Child Trust Funds Bill

House of Commons

Session 2002 - 03
Internet Publications
Other Bills before Parliament

Child Trust Funds Bill

Child Trust Funds Bill
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Tax
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Relief from income tax and capital gains tax
(1)
Regulations may make provision for and in connection with giving relief
from—
(a)
income tax, and
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(b)
capital gains tax,

in respect of investments under child trust funds.
(2)
The regulations may, in particular, include—
(a)
provision for securing that losses are disregarded for the purposes of
capital gains tax where they accrue on the disposal of investments
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under child trust funds, and
(b)
provision dealing with anything which, apart from the regulations,
would have been regarded for those purposes as an indistinguishable
part of the same asset.
(3)
The regulations may specify how tax relief is to be claimed by persons entitled
15
to it or by account providers on their behalf.
(4)
The regulations may include provision requiring that, in circumstances
prescribed by the regulations, the person prescribed by the regulations is to
account to the Inland Revenue for—
(a)
tax from which relief has been given under the regulations, and
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(b)
income or gains arising in consequence of the giving of relief under the
regulations,

or for an amount determined in accordance with the regulations in respect of
such tax.
(5)
Provision made by virtue of this section may disapply, or modify the effect of,
25
any enactment relating to income tax or capital gains tax.
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Insurance companies and friendly societies
(1)
Subsections (1) and (5) to (9) of section 333B of the Income and Corporation
Taxes Act 1988 (c. 1) (involvement of insurance companies and friendly
societies with ISAs) have effect in relation to insurance companies and friendly
30
societies as if child trust fund business were section 333 business (within the
meaning of section 333B).
(2)
“Child trust fund business”, in relation to an insurance company or friendly
society, means business of the insurance company or friendly society that is
attributable to child trust funds.
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Information etc.
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Information from account providers etc.
(1)
Regulations may require, or authorise officers of the Inland Revenue to require,
any relevant person—
(a)
to make documents available for inspection on behalf of the Inland
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Revenue, or
(b)
to provide to the Inland Revenue any information,

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relating to, or to investments which are or have been held under, a child trust
fund.
(2)
The following are relevant persons—
(a)
anyone who is or has been the account provider in relation to the child
trust fund,
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(b)
the person by whom the child trust fund is or was held,
(c)
the person (if any) to whom a voucher was issued under section 5(1) in
respect of the child by whom the child trust fund is or was held,
(d)
the person who applied to open the child trust fund (unless it was
opened by the Inland Revenue),
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(e)
anyone who has given instructions with respect to the management of
the child trust fund, and
(f)
anyone entitled to child benefit in respect of the child
(3)
The regulations may include provision requiring documents to be made
available or information to be provided—
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(a)
in the manner and form, and
(b)
by the time and at the place,

prescribed by or under the regulations.
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Information about children in care of authority
(1)
Regulations may require, or authorise officers of the Inland Revenue to require,
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an authority—
(a)
to make documents available for inspection on behalf of the Inland
Revenue, or
(b)
to provide to the Inland Revenue any information,

which the Inland Revenue may require for the discharge of any function
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relating to child trust funds and which is information to which subsection (2)
applies.
(2)
This subsection applies to information relating to a child who falls or has fallen
within—
(a)
paragraph 1(c) of Schedule 9 to the Social Security Contributions and
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Benefits Act 1992 (c. 4), or
(b)
paragraph 1(1)(f) of Schedule 9 to the Social Security Contributions and
Benefits (Northern Ireland) Act 1992 (c. 7),

by reason of being, or having been, in the care of the authority in circumstances
prescribed by regulations under that provision.
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(3)
The regulations may include provision requiring documents to be made
available or information to be provided—
(a)
in the manner and form, and
(b)
by the time and at the place,

prescribed by or under the regulations.
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Use of information
(1)
Information held for the purposes of any function relating to child trust
funds—
(a)
by the Inland Revenue, or

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(b)
by a person providing services to the Inland Revenue, in connection
with the provision of those services,

may be used, or supplied to any person providing services to the Inland
Revenue, for the purposes of, or for any purposes connected with, the exercise
of any such function.
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(2)
Information held for the purposes of any function relating to child trust
funds—
(a)
by the Inland Revenue, or
(b)
by a person providing services to the Inland Revenue, in connection
with the provision of those services,
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may be used, or supplied to any person providing services to the Inland
Revenue, for the purposes of, or for any purposes connected with, the exercise
of any other function of the Inland Revenue.
(3)
Information held for the purposes of any function other than those relating to
child trust funds—
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(a)
by the Inland Revenue, or
(b)
by a person providing services to the Inland Revenue, in connection
with the provision of those services,

may be used, or supplied to any person providing services to the Inland
Revenue, for the purposes of, or for any purposes connected with, the exercise
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of any function of the Inland Revenue relating to child trust funds.
(4)
Information held by the Secretary of State or the Department for Social
Development in Northern Ireland, or any person providing services to the
Secretary of State or that Department, may be supplied to—
(a)
the Inland Revenue, or
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(b)
a person providing services to the Inland Revenue, in connection with
the provision of those services,

