Finance Bill

House of Commons

Session 2006 - 07
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Part 6 — Investigation, administration etc
69

95
Enquiry into returns
(1)
In section 9A(2)(a) of TMA 1970 (period during which HMRC can open
enquiry into return), for “after the filing date;” substitute “after the day on
which the return was delivered;”.
(2)
In section 12AC(2)(a) of TMA 1970 (period during which HMRC can open
5
enquiry into partnership return), for “after the filing date;” substitute “after the
day on which the return was delivered;”.
(3)
In paragraph 24(2) of Schedule 18 to FA 1998 (period during which HMRC can
open enquiry into company tax return), for “from the filing date.” substitute
“from the day on which the return was delivered (subject to sub-paragraph
10
(6)).”
(4)
In paragraph 24 of that Schedule, insert at the end—
    “(6)
In the case of a company which is a member of a group other than a
small group, the 12-month period in sub-paragraph (2) shall start not
from the day on which the return was delivered but from the filing
15
date.
      (7)
In sub-paragraph (6) “group” and “small group” have the same
meaning as in sections 383(2) and 474(1) of the Companies Act 2006
(or, until their commencement, as in the provisions that they
replicate).”
20
(5)
The amendments made by subsections (1) and (2) apply to returns which relate
to the tax year 2007-08 or a later tax year.
(6)
The amendments made by subsections (3) and (4) apply to returns which relate
to accounting periods ending after 31st March 2008.
96
Penalties for errors
25
(1)
Schedule 24 contains provisions imposing penalties on taxpayers who—
(a)
make errors in certain documents sent to HMRC, or
(b)
unreasonably fail to report errors in assessments by HMRC.
(2)
That Schedule comes into force in accordance with provision made by the
Treasury by order.
30
(3)
An order—
(a)
may commence a provision generally or only for specified purposes,
(b)
may make different provision for different purposes, and
(c)
may include incidental, consequential or transitional provision.
(4)
The power to make an order is exercisable by statutory instrument.
35

Finance Bill
Part 7 — Miscellaneous
70

Part 7
Miscellaneous
Value added tax and insurance premium tax
97
VAT: joint and several liability of traders in supply chain where tax unpaid
In section 77A of VATA 1994 (joint and several liability of traders in supply
5
chain where tax unpaid), for subsection (9) substitute—
“(9)
The Treasury may by order amend subsection (1) above.
(9A)
The Treasury may by order amend this section in order to extend or
otherwise alter the circumstances in which a person shall be presumed
to have reasonable grounds for suspecting matters to be as mentioned
10
in subsection (2)(b) above.
(9B)
Any order under this section may make such incidental, supplemental,
consequential or transitional provision as the Treasury think fit.”
98
VAT: non-business use etc of business goods
(1)
Schedule 4 to VATA 1994 (matters to be treated as supply of goods or services)
15
is amended as follows.
(2)
In paragraph 5 (non-business use etc of business goods), omit sub-paragraph
(4A) (exception to rule in case of interests in land and buildings etc that non-
business use of business assets treated as supply of services).
(3)
In paragraph 9 (application of paragraphs 5 to 8 where land forms part of assets
20
of business), insert at the end—
    “(4)
In this paragraph “grant” includes surrender.”
(4)
Paragraph 7 of Schedule 6 to VATA 1994 (valuation of supply of services
otherwise than for consideration by virtue of paragraph 5(4) of Schedule 4 etc)
is amended as follows.
25
(5)
The existing provision becomes sub-paragraph (1) and after that sub-
paragraph insert—
    “(2)
Regulations may, in relation to a supply of services by virtue of
paragraph 5(4) of Schedule 4 (but otherwise than for a
consideration), make provision for determining how the full cost to
30
the taxable person of providing the services is to be calculated.
      (3)
The regulations may, in particular, make provision for the
calculation to be made by reference to any prescribed period.
      (4)
The regulations may make—
(a)
different provision for different circumstances;
35
(b)
such incidental, supplementary, consequential or transitional
provision as the Commissioners think fit.”
(6)
The amendment made by subsection (2) comes into force on 1st September
2007.

