Finance Bill

House of Commons

Session 2007 - 08
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Finance Bill

Finance Bill
Schedule 36 — Information and inspection powers
Part 4 — Restrictions on powers
358

(b)
to produce any part of a document that is privileged.
      (2)
For the purpose of this Schedule, information or a document is privileged if
it is information or a document in respect of which a claim to legal
professional privilege or, in Scotland to confidentiality of communications
as between client and professional legal adviser, could be maintained in
5
legal proceedings.
      (3)
The Commissioners may by regulations make provision for the resolution
by the First-tier Tribunal of disputes as to whether any information or
document is privileged.
      (4)
The regulations may, in particular, make provision as to—
10
(a)
the custody of a document while its status is being decided, and
(b)
the procedures to be followed.
Auditors
22    (1)
An information notice does not require a person who has been appointed as
an auditor for the purpose of an enactment—
15
(a)
to provide information held in connection with the performance of
the person’s functions under that enactment, or
(b)
to produce documents which are that person’s property and which
were created by that person or on that person’s behalf for or in
connection with the performance of those functions.
20
      (2)
Sub-paragraph (1) has effect subject to paragraph 24.
Tax advisers
23    (1)
An information notice does not require a tax adviser—
(a)
to provide information about relevant communications, or
(b)
to produce documents which are the tax adviser’s property and
25
consist of relevant communications.
      (2)
Sub-paragraph (1) has effect subject to paragraph 24.
      (3)
In this paragraph—
“relevant communications” means communications between the tax
adviser and—
30
(a)
a person in relation to whose tax affairs he has been
appointed, or
(b)
any other tax adviser of such a person,
the purpose of which is the giving or obtaining of advice about any
of those tax affairs, and
35
“tax adviser” means a person appointed to give advice about the tax
affairs of another person (whether appointed directly by that person
or by another tax adviser of that person).
Auditors and tax advisers: supplementary
24    (1)
Paragraphs 22(1) and 23(1) do not have effect in relation to—
40
(a)
information explaining any information or document which the
person to whom the notice is given has, as tax accountant, assisted
any client in preparing for, or delivering to, HMRC, or

Finance Bill
Schedule 36 — Information and inspection powers
Part 5 — Appeals against information notices
359

(b)
a document which contains such information.
      (2)
In the case of a notice given under paragraph 5, paragraphs 22(1) and 23(1)
do not have effect in relation to—
(a)
any information giving the identity or address of a person to whom
the notice relates or of a person who has acted on behalf of such a
5
person, or
(b)
a document which contains such information.
      (3)
Paragraphs 22(1) and 23(1) are not disapplied by sub-paragraph (1) or (2) if
the information in question has already been provided, or a document
containing the information in question has already been produced, to an
10
officer of Revenue and Customs.
25    (1)
This paragraph applies where paragraph 22(1) or 23(1) is disapplied in
relation to a document by paragraph 24(1) or (2).
      (2)
An information notice that requires the document to be produced has effect
as if it required any part or parts of the document containing the information
15
mentioned in paragraph 24(1) or (2) to be produced.
Corresponding restrictions on inspection of business documents
26
An officer of Revenue and Customs may not inspect a business document
under Part 2 of this Schedule if or to the extent that, by virtue of this Part of
this Schedule, an information notice given at the time of the inspection to the
20
occupier of the premises could not require the occupier to produce the
document.
Part 5
Appeals against information notices
Right to appeal against taxpayer notice
25
27    (1)
Where a taxpayer is given a taxpayer notice, the taxpayer may appeal to the
First-tier Tribunal against the notice or any requirement in the notice.
      (2)
Sub-paragraph (1) does not apply to a requirement in a taxpayer notice to
provide any information, or produce any document, that forms part of the
taxpayer’s statutory records.
30
      (3)
Sub-paragraph (1) does not apply if the First-tier Tribunal approved the
giving of the notice in accordance with paragraph 3.
Right to appeal against third party notice
28    (1)
Where a person is given a third party notice, the person may appeal to the
First-tier Tribunal against the notice or any requirement in the notice on the
35
ground that it would be unduly onerous to comply with the notice or
requirement.
      (2)
Sub-paragraph (1) does not apply to a requirement in a third party notice to
provide any information, or produce any document, that forms part of the
taxpayer’s statutory records.
40

Finance Bill
Schedule 36 — Information and inspection powers
Part 5 — Appeals against information notices
360

