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Finance Bill
Schedule 23 — Extension of HMRC powers: Scotland

261

 

23P     

Offences arising from breach of requirements under sections 23M and

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

5

subsection (2) of that section;

(b)   

under subsection (3) of that section to remain with an officer;

or

(c)   

under subsection (1) of section 23N of this Act to provide that

person’s fingerprints or a record such as is mentioned in

10

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

the standard scale.

(2)   

A person mentioned in paragraph (b) of subsection (1) of section 23M

15

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

liable on summary conviction to a fine not exceeding level 2 on the

standard scale.

20

(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.”

4          

In section 24 (detention and questioning by customs officers)—

(a)   

in subsection (1)—

25

(i)   

for “an offence punishable by imprisonment relating to an

assigned matter” substitute “a Revenue and Customs offence

punishable by imprisonment”,

(ii)   

for “a customs office” substitute “an office of Revenue and

Customs”, and

30

(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

“office of Revenue and Customs”,

(c)   

in subsection (8)—

35

(i)   

for “his name and address” substitute “the information

mentioned in subsection (8A) below”, and

(ii)   

for “customs office” substitute “office of Revenue and

Customs”,

(d)   

after that subsection insert—

40

“(8A)   

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

45

considers necessary or expedient for the purpose of

establishing that person’s identify); and

(e)   

the person’s nationality.”,

(e)   

omit subsection (9), and

 

 

Finance Bill
Schedule 23 — Extension of HMRC powers: Scotland

262

 

(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”,

and

5

(b)   

for “customs office”, in the second and third places, substitute “office

of Revenue and Customs”.

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”.

10

7          

After that section insert—

“Power of arrest

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,

15

the officer may arrest without warrant any person whom the officer

has reasonable grounds for suspecting to be guilty of the offence.

General provisions

26B     

Interpretation of Part 3 etc

(1)   

In this Part of this Act—

20

“authorised officer” means an officer acting with the authority

(which may be general or specific) of the Commissioners for

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

25

“officer” means an officer of Revenue and Customs.

(2)   

In any proceedings (whether civil or criminal) under or arising from

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

30

shall be conclusive proof of that fact.”

Criminal Procedure (Scotland) Act 1995 (c. 46)

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)

35

substitute—

“(ba)   

subject to subsection (1A) below, an officer of Revenue and

Customs acting with the authority (which may be general

or specific) of the Commissioners for Her Majesty’s

Revenue and Customs;”.

40

 

 

Finance Bill
Schedule 23 — Extension of HMRC powers: Scotland

263

 

10         

After that subsection insert—

“(1A)   

The inclusion of officers of Revenue and Customs as “officers of law”

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,

5

   

the Commissioners for Revenue and Customs Act 2005 (former

Inland Revenue matters).

(1B)   

In any proceedings (whether civil or criminal) under or arising from

this Act, a certificate of the Commissioners for Her Majesty’s

Revenue and Customs that an officer of Revenue and Customs had

10

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.

12         

In section 63(2) (powers to obtain hard copies etc of information stored in

15

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—

(a)   

in Part 1, after paragraph 59 insert—

20

“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

(b)   

in Part 2, after paragraph 81 insert—

25

“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

Revenue and Customs offences).”

30

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.

 

 

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

264

 

Schedule 24

Section 96

 

Penalties for errors

Part 1

Liability for penalty

Error in taxpayer’s document

5

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)   

Conditions 1 and 2 are satisfied.

      (2)  

Condition 1 is that the document contains an inaccuracy which amounts to,

or leads to—

10

(a)   

an understatement of P’s liability to tax,

(b)   

a false or inflated statement of a loss by P, or

(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).

15

      (4)  

Where a document contains more than one inaccuracy, a penalty is payable

for each inaccuracy.

 

Tax

Document

 
 

Income tax or capital gains tax

Return under section 8 of TMA 1970

 
  

(personal return).

 

20

 

Income tax or capital gains tax

Return under section 8A of TMA

 
  

1970 (trustee’s return).

 
 

Income tax or capital gains tax

Return, statement or declaration in

 
  

connection with a claim for an

 
  

allowance, deduction or relief.

 

25

 

Income tax or capital gains tax

Accounts in connection with

 
  

ascertaining liability to tax.

 
 

Income tax or capital gains tax

Partnership return.

 
 

Income tax or capital gains tax

Statement or declaration in

 
  

connection with a partnership

 

30

  

return.

 
 

Income tax or capital gains tax

Accounts in connection with a

 
  

partnership return.

 
 

Income tax

Return for the purposes of PAYE

 
  

regulations.

 

35

 

Construction industry deductions

Return for the purposes of

 
  

regulations under section 70(1)(a) of

 
  

FA 2004 in connection with

 
  

deductions on account of tax under

 
  

the Construction Industry Scheme.

 

40

 

 

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

265

 
 

Tax

Document

 
 

Corporation tax

Company tax return under

 
  

paragraph 3 of Schedule 18 to FA

 
  

1998.

 
 

Corporation tax

Return, statement or declaration in

 

5

  

connection with a claim for an

 
  

allowance, deduction or relief.

 
 

Corporation tax

Accounts in connection with

 
  

ascertaining liability to tax.

 
 

VAT

VAT return under regulations made

 

10

  

under paragraph 2 of Schedule 11 to

 
  

VATA 1994.

 
 

VAT

Return, statement or declaration in

 
  

connection with a claim.