Finance Bill
Part 7 — Miscellaneous
71

(7)
The amendment made by subsection (3) has effect in relation to surrenders on
or after 21st March 2007.
99
VAT: transfers of going concerns
(1)
Section 49 of VATA 1994 (transfers of going concern) is amended as follows.
(2)
In subsection (1) (transferor’s supplies treated as transferee’s supplies for
5
purposes of registration and transferor’s records to be kept by transferee after
transfer)—
(a)
after “Where a business” insert “, or part of a business,”,
(b)
after “on the business” insert “or part of the business”, and
(c)
omit paragraph (b) (together with the “and” before it).
10
(3)
In subsection (2) (regulations for securing continuity of Act in case of transfers
of going concerns), after “a business” insert “, or part of a business,”.
(4)
After that subsection insert—
“(2A)
Regulations under subsection (2) above may, in particular, provide for
the duties under this Act of the transferor to preserve records relating
15
to the business or part of the business for any period after the transfer
to become duties of the transferee unless the Commissioners, at the
request of the transferor, otherwise direct.”
(5)
In subsection (3) (provision which may be made by regulations), in paragraph
(a), after “the transferor” insert “(other than the duties mentioned in subsection
20
(2A) above)”.
(6)
After that subsection insert—
“(4)
Subsection (5) below applies where—
(a)
a business, or part of a business, carried on by a taxable person
is transferred to another person as a going concern, and
25
(b)
the transferor continues to be required under this Act to
preserve for any period after the transfer any records relating to
the business or part of the business.
(5)
So far as is necessary for the purpose of complying with the transferee’s
duties under this Act, the transferee (“E”) may require the transferor—
30
(a)
to give to E, within such time and in such form as E may
reasonably require, such information contained in the records
as E may reasonably specify,
(b)
to give to E, within such time and in such form as E may
reasonably require, such copies of documents forming part of
35
the records as E may reasonably specify, and
(c)
to make the records available for E’s inspection at such time and
place as E may reasonably require (and permit E to take copies
of, or make extracts from, them).
(6)
Where a business, or part of a business, carried on by a taxable person
40
is transferred to another person as a going concern, the Commissioners
may disclose to the transferee any information relating to the business
when it was carried on by the transferor for the purpose of enabling the
transferee to comply with the transferee’s duties under this Act.”
(7)
In section 94(6) of VATA 1994 (meaning of “business” etc)—
45

Finance Bill
Part 7 — Miscellaneous
72

(a)
after “a business” insert “, or part of a business,”, and
(b)
for “its assets or liabilities” substitute “the assets or liabilities of the
business or part of the business”.
(8)
In paragraph 1(2) of Schedule 1 to that Act (registration in respect of taxable
supplies), after “Where a business” insert “, or part of a business,”.
5
(9)
In paragraph 8(2)(b) of Schedule 4 to that Act (matters to be treated as supply
of goods or services), after “a business” insert “, or part of a business,”.
(10)
The amendments made by this section have effect in relation to transfers
pursuant to contracts entered into on or after 1st September 2007.
100
IPT: meaning of “premium”
10
(1)
In section 72 of FA 1994 (interpretation: “premium”), after subsection (1A)
insert—
“(1B)
Where—
(a)
an amount is charged (to the insured or any other person) in
respect of the acquisition of a right (whether of the insured or
15
any other person) to require the insurer to provide, or offer to
provide, any of the cover included in a taxable insurance
contract, and
(b)
any payment in respect of that amount is not regarded as a
payment received under that contract by the insurer by virtue
20
of subsection (1A) above,

the payment is to be regarded as a payment received under that
contract by the insurer unless it is chargeable to tax at the higher rate by
virtue of section 52A above.”
(2)
The amendment made by subsection (1) has effect in relation to amounts
25
charged on or after 22nd March 2007.
Petroleum revenue tax
101
Abolition of PRT for fields recommissioned after earlier decommissioning
(1)
Section 185 of FA 1993 (abolition of PRT for oil fields with development
consents on or after 16th March 1993) is amended as follows.
30
(2)
In subsection (1) (meaning of “non-taxable field” and “taxable field”), after
paragraph (b) insert “or an oil field which does not meet the conditions in
paragraphs (a) and (b) above but which does meet the conditions in subsection
(1A) below”.
(3)
After that subsection insert—
35
“(1A)
An oil field meets the conditions in this subsection if—
(a)
the Secretary of State has at any time approved one or more
abandonment programmes under Part 4 of the Petroleum Act
1998 (or Part 1 of the Petroleum Act 1987) in relation to all assets
of the field which are relevant assets;
40
(b)
those programmes have been carried out to the satisfaction of
the Secretary of State;
(c)
a development decision is made in relation to the field; and

Finance Bill
Part 7 — Miscellaneous
73

(d)
that decision is made on or after 16th March 1993 and after those
programmes have been so carried out.
(1B)
For the purposes of subsection (1A)(a) above, an asset is a relevant asset
of an oil field if—
(a)
it has at any time been a qualifying asset (within the meaning of
5
the 1983 Act) in relation to any participator in the field; and
(b)
it has at any time been used for the purpose of winning oil from
the field.
(1C)
For the purposes of subsection (1A)(c) and (d) above, a development
decision is made in relation to an oil field when—
10
(a)
consent for development is granted to a licensee by the
Secretary of State in respect of the whole or part of the field; or
(b)
a programme of development is served on a licensee or
approved by the Secretary of State for the whole or part of the
field.”
15
(4)
In subsection (7) (meaning of “development” etc), for “subsections (1) and (2)”
substitute “this section”.
(5)
An oil field which meets the conditions in subsection (1A) of section 185 of FA
1993 (as inserted by subsection (3) above) becomes a non-taxable field for the
purposes of any enactment relating to petroleum revenue tax—
20
(a)
in any case where the development decision is made before 1st July
2007, on that date, and
(b)
in any other case, on the date on which the development decision is
made.
102
Tax-exempt tariffing receipts
25
(1)
Section 6A of the Oil Taxation Act 1983 (c. 56) (tax-exempt tariffing receipts) is
amended as follows.
(2)
In subsection (4), insert at the end “or
(c)
use in relation to a UK recommissioned field (see subsection (5)
below) or oil won from such a field.”
30
(3)
In subsection (5), insert at the end—
““UK recommissioned field” means any oil field which is not a
new field or qualifying existing field but as respects which the
conditions in section 185(1A) of the Finance Act 1993 are
satisfied (fields recommissioned after earlier
35
decommissioning).”
(4)
The amendments made by this section are deemed to have come into force on
1st July 2007.
103
Allowance of unrelievable loss from abandoned field
(1)
In section 6 of the Oil Taxation Act 1975 (c. 22) (allowance of unrelievable loss
40
from abandoned field), after subsection (4) insert—
“(4A)
For the purposes of this section and Schedule 8 to this Act, the winning
of oil from an oil field shall not be regarded as having permanently

