Finance Bill

House of Commons

Session 2002 - 03
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Finance Bill

Finance Bill
Part 7 — Disclosure of tax avoidance schemes
256

301
Duty of person dealing with promoter outside United Kingdom
(1)
Any person (“the client”) who enters into any transaction forming part of any
notifiable arrangements in relation to which—
(a)
a promoter is resident outside the United Kingdom, and
(b)
no promoter is resident in the United Kingdom,
5

must, within the prescribed period after doing so, provide the Board with
prescribed information relating to the notifiable arrangements.
(2)
Compliance with section 300(1) by any promoter in relation to the notifiable
arrangements discharges the duty of the client under subsection (1).
302
Duty of parties to notifiable arrangements not involving promoter
10
Any person who enters into any transaction forming part of notifiable
arrangements as respects which neither he nor any other person in the United
Kingdom is liable to comply with section 300 (duties of promoter) or section
301 (duty of person dealing with promoter outside the United Kingdom) must
at the prescribed time provide the Board with prescribed information relating
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to the notifiable arrangements.
303
Arrangements to be given reference number
(1)
Where a person complies with section 300(1) or (3), 301(1) or 302 in relation to
any notifiable proposal or notifiable arrangements, the Board may within 30
days—
20
(a)
allocate a reference number to the notifiable arrangements or, in the
case of a notifiable proposal, to the proposed notifiable arrangements,
and
(b)
if it does so, notify the person of that number.
(2)
The allocation of a reference number to any notifiable arrangements (or
25
proposed notifiable arrangements) is not to be regarded as constituting any
indication by the Board that the arrangements could as a matter of law result
in the obtaining by any person of a tax advantage.
(3)
In this Part “reference number”, in relation to any notifiable arrangements,
means the reference number allocated under this section.
30
304
Duty of promoter to notify client of number
(1)
Any promoter who is providing services to any person (“the client”) in
connection with notifiable arrangements must, within 30 days after the
relevant date, provide the client with prescribed information relating to any
reference number that has been notified to the promoter by the Board—
35
(a)
in relation to those arrangements, or
(b)
in relation to arrangements which are substantially the same as those
arrangements (whether made between the same parties or different
parties).
(2)
In subsection (1) “the relevant date” means—
40
(a)
the date on which the promoter first becomes aware of any transaction
forming part of the notifiable arrangements, or
(b)
if later, the date on which the number is notified to the promoter under
section 303.

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Part 7 — Disclosure of tax avoidance schemes
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305
Duty of parties to notifiable arrangements to notify Board of number, etc.
(1)
Any person who is a party to any notifiable arrangements must provide the
Board with prescribed information relating to—
(a)
any reference number notified to him under section 303 by the Board or
under section 304 by the promoter, and
5
(b)
the time when he obtains or expects to obtain by virtue of the
arrangements an advantage in relation to any relevant tax.
(2)
For the purposes of subsection (1) a tax is a “relevant tax” in relation to any
notifiable arrangements if it is prescribed in relation to arrangements of that
description by regulations under section 298.
10
(3)
Regulations under subsection (1) may—
(a)
in prescribed cases, require the number and other information to be
included in any return or account which the person is required by or
under any enactment to deliver to the Board, and
(b)
in prescribed cases, require the number and other information to be
15
provided separately to the Board at the prescribed time or times.
(4)
A person is not liable to a penalty under—
(a)
section 95 of the Taxes Management Act 1970 (c. 9) (incorrect return or
accounts for income tax or capital gains tax),
(b)
paragraph 8 of Schedule 2 to the Oil Taxation Act 1975 (c. 22) (incorrect
20
returns and accounts for purposes of petroleum revenue tax),
(c)
section 247 of the Inheritance Tax Act 1984 (c. 51) (provision of incorrect
information for purposes of inheritance tax),
(d)
any provision relating to incorrect or uncorrected returns made under
section 98 of the Finance Act 1986 (c. 41) (administration of stamp duty
25
reserve tax),
(e)
paragraph 20 of Schedule 18 to the Finance Act 1998 (c. 36) (incorrect or
uncorrected return for corporation tax),
(f)
paragraph 8 of Schedule 10 to the Finance Act 2003 (incorrect or
uncorrected return for purposes of stamp duty land tax), or
30
(g)
any other prescribed provision,

by reason of any failure to include in any return or account any reference
number or other information required by virtue of subsection (3)(a) (but see
section 98C of the Taxes Management Act 1970 for the penalty for failure to
comply with this section).
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306
Legal professional privilege
(1)
Nothing in this Part requires any person to disclose to the Board any privileged
information.
(2)
In this Part “privileged information” means information with respect to which
a claim to legal professional privilege, or, in Scotland, to confidentiality of
40
communications, could be maintained in legal proceedings.

