Finance Bill

House of Commons

Session 2007 - 08
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Finance Bill

Finance Bill
Schedule 36 — Information and inspection powers
Part 7 — Penalties
365

Reasonable excuse
43    (1)
Liability to a penalty under paragraph 37 or 38 does not arise if the person
satisfies HMRC or (on appeal) the First-tier Tribunal that there is a
reasonable excuse for the failure or the obstruction of an officer of Revenue
and Customs.
5
      (2)
For the purposes of this paragraph—
(a)
an insufficiency of funds is not a reasonable excuse unless
attributable to events outside the person’s control,
(b)
where the person relies on any other person to do anything, that is
not a reasonable excuse unless the first person took reasonable care
10
to avoid the failure or obstruction, and
(c)
where the person had a reasonable excuse for the failure or
obstruction but the excuse has ceased, the person is to be treated as
having continued to have the excuse if the failure is remedied, or the
obstruction stops, without unreasonable delay after the excuse
15
ceased.
Assessment of standard penalty or daily default penalty
44    (1)
Where a person becomes liable for a penalty under paragraph 37 or 38,
HMRC may—
(a)
assess the penalty, and
20
(b)
notify the person.
      (2)
An assessment of a penalty under paragraph 37 or 38 must be made within
12 months of the relevant date.
      (3)
In sub-paragraph (2), “the relevant date” means—
(a)
in a case involving an information notice against which a person may
25
appeal, the later of—
(i)
the end of the period in which notice of an appeal against the
information notice could have been given, and
(ii)
if notice of an appeal against the information notice is given,
the date on which the appeal is determined or withdrawn,
30
and
(b)
in any other case, the date on which the person became liable to the
penalty.
Right to appeal against standard penalty or daily default penalty
45
A person may appeal to the First-tier Tribunal against any of the following
35
decisions of an officer of Revenue and Customs—
(a)
a decision that a penalty is payable by that person under paragraph
37 or 38, or
(b)
a decision as to the amount of such a penalty.
Procedure on appeal against standard penalty or daily default penalty
40
46    (1)
Notice of an appeal under paragraph 45 must be given—
(a)
in writing,
(b)
before the end of the period of 30 days beginning with the date on
which the notification under paragraph 44 was issued, and

Finance Bill
Schedule 36 — Information and inspection powers
Part 7 — Penalties
366

(c)
to HMRC.
      (2)
Notice of an appeal under paragraph 45 must state the grounds of appeal.
      (3)
On an appeal under paragraph 45(a), the First-tier Tribunal may confirm or
cancel the decision.
      (4)
On an appeal under paragraph 45(b), the First-tier Tribunal may—
5
(a)
confirm the decision, or
(b)
substitute for the decision another decision that the officer of
Revenue and Customs had power to make.
      (5)
Subject to this paragraph and paragraph 47, the provisions of Part 5 of TMA
1970 relating to appeals have effect in relation to appeals under this Part of
10
this Schedule as they have effect in relation to an appeal against an
assessment to income tax.
Enforcement of standard penalty or daily default penalty
47    (1)
A penalty under paragraph 37 or 38 must be paid—
(a)
before the end of the period of 30 days beginning with the date on
15
which the notification under paragraph 44 was issued, or
(b)
if a notice of an appeal against the penalty is given, before the end of
the period of 30 days beginning with the date on which the appeal is
determined or withdrawn.
      (2)
A penalty under paragraph 37 or 38 may be enforced as if it were income tax
20
charged in an assessment and due and payable.
Tax-related penalty
48    (1)
This paragraph applies where—
(a)
a person becomes liable to a penalty under paragraph 37,
(b)
the failure or obstruction continues after a penalty is imposed under
25
that paragraph,
(c)
an officer of Revenue and Customs has reason to believe that, as a
result of the failure or obstruction, the amount of tax that the person
has paid, or is likely to pay, is significantly less than it would
otherwise have been,
30
(d)
before the end of the period of 12 months beginning with the relevant
date (within the meaning of paragraph 44), an officer of Revenue and
Customs makes an application to the Upper Tribunal for an
additional penalty to be imposed on the person, and
(e)
the Upper Tribunal decides that it is appropriate for an additional
35
penalty to be imposed.
      (2)
The person is liable to a penalty of an amount decided by the Upper
Tribunal.
      (3)
In deciding the amount of the penalty, the Upper Tribunal must have regard
to the amount of tax which has not been, or is not likely to be, paid by the
40
person.
      (4)
Where a person becomes liable to a penalty under this paragraph, HMRC
must notify the person.