 
 

Income tax, capital gains tax,

Any document which is likely to be

 

15

 

corporation tax or VAT

relied upon by HMRC to determine,

 
  

without further inquiry, a question

 
  

about—

 
  

(a)   

P’s liability to tax,

 
  

(b)   

payments by P by way of

 

20

  

or in connection with tax,

 
  

(c)   

any other payment by P

 
  

(including penalties), or

 
  

(d)   

repayments, or any other

 
  

kind of payment or credit,

 

25

  

to P.

 
 

Under-assessment by HMRC

2     (1)  

A penalty is payable by a person (P) where—

(a)   

an assessment issued to P by HMRC understates P’s liability to tax,

and

30

(b)   

P has failed to take reasonable steps to notify HMRC, within the

period of 30 days beginning with the date of the assessment, that it is

an under-assessment.

      (2)  

In deciding what steps (if any) were reasonable HMRC must consider—

(a)   

whether P knew, or should have known, about the under-

35

assessment, and

(b)   

what steps would have been reasonable to take to notify HMRC.

      (3)  

In sub-paragraph (1) “tax” means—

(a)   

income tax,

(b)   

capital gains tax,

40

(c)   

corporation tax, and

(d)   

VAT.

Degrees of culpability

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

45

care,

(b)   

“deliberate but not concealed” if the inaccuracy is deliberate but P

does not make arrangements to conceal it, and

 

 

Finance Bill
Schedule 24 — Penalties for errors
Part 2 — Amount of penalty

266

 

(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

5

careless if P—

(a)   

discovered the inaccuracy at some later time, and

(b)   

did not take reasonable steps to inform HMRC.

Part 2

Amount of penalty

10

Standard amount

4     (1)  

The penalty payable under paragraph 1 is—

(a)   

for careless action, 30% of the potential lost revenue,

(b)   

for deliberate but not concealed action, 70% of the potential lost

revenue, and

15

(c)   

for deliberate and concealed action, 100% of the potential lost

revenue.

      (2)  

The penalty payable under paragraph 2 is 30% of the potential lost revenue.

      (3)  

Paragraphs 5 to 8 define “potential lost revenue”.

Potential lost revenue: normal rule

20

5     (1)  

“The potential lost revenue” in respect of an inaccuracy in a document or a

failure to notify an under-assessment is the additional amount due or

payable in respect of tax as a result of correcting the inaccuracy or

assessment.

      (2)  

The reference in sub-paragraph (1) to the additional amount due or payable

25

includes a reference to—

(a)   

an amount payable to HMRC having been erroneously paid by way

of repayment of tax, and

(b)   

an amount which would have been repayable by HMRC had the

inaccuracy or assessment not been corrected.

30

      (3)  

In sub-paragraph (1) “tax” includes national insurance contributions.

      (4)  

The following shall be ignored in calculating potential lost revenue under

this paragraph—

(a)   

group relief, and

(b)   

section 419(4) of ICTA (close company: relief for loans);

35

           

(but this sub-paragraph does not prevent a penalty being charged in respect

of an inaccurate claim for relief).

Potential lost revenue: multiple errors

6     (1)  

Where P is liable to a penalty in respect of more than one inaccuracy, and the

calculation of potential lost revenue under paragraph 5 in respect of each

40

inaccuracy depends on the order in which they are corrected—

 

 

Finance Bill
Schedule 24 — Penalties for errors
Part 2 — Amount of penalty

267

 

(a)   

careless inaccuracies shall be taken to be corrected before deliberate

inaccuracies, and

(b)   

deliberate but not concealed inaccuracies shall be taken to be

corrected before deliberate and concealed inaccuracies.

      (2)  

In calculating potential lost revenue where P is liable to a penalty in respect

5

of one or more understatements in one or more documents relating to a tax

period, account shall be taken of any overstatement in any document given

by P which relates to the same tax period.

      (3)  

In sub-paragraph (2)—

(a)   

“understatement” means an inaccuracy that satisfies Condition 1 of

10

paragraph 1, and

(b)   

“overstatement” means an inaccuracy that does not satisfy that

condition.

      (4)  

For the purposes of sub-paragraph (2) overstatements shall be set against

understatements in the following order—

15

(a)   

understatements in respect of which P is not liable to a penalty,

(b)   

careless understatements,

(c)   

deliberate but not concealed understatements, and

(d)   

deliberate and concealed understatements.

      (5)  

In calculating potential lost revenue in respect of a document given by or on

20

behalf of P no account shall be taken of the fact that a potential loss of

revenue from P is or may be balanced by a potential over-payment by

another person (except to the extent that an enactment requires or permits a

person’s tax liability to be adjusted by reference to P’s).

Potential lost revenue: losses

25

7     (1)  

Where an inaccuracy has the result that a loss is wrongly recorded for

purposes of direct tax and the loss has been wholly used to reduce the

amount due or payable in respect of tax, the potential lost revenue is

calculated in accordance with paragraph 5.

      (2)  

Where an inaccuracy has the result that a loss is wrongly recorded for

30

purposes of direct tax and the loss has not been wholly used to reduce the

amount due or payable in respect of tax, the potential lost revenue is—

(a)   

the potential lost revenue calculated in accordance with paragraph 5

in respect of any part of the loss that has been used to reduce the

amount due or payable in respect of tax, plus

35

(b)   

10% of any part that has not.

      (3)  

Sub-paragraphs (1) and (2) apply both—

(a)   

to a case where no loss would have been recorded but for the

inaccuracy, and

(b)   

to a case where a loss of a different amount would have been

40

recorded (but in that case sub-paragraphs (1) and (2) apply only to

the difference between the amount recorded and the true amount).

      (4)  

Where an inaccuracy has the effect of creating or increasing an aggregate

loss recorded for a group of companies—

(a)   

the potential lost revenue shall be calculated in accordance with this

45

paragraph, and

 

 

 
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