice and
explain the effect of paragraph 11 of Schedule 13 (right of review);

(f)explain the effect of paragraph 13 of that Schedule (right of appeal).

(9)30An individual who is given a notice under sub-paragraph (2) is jointly and
severally liable with the company (and with any other individual who is
given such a notice) to the amount of the income tax liability specified under
sub-paragraph (8)(c).

For provision under which the amount so specified may be varied, see—

(a)35paragraph 10 of Schedule 13 (modification etc),

(b)paragraphs 11 and 12 of that Schedule (review), and

(c)paragraphs 13 and 14 of that Schedule (appeal).

(10)Paragraphs 10 to 15 and 17 of Schedule 13 apply to a notice under sub-
paragraph (2) as they apply to a joint liability notice (see paragraph 1(2) of
40that Schedule) as if—

(a)the references in those paragraphs to “relevant conditions” were to
conditions A to D in this paragraph;

(b)sub-paragraphs (3) and (4) of paragraph 10 were omitted (and
references to sub-paragraph (3) in that paragraph were omitted);

(c)45in paragraph 10(6)(a), after “or (9)” there were inserted “or
paragraph 15(8)(c) of Schedule 16”;

(d)in paragraph 12(6)(b) after “5(9)” there were inserted “or paragraph
15(8)(c) of Schedule 16”.

(11)Expressions used in this paragraph and in Schedule 13 have the same
meaning in this paragraph as they have in that Schedule (subject to the
5modification made by sub-paragraph (10)(a)).