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Part 7 — Disclosure of tax avoidance schemes
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307
Penalties
(1)
After section 98B of the Taxes Management Act 1970 insert—
“98C
Notification under Part 7 of Finance Act 2004
(1)
A person who fails to comply with any of the provisions of Part 7 of the
Finance Act 2004 (disclosure of tax avoidance schemes) mentioned in
5
subsection (2) below shall be liable—
(a)
to a penalty not exceeding £5,000, and
(b)
if the failure continues after a penalty is imposed under
paragraph (a) above, to a further penalty or penalties not
exceeding £600 for each day on which the failure continues after
10
the day on which the penalty under paragraph (a) was imposed
(but excluding any day for which a penalty under this
paragraph has already been imposed).
(2)
Those provisions are—
(a)
section 300(1) and (3) (duty of promoter in relation to notifiable
15
proposals and notifiable arrangements),
(b)
section 301(1) (duty of person dealing with promoter outside
United Kingdom),
(c)
section 302 (duty of parties to notifiable arrangements not
involving promoter), or
20
(d)
section 304(1) (duty of promoter to notify client of reference
number).
(3)
A person who fails to comply with section 305(1) of the Finance Act
2004 (duties of parties to notifiable arrangements to notify Board of
reference number, etc.) shall be liable to a penalty of the relevant sum.
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(4)
In subsection (3) above “the relevant sum” means—
(a)
in relation to a person not falling within paragraph (b) or (c)
below, £100 in respect of each scheme to which the failure
relates,
(b)
in relation to a person who has previously failed to comply with
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section 305(1) on one (and only one) occasion during the period
of 36 months ending with the date on which the current failure
to comply with that provision began, £500 in respect of each
scheme to which the current failure relates (whether or not the
same as the scheme to which the previous failure relates), or
35
(c)
in relation to a person who has previously failed to comply with
section 305(1) on two or more occasions during the period of 36
months ending with the date on which the current failure to
comply with that provision began, £1,000 in respect of each
scheme to which the current failure relates (whether or not the
40
same as the schemes to which any of the previous failures
relates).
(5)
In subsection (4) above “scheme” means any notifiable arrangements
within the meaning of Part 7 of the Finance Act 2004.”
(2)
In section 100 of that Act (determination of penalties by officer of Board) at the
45
end of subsection (2) (penalties to which subsection (1) of the section does not
apply) insert “, or
(f)
section 98C(1)(a) above.”

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(3)
In section 100C of that Act (penalty proceedings before Commissioners) after
subsection (1) insert—
“(1A)
In its application to a penalty under section 98C(1)(a) above, subsection
(1) above has effect with the omission of the words “General or”.”
308
Information to be provided in form and manner specified by Board
5
The information required by section 300(1) or (3), 301(1), 302, 304(1) or 305(1)
must be provided in a form and manner specified by the Board.
309
Regulations under Part 7
(1)
Any power of the Treasury or the Board to make regulations under this Part is
exercisable by statutory instrument.
10
(2)
Regulations made by the Treasury or the Board under this Part may contain
transitional provisions and savings.
(3)
A statutory instrument containing regulations made by the Treasury or the
Board under any provision of this Part is subject to annulment in pursuance of
a resolution of the House of Commons.
15
310
Interpretation of Part 7
(1)
In this Part—

“advantage”, in relation to any tax, means—
(a)
relief or increased relief from, or repayment or increased
repayment of, that tax, or the avoidance or reduction of a charge
20
to that tax or an assessment to that tax or the avoidance of a
possible assessment to that tax,
(b)
the deferral of any payment of tax or the advancement of any
repayment of tax, or
(c)
the avoidance of any obligation to deduct or account for any tax;
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“arrangements” includes any scheme, transaction or series of transactions;