for use for the purposes of, or for any purposes connected with, the exercise of
any function of the Inland Revenue relating to child trust funds.
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Disclosure of information
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(1)
Section 182 of the Finance Act 1989 (c. 26) (disclosure of information by
officials) is amended as follows.
(2)
In subsection (1) (offence of disclosure by person holding information in
exercise of certain functions)—
(a)
after “tax credit functions” insert “, child trust fund functions”, and
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(b)
after paragraph (aa) insert—
“(ab)
to a child trust fund of any identifiable person,”.
(3)
After subsection (2ZA) insert—
“(2ZB)
In this section “child trust fund functions” means the functions relating
to child trust funds—
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(a)
of the Board and their officers,
(b)
of any person carrying out the administrative work of the
General Commissioners or the Special Commissioners, or
(c)
of any person providing, or employed in the provision of,
services to the Board or any person mentioned in paragraph (b)
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above.”

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(4)
In subsection (4) (offence of disclosure by staff of auditors or ombudsmen)—
(a)
in paragraphs (b) and (c), after “tax credit functions” insert “, child trust
fund functions”, and
(b)
after sub-paragraph (ia) of paragraph (c) insert—
“(ib)
to a child trust fund of any identifiable
5
person,”.
(5)
In subsection (5)(b) (exception in case of consent), for “or to a tax credit”
substitute “, to a tax credit or to a child trust fund”.
(6)
In subsection (10), after the definition of “the Board” insert—

““child trust fund” has the same meaning as in the Child Trust Funds Act
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2004,”.
Payments after death
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Payments after death of child
(1)
Where a relevant child dies, the Inland Revenue may make a payment to the personal
representatives of the child if any one or more of the conditions specified in subsection
15
(3) is satisfied.
(2)
“Relevant child” means a child who is or has been an eligible child (or would
have been had this Act come into force on the date referred to in section 2(1)).
(3)
The conditions are—
(a)
that either no payment had been made under section 8 by the Inland
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Revenue or, if one had, the amount of the payment had not been
credited to the child trust fund held by the child,
(b)
that section 9(4)(b) and (c) were satisfied in relation to the child (or
would have been had this Act come into force on the date referred to in
section 2(1)) but either no payment had been made under that section
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by the Inland Revenue or, if one had, the amount of the payment had
not been credited to the child trust fund held by the child, and
(c)
that the Inland Revenue was required by regulations under section 10
to make a payment in respect of the child but either the payment had
not been made or, if it had, the amount of the payment had not been
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credited to the child trust fund held by the child.
(4)
The amount of the payment is to be equal to the amount of the payment or
payments which had not been made or credited.
Penalties
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Penalties
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(1)
A penalty of £300 may be imposed on any person who fraudulently—
(a)
applies to open a child trust fund,
(b)
makes a withdrawal from a child trust fund otherwise than as
permitted by regulations under section 3(4)(d), or
(c)
secures the opening of a child trust fund by the Inland Revenue.
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(2)
A penalty not exceeding £3,000 may be imposed on—

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(a)
an account provider who fraudulently or negligently makes an
incorrect statement or declaration in connection with a claim under
section 8 or 9 or regulations under section 10 or 13, and
(b)
any person who fraudulently or negligently provides incorrect
information in response to a requirement imposed by or under
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regulations under section 15.
(3)
Penalties may be imposed on—
(a)
an account provider who fails to make a claim under section 8 or 9 or
regulations under section 10 by the time required by regulations under
the section concerned, and
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(b)
any person who fails to make a document available, or provide
information, in accordance with regulations under section 15.
(4)
The penalties which may be imposed under subsection (3) are—
(a)
a penalty not exceeding £300, and
(b)
if the failure continues after a penalty under paragraph (a) is imposed,
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a further penalty or penalties not exceeding £60 for each day on which
the failure continues after the day on which the penalty under that
paragraph was imposed (but excluding any day for which a penalty
under this paragraph has already been imposed).
(5)
No penalty under subsection (3) may be imposed on a person in respect of a
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failure after the failure has been remedied.
(6)
For the purposes of subsection (3) a person is to be taken not to have failed to
make a claim, make available a document or provide information which must
be made, made available or provided by a particular time—
(a)
if the person made it, made it available or provided it within such
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further time (if any) as the Inland Revenue may have allowed,
(b)
if the person had a reasonable excuse for not making it, making it
available or providing it by that time, or
(c)
if, after having had such an excuse, the person made it, made it
available or provided it without unreasonable delay.
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(7)
A penalty may be imposed on an account provider in respect of—
(a)
a failure by the account provider to comply with section 3(2) or (4), 8(2)
or 9(3),
(b)
a failure by the account provider to comply with a requirement which
is imposed on the account provider by regulations under section 3(4) or
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(5), 5(4), 6(2), 7 or 10(3), or
(c)
a breach of section 12(1), or regulations under section 12(2), in relation
to a child trust fund held with the account provider.
(8)
The penalty which may be imposed under subsection (7) on the account
provider is a penalty not exceeding—
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(a)
£300, or
(b)
£1 in respect of each child trust fund in relation to which there has been
a failure within subsection (7)(a) or (b) or a breach within subsection
(7)(c),

whichever is greater.
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Decisions, appeals, mitigation and recovery
(1)
It is for the Inland Revenue to impose a penalty under section 20.