Finance Bill
Part 7 — Miscellaneous
74

ceased until all the oil wells in the field have been permanently
abandoned.”
(2)
The amendment made by subsection (1) is deemed to have come into force on
1st July 2007.
Other miscellaneous measures
5
104
Amendments connected with Gambling Act 2005
Schedule 25 contains amendments that are consequential on, or otherwise
connected with, the Gambling Act 2005 (c. 19).
105
VED: exempt vehicles
(1)
In section 5 of VERA 1994 (exempt vehicles), after subsection (2) insert—
10
“(3)
The Secretary of State may by order amend Schedule 2 in order to make
provision about the descriptions of—
(a)
tractors, and
(b)
vehicles used for purposes relating to agriculture, horticulture
or forestry,
15

that are to be exempt vehicles.
(4)
An order under subsection (3) may in particular repeal any of
paragraphs 20A to 20D of Schedule 2.”
(2)
In section 60(3) of that Act (orders subject to affirmative procedure), after
“under” insert “section 5(3) or”.
20
106
Limitation period in old actions for mistake of law relating to direct tax
(1)
Section 32(1)(c) of the Limitation Act 1980 (c. 58) (extended period for bringing
action in case of mistake) does not apply in relation to any action brought
before 8th September 2003 for relief from the consequences of a mistake of law
relating to a taxation matter under the care and management of the
25
Commissioners of Inland Revenue.
(2)
Subsection (1) has effect regardless of how the grounds on which the action
was brought were expressed and of whether it was also brought otherwise
than for such relief.
(3)
But subsection (1) does not have effect in relation to an action, or so much of an
30
action as relates to a cause of action, if—
(a)
the action, or cause of action, has been the subject of a judgment of the
House of Lords given before 6th December 2006 as to the application of
section 32(1)(c) in relation to such relief, or
(b)
the parties to the action are, in accordance with a group litigation order,
35
bound in relation to the action, or cause of action, by a judgment of the
House of Lords in another action given before that date as to the
application of section 32(1)(c) in relation to such relief.
(4)
If the judgment of any court was given on or after 6th December 2006 but
before the day on which this Act is passed, the judgment is to be taken to have
40
been what it would have been had subsections (1) to (3) been in force at all

Finance Bill
Part 7 — Miscellaneous
75

times since the action was brought (and any defence of limitation which would
have been available had been raised).
(5)
And any payment made to satisfy a liability under the judgment which (in
consequence of subsection (4)) is to be taken not to have been imposed is
repayable (with interest from the date of the payment).
5
(6)
In this section—
“group litigation order” means an order of a court providing for the case
management of actions which give rise to common or related issues of
fact or law, and
“judgment” includes order (and “given” includes made).
10
107
Disclosure of tax avoidance schemes
(1)
Part 7 of FA 2004 (disclosure of tax avoidance schemes) is amended as follows.
(2)
After section 306 insert—
“306A
Doubt as to notifiability
(1)
HMRC may apply to the Special Commissioners for an order that—
15
(a)
a proposal is to be treated as notifiable, or
(b)
arrangements are to be treated as notifiable.
(2)
An application must specify—
(a)
the proposal or arrangements in respect of which the order is
sought, and
20
(b)
the promoter.
(3)
On an application the Special Commissioners may make the order only
if satisfied that HMRC—
(a)
have taken all reasonable steps to establish whether the
proposal or arrangements are notifiable, and
25
(b)
have reasonable grounds for suspecting that the proposal or
arrangements may be notifiable.
(4)
Reasonable steps under subsection (3)(a) may (but need not) include
taking action under section 313A or 313B.
(5)
Grounds for suspicion under subsection (3)(b) may include—
30
(a)
the fact that the relevant arrangements fall within a description
prescribed under section 306(1)(a);
(b)
an attempt by the promoter to avoid or delay providing
information or documents about the proposal or arrangements
under or by virtue of section 313A or 313B;
35
(c)
the promoter’s failure to comply with a requirement under or
by virtue of section 313A or 313B in relation to another proposal
or other arrangements.
(6)
Where an order is made under this section in respect of a proposal or
arrangements, the prescribed period for the purposes of section 308(1)
40
or (3) in so far as it applies by virtue of the order—
(a)
shall begin after a date prescribed for the purpose, and
(b)
may be of a different length than the prescribed period for the
purpose of other applications of section 308(1) or (3).