      (3)
Sub-paragraph (1) does not apply if the First-tier Tribunal approved the
giving of the notice in accordance with paragraph 3.
Right to appeal against notice given under paragraph 5
29
Where a person is given a notice under paragraph 5, the person may appeal
to the First-tier Tribunal against the notice or any requirement in the notice
5
on the ground that it would be unduly onerous to comply with the notice or
requirement.
Procedure
30    (1)
Notice of an appeal under this Part of this Schedule must be given—
(a)
in writing,
10
(b)
before the end of the period of 30 days beginning with the date on
which the information notice is given, and
(c)
to the officer of Revenue and Customs by whom the information
notice was given.
      (2)
Notice of an appeal under this Part of this Schedule must state the grounds
15
of appeal.
      (3)
On an appeal the First-tier Tribunal may—
(a)
confirm the information notice or a requirement in the information
notice,
(b)
vary the information notice or such a requirement, or
20
(c)
set aside the information notice or such a requirement.
      (4)
Where the First-tier Tribunal confirms or varies the information notice or a
requirement, the person to whom the information notice was given must
comply with the notice or requirement—
(a)
within such period as is specified by the Tribunal, or
25
(b)
if the Tribunal does not specify a period, within such period as is
reasonably specified in writing by an officer of Revenue and
Customs following the Tribunal’s decision.
      (5)
A decision by the First-tier Tribunal on an appeal under this Part of this
Schedule is final.
30
      (6)
Subject to this paragraph, the provisions of Part 5 of TMA 1970 relating to
appeals have effect in relation to appeals under this Part of this Schedule as
they have effect in relation to an appeal against an assessment to income tax.
Special cases
31
This Part of this Schedule has effect subject to Part 6 of this Schedule.
35

Finance Bill
Schedule 36 — Information and inspection powers
Part 6 — Special cases
361

Part 6
Special cases
Supply of goods or services etc
32    (1)
This paragraph applies to a taxpayer notice or third party notice that refers
only to information or documents that form part of any person’s statutory
5
records and relate to—
(a)
the supply of goods or services,
(b)
the acquisition of goods from another member State, or
(c)
the importation of goods from a place outside the member States in
the course of carrying on a business.
10
      (2)
Paragraph 3(1) (requirement for consent to, or approval of, third party
notice) does not apply to such a notice.
      (3)
Where a person is given such a notice, the person may not appeal to the First-
tier Tribunal against the notice or any requirement in the notice.
      (4)
Sections 5, 11 and 15 of, and Schedule 4 to, VATA 1994, and any orders made
15
under those provisions, apply for the purposes of this paragraph as if it were
part of that Act.
Groups of undertakings
33    (1)
This paragraph applies where an undertaking is a parent undertaking in
relation to another undertaking (a subsidiary undertaking).
20
      (2)
Where a third party notice is given to any person for the purpose of checking
the tax position of the parent undertaking and any of its subsidiary
undertakings, paragraph 2 only requires the notice to state this and name the
parent undertaking.
      (3)
In relation to such a notice—
25
(a)
in paragraphs 3 and 4 (approval etc of notices and copying third
party notices to taxpayer), the references to the taxpayer have effect
as if they were references to the parent undertaking, but
(b)
in paragraph 28(2) (no appeal in relation to taxpayer’s statutory
records), the reference to the taxpayer has effect as if it were a
30
reference to the parent undertaking and each of its subsidiary
undertakings.
      (4)
Where a third party notice is given to the parent undertaking for the purpose
of checking the tax position of one or more subsidiary undertakings—
(a)
paragraphs 3(1) and 4(1) (approval etc of notices and copying third
35
party notices to taxpayer) do not apply to the notice, but
(b)
paragraph 19 (restrictions on giving taxpayer notice where taxpayer
has made tax return) applies as if the notice was a taxpayer notice or
taxpayer notices given to the subsidiary undertaking or each of the
subsidiary undertakings.
40
      (5)
Where a notice is given under paragraph 5 to the parent undertaking for the
purpose of checking the tax position of one or more subsidiary undertakings
whose identities are not known to the officer giving the notice, sub-

Finance Bill
Schedule 36 — Information and inspection powers
Part 6 — Special cases
362

paragraph (3) of that paragraph (approval of First-tier Tribunal) does not
apply.
      (6)
Where a third party notice or a notice under paragraph 5 is given to the
parent undertaking for the purpose of checking the tax position of one or
more subsidiary undertakings, the parent undertaking may not appeal
5
against a requirement in the notice to produce any document that forms part
of the statutory records of the parent undertaking or any of its subsidiary
undertakings.
      (7)
In this paragraph, “parent undertaking”, “subsidiary undertaking” and
“undertaking” have the same meaning as in the Companies Acts (see
10
sections 1161 and 1162 of, and Schedule 7 to, the Companies Act 2006 (c. 46)).
Change of ownership of companies
34    (1)
Sub-paragraph (2) applies where it appears to the Commissioners that—
(a)
there has been a change in the ownership of a company, and
(b)
in connection with that change a person (“the seller”) may be or
15
become liable to be assessed and charged to corporation tax under
section 767A or 767AA of ICTA.
      (2)
Paragraph 19 (restrictions on giving taxpayer notice where taxpayer has
made tax return) does not apply in relation to a taxpayer notice given to the
seller.
20
      (3)
Section 769 of ICTA applies for the purposes of determining when there has
been a change in the ownership of a company.
Partnerships
35    (1)
This paragraph applies where a business is carried on by two or more
persons in partnership.
25
      (2)
If a tax return has been made by any of the partners under section 12AA of
TMA 1970 (partnership returns) in respect of a chargeable period—
(a)
paragraph 19 (restrictions where taxpayer has made tax return) has
effect as if that return had been made by each of the partners in
respect of that chargeable period, and
30
(b)
for the purpose of that paragraph, Condition A is met in relation to a
partner if a notice of enquiry has been given, and an enquiry has not
been completed, in respect of that return or any other return
mentioned in paragraph 19(1) or (2) made by the partner in respect
of the chargeable period in question.
35
      (3)
Where a third party notice is given to any person (other than one of the
partners) for the purpose of checking the tax position of more than one of the
partners (in their capacity as such), paragraph 2 only requires the notice to
state this and give a name in which the partnership is registered for any
purpose.
40
      (4)
In relation to such a notice—
(a)
in paragraphs 3 and 4 (approval etc of notices and copying third
party notices to taxpayer), the references to the taxpayer have effect
as if they were references to at least one of the partners, and

