Finance Bill

House of Commons

Session 2006 - 07
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 23 — Extension of HMRC powers: Scotland
256

Detention and questioning of suspects and witnesses
23M
Powers relating to suspects and potential witnesses
(1)
Where an authorised officer has reasonable grounds for suspecting
that a person has committed or is committing, at any place, a
Revenue and Customs offence, the officer may require—
5
(a)
that person, if found by the officer at that place or at any place
where the officer is entitled to be, to give—
(i)
the information mentioned in subsection (2) below;
and
(ii)
an explanation of the circumstances which have given
10
rise to the officer’s suspicion;
(b)
any other person whom the officer finds at that place or at
any place where the officer is entitled to be and who the
officer believes has information relating to the offence, to give
the information mentioned in subsection (2) below.
15
(2)
That information is—
(a)
the person’s name;
(b)
the person’s address;
(c)
the person’s date of birth;
(d)
the person’s place of birth (in such detail as the officer
20
considers necessary or expedient for the purpose of
establishing that person’s identity); and
(e)
the person’s nationality.
(3)
The officer may require the person mentioned in paragraph (a) of
subsection (1) above to remain with the officer while the officer (any
25
or all)—
(a)
subject to subsection (4) below, verifies any information
mentioned in subsection (2) above given by the person;
(b)
subject to section (5) below, establishes whether the person
may be a person suspected of having committed a Revenue
30
and Customs offence other than the offence in relation to
which the officer made the requirement of that person under
paragraph (a) of subsection (1) above;
(c)
notes any explanation proffered by the person.
(4)
The officer shall exercise the power under paragraph (a) of
35
subsection (3) above only where it appears to the officer that such
verification can be obtained quickly.
(5)
The officer shall exercise the power under paragraph (b) of
subsection (3) above only where—
(a)
the person mentioned in paragraph (a) of subsection (1)
40
above has given a name and address; and
(b)
it appears to the officer that establishing the matter
mentioned in paragraph (b) of subsection (3) above can be
achieved quickly.
(6)
The officer may use reasonable force to ensure that the person
45
mentioned in paragraph (a) of subsection (1) above remains with that
officer.

Finance Bill
Schedule 23 — Extension of HMRC powers: Scotland
257

(7)
The officer shall inform a person, when making a requirement of that
person under—
(a)
paragraph (a) of subsection (1) above, of the officer’s
suspicion and of the general nature of the offence which the
officer suspects that the person has committed or is
5
committing;
(b)
paragraph (b) of subsection (1) above, of the officer’s
suspicion, of the general nature of the offence which the
officer suspects has been or is being committed and that the
reason for the requirement is that the officer believes the
10
person has information relating to the offence;
(c)
subsection (3) above, why the person is being required to
remain with the officer;
(d)
any of the said subsections, that failure to comply with the
requirement may constitute an offence.
15
23N
Fingerprinting of persons suspected of offences
(1)
An authorised officer may, if the person mentioned in section
23M(1)(a) of this Act gives a name and address, require that person
to provide—
(a)
that person’s fingerprints; or
20
(b)
a record, created by an approved device, of the skin on that
person’s fingers.
(2)
Such fingerprints or record may be used only for the purposes of—
(a)
verifying the name and address given by the person;
(b)
establishing whether the person may be a person who is
25
suspected of having committed any other Revenue and
Customs offence,

and all record of such fingerprints or record shall be destroyed as
soon as possible after they have fulfilled those purposes.
(3)
The officer shall inform a person, when making a requirement of that
30
person under subsection (1) above—
(a)
of the existence of the power to make the requirement and
why the officer proposes to exercise it in the person’s case;
and
(b)
that failure to comply with the requirement may constitute
35
an offence.
(4)
In subsection (1)(b) above, an “approved device” is any device
approved by the Scottish Ministers under section 13(8) of the
Criminal Procedure (Scotland) Act 1995.
23P
Offences arising from breach of requirements under sections 23M and
40
23N
(1)
A person mentioned in paragraph (a) of subsection (1) of section 23M
of this Act who, having been required—
(a)
under that subsection to give the information mentioned in
subsection (2) of that section;
45
(b)
under subsection (3) of that section to remain with an officer;
or