“corporation tax” includes any amount which, by virtue of any of the
provisions mentioned in paragraph 1 of Schedule 18 to the Finance Act
1998 (c. 36) (company tax returns, assessments and related matters) is
assessable and chargeable as if it were corporation tax;
30

“notifiable arrangements” has the meaning given by section 298(1);

“notifiable proposal” has the meaning given by section 298(2);

“prescribed”, except in section 298, means prescribed by regulations made
by the Board;

“promoter”, in relation to notifiable arrangements or a notifiable
35
proposal, has the meaning given by section 299;

“reference number”, in relation to notifiable arrangements, has the
meaning given by section 303(3);

“tax” means—
(a)
income tax,
40
(b)
capital gains tax,
(c)
corporation tax,
(d)
petroleum revenue tax,
(e)
inheritance tax,

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(f)
stamp duty land tax, or
(g)
stamp duty reserve tax.
(2)
Subject to subsection (1), expressions which are defined in the Taxes Act 1988
for the purposes of the Tax Acts, as defined in section 831(2) of that Act, have
the same meaning in this Part.
5
311
Part 7: commencement and savings
(1)
The following provisions of this Part come into force on the passing of this
Act—

sections 298 to 307, so far as is necessary for enabling the making of any
regulations for which they provide, and
10

sections 309 and 310 and this section.
(2)
Except as provided by subsection (1), the provisions of this Part come into force
on 1st August 2004.
(3)
Section 300 does not apply to a promoter in the case of—
(a)
any notifiable proposal as respects which the relevant date, as defined
15
by subsection (2) of that section, fell before 18th March 2004,
(b)
any notifiable arrangements which implement such a proposal, or
(c)
any notifiable arrangements which include any transaction entered into
before 18th March 2004.
(4)
Sections 301 and 302 do not apply in relation to notifiable arrangements which
20
include any transaction entered into before 23rd April 2004.
(5)
Section 305 does not apply in relation to any notifiable arrangements in respect
of which, by virtue of subsection (3) or (4), none of the duties imposed by
sections 300 to 302 arises.
Part 8
25
Miscellaneous matters
312
Exclusion of extended limitation period in England, Wales and Northern
Ireland
(1)
Section 32(1)(c) of the Limitation Act 1980 (c. 58) or, in Northern Ireland,
Article 71(1)(c) of the Limitation (Northern Ireland) Order 1989 (S.I. 1989/1339
30
(N.I. 11)) (extended period for bringing an action in case of mistake) does not
apply in relation to a mistake of law relating to a taxation matter under the care
and management of the Commissioners of Inland Revenue.

This subsection has effect in relation to actions brought on or after 8th
September 2003.
35
(2)
For the purposes of—
(a)
section 35(5)(a) of the Limitation Act 1980 or, in Northern Ireland,
Article 73(4)(a) of the Limitation (Northern Ireland) Order 1989
(circumstances in which time-barred claim may be brought in course of
existing action), and
40
(b)
rules of court or county court rules having effect for the purposes of
those provisions,

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as they apply to claims in respect of mistakes of the kind mentioned in
subsection (1), a new claim shall not be regarded as arising out of the same
facts, or substantially the same facts, if it is brought in respect of a different
payment, transaction, period or other matter.

This subsection has effect in relation to claims made on or after 20th November
5
2003.
(3)
If before the passing of this Act—
(a)
an action is brought in relation to which a defence of limitation would
have been available if subsection (1) had been in force, or
(b)
a claim is made on or after 20th November 2003 that by virtue of section
10
35(1)(b) of the Limitation Act 1980 or, in Northern Ireland, Article
73(1)(b) of the Limitation (Northern Ireland) Order 1989 is treated as an
action brought before 8th September 2003 and that claim would not
have been allowed if subsections (1) and (2) above had been in force,