Finance Bill
Schedule 36 — Information and inspection powers
Part 7 — Penalties
363

(b)
in paragraph 28(2) (no appeal in relation to taxpayer’s statutory
records), the reference to the taxpayer has effect as if it were a
reference to each of the partners.
      (5)
Where a third party notice is given to one of the partners for the purpose of
checking the tax position of one or more of the other partners (in their
5
capacity as such), paragraphs 3(1) and 4(1) (approval etc of notices and
copying third party notices to taxpayer) do not apply.
      (6)
Where a notice is given under paragraph 5 to one of the partners for the
purpose of checking the tax position of one or more of the other partners
whose identities are not known to the officer giving the notice, sub-
10
paragraph (3) of that paragraph (approval of First-tier Tribunal) does not
apply.
      (7)
Where a third party notice or a notice under paragraph 5 is given to one of
the partners for the purpose of checking the tax position of one or more of
the other partners, that partner may not appeal against a requirement in the
15
notice to produce any document that forms part of that partner’s statutory
records.
Application to the Crown
36
This Schedule (other than Part 8) applies to the Crown, but not to Her
Majesty in Her private capacity (within the meaning of the Crown
20
Proceedings Act 1947 (c. 44)).
Part 7
Penalties
Standard penalties
37    (1)
This paragraph applies to a person who—
25
(a)
fails to comply with an information notice, or
(b)
deliberately obstructs an officer of Revenue and Customs in the
course of an inspection under Part 2 of this Schedule that has been
approved by the First-tier Tribunal.
      (2)
A person to whom this paragraph applies is liable to a penalty of £300.
30
      (3)
The reference in this paragraph to a person who fails to comply with an
information notice includes a person who conceals, destroys or otherwise
disposes of, or arranges for the concealment, destruction or disposal of, a
document in breach of paragraph 40 or 41.
Daily default penalties
35
38    (1)
This paragraph applies if the failure or obstruction mentioned in paragraph
37(1) continues after the date on which a penalty is imposed under that
paragraph in respect of the failure or obstruction.
      (2)
The person is liable to a further penalty or penalties not exceeding £60 for
each subsequent day on which the failure or obstruction continues.
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Finance Bill
Schedule 36 — Information and inspection powers
Part 7 — Penalties
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Power to change amount of standard and daily default penalties
39    (1)
If it appears to the Treasury that there has been a change in the value of
money since the last relevant date, they may by regulations substitute for the
sums for the time being specified in paragraphs 37(2) and 38(2) such other
sums as appear to them to be justified by the change.
5
      (2)
In sub-paragraph (1), “relevant date” means—
(a)
the date on which this Act is passed, and
(b)
each date on which the power conferred by that sub-paragraph has
been exercised.
      (3)
Regulations under this paragraph do not apply to any failure or obstruction
10
which began before the date on which they come into force.
Concealing, destroying etc documents following information notice
40    (1)
A person must not conceal, destroy or otherwise dispose of, or arrange for
the concealment, destruction or disposal of, a document that is the subject of
an information notice addressed to the person (subject to sub-paragraphs (2)
15
and (3)).
      (2)
Sub-paragraph (1) does not apply if the person acts after the document has
been produced to an officer of Revenue and Customs in accordance with the
information notice, unless an officer of Revenue and Customs has notified
the person in writing that the document must continue to be available for
20
inspection (and has not withdrawn the notification).
      (3)
Sub-paragraph (1) does not apply, in a case to which paragraph 8(1) applies,
if the person acts after the expiry of the period of 6 months beginning with
the day on which a copy of the document was produced in accordance with
that paragraph unless, before the expiry of that period, an officer of Revenue
25
and Customs made a request for the original document under paragraph
8(2)(b).
Concealing, destroying etc documents following informal notification
41    (1)
A person must not conceal, destroy or otherwise dispose of, or arrange for
the concealment, destruction or disposal of, a document if an officer of
30
Revenue and Customs has informed the person that the document is, or is
likely, to be the subject of an information notice addressed to that person
(subject to sub-paragraph (2)).
      (2)
Sub-paragraph (1) does not apply if the person acts after—
(a)
at least 6 months has expired since the person was, or was last, so
35
informed, or
(b)
an information notice has been given to the person requiring the
document to be produced.
Failure to comply with time limit
42
A failure by a person to do anything required to be done within a limited
40
period of time does not give rise to liability to a penalty under paragraph 37
or 38 if the person did it within such further time, if any, as an officer of
Revenue and Customs may have allowed.