Finance Bill
Schedule 23 — Extension of HMRC powers: Scotland
258

(c)
under subsection (1) of section 23N of this Act to provide that
person’s fingerprints or a record such as is mentioned in
paragraph (b) of that subsection,

fails, without reasonable excuse, to do so, shall be guilty of an offence
and liable on summary conviction to a fine not exceeding level 3 on
5
the standard scale.
(2)
A person mentioned in paragraph (b) of subsection (1) of section 23M
of this Act who, having been required under that subsection to give
the information mentioned in subsection (2) of that section, fails,
without reasonable excuse, to do so, shall be guilty of an offence and
10
liable on summary conviction to a fine not exceeding level 2 on the
standard scale.
(3)
An authorised officer may arrest without warrant any person whom
the officer has reasonable grounds for suspecting has committed an
offence under subsection (1) or (2) above.”
15
4
In section 24 (detention and questioning by customs officers)—
(a)
in subsection (1)—
(i)
for “an offence punishable by imprisonment relating to an
assigned matter” substitute “a Revenue and Customs offence
punishable by imprisonment”,
20
(ii)
for “a customs office” substitute “an office of Revenue and
Customs”, and
(iii)
for “customs office”, in the second place, substitute “office of
Revenue and Customs”,
(b)
in subsection (5), for “customs office” (in both places) substitute
25
“office of Revenue and Customs”,
(c)
in subsection (8)—
(i)
for “his name and address” substitute “the information
mentioned in subsection (8A) below”, and
(ii)
for “customs office” substitute “office of Revenue and
30
Customs”,
(d)
after that subsection insert—
“(8A)
That information is—
(a)
the person’s name;
(b)
the person’s address;
35
(c)
the person’s date of birth;
(d)
the person’s place of birth (in such detail as the officer
considers necessary or expedient for the purpose of
establishing that person’s identify); and
(e)
the person’s nationality.”,
40
(e)
omit subsection (9), and
(f)
the heading accordingly becomes “Detention and questioning at
office of Revenue and Customs”.
5
In section 25(1) (right to have someone informed of the fact of detention)—
(a)
for “a customs office” substitute “an office of Revenue and Customs”,
45
and
(b)
for “customs office”, in the second and third places, substitute “office
of Revenue and Customs”.

Finance Bill
Schedule 23 — Extension of HMRC powers: Scotland
259

6
In section 26 (detention in connection with drug smuggling offences), for “a
customs office” (in both places) substitute “an office of Revenue and
Customs”.
7
After that section insert—
“Power of arrest
5
26A
Power of arrest

Where an authorised officer has reasonable grounds for suspecting
that a Revenue and Customs offence has been or is being committed,
the officer may arrest without warrant any person whom the officer
has reasonable grounds for suspecting to be guilty of the offence.
10
General provisions
26B
Interpretation of Part 3 etc
(1)
In this Part of this Act—
“authorised officer” means an officer acting with the authority
(which may be general or specific) of the Commissioners for
15
Her Majesty’s Revenue and Customs;
“office of Revenue and Customs” means premises wholly or
partly occupied by Her Majesty’s Revenue and Customs; and
“officer” means an officer of Revenue and Customs.
(2)
In any proceedings (whether civil or criminal) under or arising from
20
this Part of this Act, a certificate of the Commissioners for Her
Majesty’s Revenue and Customs that an officer had authority to
exercise a power or function conferred by a provision of this Part
shall be conclusive proof of that fact.”
Criminal Procedure (Scotland) Act 1995 (c. 46)
25
8
Section 307 of the Criminal Procedure (Scotland) Act 1995 (interpretation) is
amended as follows.
9
In subsection (1), in the definition of “officer of law”, for paragraph (ba)
substitute—
“(ba)
subject to subsection (1A) below, an officer of Revenue and
30
Customs acting with the authority (which may be general
or specific) of the Commissioners for Her Majesty’s
Revenue and Customs;”.
10
After that subsection insert—
“(1A)
The inclusion of officers of Revenue and Customs as “officers of law”
35
shall not have effect in relation to any matter specified in—
(a)
section 54(4)(b) or (f) of; or
(b)
paragraphs 3, 7, 10, 13 to 15, 19 or 24 to 29 of Schedule 1 to,

the Commissioners for Revenue and Customs Act 2005 (former
Inland Revenue matters).
40
(1B)
In any proceedings (whether civil or criminal) under or arising from
this Act, a certificate of the Commissioners for Her Majesty’s

Finance Bill
Schedule 24 — Penalties for errors
Part 1 — Liability for penalty
260

Revenue and Customs that an officer of Revenue and Customs had
the authority to exercise a power or function conferred by a
provision of this Act shall be conclusive evidence of that fact.”
Criminal Justice and Police Act 2001 (c. 16)
11
The Criminal Justice and Police Act 2001 is amended as follows.
5
12
In section 63(2) (powers to obtain hard copies etc of information stored in
electronic form), after paragraph (g) insert—
“(ga)
section 23E(5)(b) (as read with section 23K(2)) of the Criminal
Law (Consolidation) (Scotland) Act 1995;”.
13
In Schedule 1—
10
(a)
in Part 1, after paragraph 59 insert—
“Criminal Law (Consolidation) (Scotland) Act 1995 (c. 39)
59A
The power of seizure conferred by section 23E(3) of the
Criminal Law (Consolidation) (Scotland) Act 1995 (seizure
of evidence of Revenue and Customs offences).”, and
15
(b)
in Part 2, after paragraph 81 insert—
“Criminal Law (Consolidation) (Scotland) Act 1995 (c. 39)
81A
The power of seizure conferred by section 23E(3) (as read
with section 23E(5)(c)) of the Criminal Law
(Consolidation) (Scotland) Act 1995 (seizure of evidence of
20
Revenue and Customs offences).”
14    (1)
The amendments made by this Schedule come into force in accordance with
provision made by the Treasury by order.
      (2)
The power to make an order under this paragraph is exercisable by statutory
instrument.
25
Schedule 24
Section 96