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(2)
If the Inland Revenue decide to impose such a penalty the decision must
(subject to the permitted maximum) set it at such amount as, in their opinion,
is appropriate.
(3)
A decision to impose such a penalty may not be made after the end of the
period of six years beginning with the date on which the penalty was incurred
5
or began to be incurred.
(4)
The Inland Revenue must give notice of such a decision to the person on whom
the penalty is imposed.
(5)
The notice must state the date on which it is given and give details of the right
to appeal against the decision under section 22.
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(6)
After the notice has been given, the decision must not be altered except on
appeal.
(7)
But the Inland Revenue may, in their discretion, mitigate any penalty under
section 20.
(8)
A penalty under section 20 becomes payable at the end of the period of 30 days
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beginning with the date on which notice of the decision is given.
(9)
On an appeal under section 22 against a decision under this section, the
General Commissioners or Special Commissioners may—
(a)
if it appears that no penalty has been incurred, set the decision aside,
(b)
if the amount set appears to be appropriate, confirm the decision,
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(c)
if the amount set appears to be excessive, reduce it to such other
amount (including nil) as they consider appropriate, or
(d)
if the amount set appears to be insufficient, increase it to such amount
not exceeding the permitted maximum as they consider appropriate.
(10)
An appeal from a decision of the Commissioners under subsection (9) lies, at
25
the instance of the person on whom the penalty was imposed, to—
(a)
the High Court, or
(b)
in Scotland, the Court of Session as the Court of Exchequer in Scotland,

and on such an appeal the court has a similar jurisdiction to that conferred on
the Commissioners by that subsection.
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(11)
A penalty is to be treated for the purposes of Part 6 of the Taxes Management
Act 1970 (c. 9) (collection and recovery) as if it were tax charged in an
assessment and due and payable.
Appeals
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Rights of appeal
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(1)
A person may appeal against—
(a)
a decision by the Inland Revenue not to approve the person as an
account provider, or
(b)
a decision by the Inland Revenue to withdraw the person’s approval as
an account provider.
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(2)
A person who is a relevant person in relation to a child may appeal against a
decision by the Inland Revenue—
(a)
not to issue a voucher under section 5 in relation to the child,

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(b)
not to open a child trust fund for the child under section 6,
(c)
not to make a payment under section 8 or 9 in respect of the child, or
(d)
not to make a payment under regulations under section 10 in respect of
the child.
(3)
“Relevant person”, in relation to a child, means—
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(a)
the person (if any) entitled to child benefit in respect of the child,
(b)
anyone who applied to open a child trust fund for the child, and
(c)
anyone who is a responsible person and has, at any time, given
instructions with respect to the management of the child trust fund
held by the child.
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(4)
A person who is required by the Inland Revenue to account for an amount
under regulations under section 11 or 13 may appeal against the decision to
impose the requirement.
(5)
The personal representatives of a child who has died may appeal against a
decision by the Inland Revenue not to make a payment to them under section
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19.
(6)
A person on whom a penalty under section 20 is imposed may appeal against
the decision to impose the penalty or its amount.
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Exercise of rights of appeal
(1)
Notice of an appeal under section 22 against a decision must be given to the
20
Inland Revenue in the prescribed manner within the period of thirty days after
the date on which notice of the decision was given.
(2)
Notice of such an appeal must specify the grounds of appeal.
(3)
An appeal under section 22 is to the General Commissioners but the appellant
may elect (in accordance with section 46(1) of the Taxes Management Act 1970
25
(c. 9)) to bring the appeal before the Special Commissioners instead.
(4)
Subsections (2) to (7) of section 31D of the Taxes Management Act 1970 (which
relate to an election to bring proceedings before the Special Commissioners)
have effect in relation to an election under subsection (3) (as in relation to an
election under subsection (1) of that section).
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(5)
On the hearing of an appeal under section 22 the Commissioners may allow the
appellant to put forward grounds not specified in the notice, and take them
into consideration if satisfied that the omission was not wilful or unreasonable.
(6)
Part 5 of the Taxes Management Act 1970 (appeals to Commissioners) applies
in relation to appeals under section 22 (as in relation to appeals under the Taxes
35
Acts, within the meaning of that Act), but subject to such modifications as are
prescribed by regulations.
(7)
Any regulations under section 56B of the Taxes Management Act 1970 which
are in force immediately before the commencement of subsection (6) apply,
subject to any necessary modifications, for the purposes of appeals under
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section 22 (until amended or revoked).
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Temporary modifications
(1)
Until such day as may be appointed by order—