the action (or so much of it as relates to a cause of action in respect of which a
15
defence of limitation would have been available or, as the case may be, a claim
would not have been allowed) shall be deemed to be discontinued on the
passing of this Act and any payment made by the Commissioners in or
towards meeting their liability in the action (or so much of the action as so
relates) may be recovered by them (with interest from the date of the payment).
20
(4)
Nothing in this section affects a claim made before 20th November 2003 that by
virtue of section 35(1)(b) of the Limitation Act 1980 (c. 58) or, in Northern
Ireland, Article 73(1)(b) of the Limitation (Northern Ireland) Order 1989 is
treated as an action brought before 8th September 2003.
(5)
For the purposes of this section a claim is treated as made before 20th
25
November 2003 if—
(a)
the Commissioners have before that date consented in writing to the
making of the claim; or
(b)
immediately before that date—
(i)
the consent of the Commissioners has been sought and has not
30
been refused, or
(ii)
an application to the court for permission to make the claim has
been made and has not been refused.
(6)
The provisions of this section apply to any action or claim for relief from the
consequences of a mistake of law, whether expressed to be brought on the
35
ground of mistake or on some other ground (such as unlawful demand or ultra
vires act).
(7)
This section shall be construed as one with the Limitation Act 1980 or, in
Northern Ireland, the Limitation (Northern Ireland) Order 1989.
313
Exclusion of extended prescriptive period in Scotland
40
(1)
Section 6(4)(a)(ii) of the Prescription and Limitation (Scotland) Act 1973 (c. 52)
(extinction of obligations by prescriptive period: exclusion of period during
which creditor induced by error to refrain from making claim) does not apply
in relation to an obligation based on redress of unjustified enrichment arising
from an error of law relating to a taxation matter under the care and
45
management of the Commissioners of Inland Revenue.
(2)
Subsection (1) has effect in relation to an obligation in respect of which no
relevant claim has been made before 8th September 2003.

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(3)
In the case of a relevant claim made on or after that date and before the passing
of this Act relating to an obligation that would have been extinguished if
subsections (1) and (2) had been in force—
(a)
proceedings on the claim (or so much of the proceedings as relates to
such an obligation) shall be deemed to be discontinued on the passing
5
of this Act, and
(b)
any payment made by the Commissioners in or towards meeting their
liability on the claim (or so much of it as so relates) may be recovered
by them (with interest from the date of the payment).
(4)
The provisions of this section apply in relation to any relevant claim for redress
10
of unjustified enrichment arising from an error of law, whether expressed to be
made on the ground of error or on some other ground.
(5)
In this section “relevant claim” has the same meaning as in section 6 of the
Prescription and Limitation (Scotland) Act 1973.
314
Mutual assistance: customs union with the Principality of Andorra
15
(1)
The UK mutual assistance provisions have effect for the purposes of giving
effect to the EC-Andorra Mutual Assistance Recovery Decision as they have
effect for the purposes of giving effect to the Mutual Assistance Recovery
Directive.
(2)
In this section—
20

“the EC-Andorra Mutual Assistance Recovery Decision” means Chapter
2 of Title 1 of, and Annex 1 to, Decision No 1/2003 of the EC-Andorra
Joint Committee of 3 September 2003 (on the laws, regulations and
administrative provisions necessary for the proper functioning of the
Customs Union between the European Community and the
25
Principality of Andorra);

“the Mutual Assistance Recovery Directive” has the same meaning as in
the UK mutual assistance provisions;

“the UK mutual assistance provisions” means the provisions of section
134 of the Finance Act 2002 (c. 23) (recovery of taxes etc due in other
30
member States) and Schedule 39 to that Act.
(3)
In the UK mutual assistance provisions as they have effect in accordance with
subsection (1)—
(a)
references (except those in section 134(2) and paragraph 1(2)(a) of
Schedule 39) to the Mutual Assistance Recovery Directive shall be read
35
as references to the EC-Andorra Mutual Assistance Recovery Decision,
(b)
references to another member State shall be read as references to the
Principality of Andorra,
(c)
references to the competent authority of another member State shall be
read as references to the competent authority of the Principality of
40
Andorra,
(d)
references to a tax authority in the United Kingdom, or to the relevant
UK authority, shall be read as references to the Commissioners of
Customs and Excise,
(e)
the following provisions shall be treated as omitted—
45
(i)
in section 134, subsections (3)(a), (4) and (5), and
(ii)
in Schedule 39, paragraphs 2(2) and 3(3).