Penalties for errors
Part 1
Liability for penalty
Error in taxpayer’s document
30
1     (1)
A penalty is payable by a person (P) where—
(a)
P gives HMRC a document of a kind listed in the Table below, and
(b)
HMRC think that Conditions 1 and 2 are satisfied.
      (2)
Condition 1 is that the document contains an inaccuracy which amounts to,
or leads to—
35
(a)
an understatement of P’s liability to tax,
(b)
a false or inflated statement of a loss by P, or

Finance Bill
Schedule 24 — Penalties for errors
Part 1 — Liability for penalty
261

(c)
a false or inflated claim to repayment of tax.
      (3)
Condition 2 is that the inaccuracy was careless or deliberate (within the
meaning of paragraph 3).
      (4)
Where a document contains more than one inaccuracy, a penalty is payable
for each inaccuracy.
5

Tax
Document

Income tax or capital gains tax
Return under section 8 of TMA 1970

(personal return).

Income tax or capital gains tax
Return under section 8A of TMA

1970 (trustee’s return).

10

Income tax or capital gains tax
Return, statement or declaration in

connection with a claim for an

allowance, deduction or relief.

Income tax or capital gains tax
Accounts in connection with

ascertaining liability to tax.

15

Income tax or capital gains tax
Partnership return.

Income tax or capital gains tax
Statement or declaration in

connection with a partnership

return.

Income tax or capital gains tax
Accounts in connection with a

20

partnership return.

Income tax
Return for the purposes of PAYE

regulations.

Construction industry deductions
Return for the purposes of

regulations under section 70(1)(a) of

25

FA 2004 in connection with

deductions on account of tax under

the Construction Industry Scheme.

Corporation tax
Company tax return under

paragraph 3 of Schedule 18 to FA

30

1998.

Corporation tax
Return, statement or declaration in

connection with a claim for an

allowance, deduction or relief.

Corporation tax
Accounts in connection with

35

ascertaining liability to tax.

VAT
VAT return under regulations made

under paragraph 2 of Schedule 11 to

VATA 1994.

VAT
Return, statement or declaration in

40

connection with a claim.

Finance Bill
Schedule 24 — Penalties for errors
Part 1 — Liability for penalty
262

Tax
Document

Income tax, capital gains tax,
Any document which is likely to be

corporation tax or VAT
relied upon by HMRC to determine,

without further inquiry, a question

about—

5

(a)
P’s liability to tax,

(b)
payments by P by way of

or in connection with tax,

(c)
any other payment by P

(including penalties), or

10

(d)
repayments, or any other

kind of payment or credit,

to P.

Error in HMRC assessment
2     (1)
A penalty is payable by a person (P) where—
15
(a)
an assessment issued to P by HMRC understates P’s liability to tax,
and
(b)
HMRC think that P has failed to take reasonable steps to notify them,
within the period of 30 days beginning with the date of the
assessment, that it is an under-assessment.
20
      (2)
In deciding what steps (if any) were reasonable HMRC must consider—
(a)
whether P knew, or should have known, about the under-
assessment, and
(b)
what steps would have been reasonable to take to notify HMRC.
      (3)
In sub-paragraph (1) “tax” means—
25
(a)
income tax,
(b)
capital gains tax,
(c)
corporation tax, and
(d)
VAT.
Degrees of culpability
30
3     (1)
Inaccuracy in a document given by P to HMRC is—
(a)
“careless” if the inaccuracy is due to failure by P to take reasonable
care,
(b)
“deliberate but not concealed” if the inaccuracy is deliberate but P
does not make arrangements to conceal it, and
35
(c)
“deliberate and concealed” if the inaccuracy is deliberate and P
makes arrangements to conceal it (for example, by submitting false
evidence in support of an inaccurate figure).
      (2)
An inaccuracy in a document given by P to HMRC, which was neither
careless nor deliberate when the document was given, is to be treated as
40
careless if HMRC think that P—
(a)
discovered the inaccuracy at some later time, and
(b)
did not take reasonable steps to inform HMRC.