Finance Bill
Schedule 36 — Information and inspection powers
Part 8 — Offence
367

      (5)
Any penalty under this paragraph is in addition to the penalty or penalties
under paragraph 37 or 38.
      (6)
In the application of the following provisions, no account shall be taken of a
penalty under this paragraph—
(a)
section 97A of TMA 1970 (multiple penalties),
5
(b)
paragraph 12(2) of Schedule 24 to FA 2007 (interaction with other
penalties), and
(c)
paragraph 15(1) of Schedule 41 (interaction with other penalties).
Enforcement of tax-related penalty
49    (1)
A penalty under paragraph 48 must be paid before the end of the period of
10
30 days beginning with the date on which the notification of the penalty is
issued.
      (2)
A penalty under paragraph 48 may be enforced as if it were income tax
charged in an assessment and due and payable.
Double jeopardy
15
50
A person is not liable to a penalty under this Schedule in respect of anything
in respect of which the person has been convicted of an offence.
Part 8
Offence
Concealing etc documents following information notice
20
51    (1)
A person is guilty of an offence (subject to sub-paragraph (2)) if—
(a)
the person is required to produce a document by an information
notice,
(b)
the First-tier Tribunal approved the giving of the notice in
accordance with paragraph 3 or 5, and
25
(c)
the person conceals, destroys or otherwise disposes of, or arranges
for the concealment, destruction or disposal of, that document.
      (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
30
the person in writing that the document must continue to be available for
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 so produced unless, before the
35
expiry of that period, an officer of Revenue and Customs made a request for
the original document under paragraph 8(2)(b).
Concealing etc documents following informal notification
52    (1)
A person is also guilty of an offence (subject to sub-paragraph (2)) if the
person conceals, destroys or otherwise disposes of, or arranges for the
40

Finance Bill
Schedule 36 — Information and inspection powers
Part 9 — Miscellaneous provisions and interpretation
368

concealment, destruction or disposal of a document after the person has
been informed by an officer of Revenue and Customs in writing that—
(a)
the document is, or is likely, to be the subject of an information notice
addressed to that person, and
(b)
an officer of Revenue and Customs intends to seek the approval of
5
the First-tier Tribunal to the giving of the notice under paragraph 3
or 5 in respect of the document.
      (2)
A person is not guilty of an offence under this paragraph if the person acts
after—
(a)
at least 6 months has expired since the person was, or was last, so
10
informed, or
(b)
an information notice has been given to the person requiring the
document to be produced.
Fine or imprisonment
53
A person who is guilty of an offence under this Part of this Schedule is
15
liable—
(a)
on summary conviction, to a fine not exceeding the statutory
maximum, and
(b)
on conviction on indictment, to imprisonment for a term not
exceeding 2 years or to a fine, or both.
20
Part 9
Miscellaneous provisions and interpretation
Application of provisions of TMA 1970
54
Subject to the provisions of this Schedule, the following provisions of TMA
1970 apply for the purposes of this Schedule as they apply for the purposes
25
of the Taxes Acts—
(a)
section 108 (responsibility of company officers),
(b)
section 114 (want of form), and
(c)
section 115 (delivery and service of documents).
Regulations under this Schedule
30
55    (1)
Regulations made by the Commissioners or the Treasury under this
Schedule are to be made by statutory instrument.
      (2)
A statutory instrument containing regulations under this Schedule is subject
to annulment in pursuance of a resolution of the House of Commons.
General interpretation
35
56
In this Schedule—
“checking” includes carrying out an investigation or enquiry of any
kind,
“the Commissioners” means the Commissioners for Her Majesty’s
Revenue and Customs,
40
“document” includes a part of a document (except where the context
otherwise requires),

Finance Bill
Schedule 36 — Information and inspection powers
Part 9 — Miscellaneous provisions and interpretation
369

“enactment” includes subordinate legislation (within the meaning of
the Interpretation Act 1978 (c. 30)),
“HMRC” means Her Majesty’s Revenue and Customs,
“the Taxes Acts” means—
(a)
TMA 1970,
5
(b)
the Tax Acts, and
(c)
TCGA 1992 and all other enactments relating to capital gains
tax, and
“taxpayer”, in relation to a taxpayer notice or a third party notice, has
the meaning given in paragraph 1(1) or 2(1) (as appropriate).
10
Authorised officer of Revenue and Customs
57
A reference in a provision of this Schedule to an authorised officer of
Revenue and Customs is a reference to an officer of Revenue and Customs
who is, or is a member of a class of officers who are, authorised by the
Commissioners for the purpose of that provision.
15
Business
58    (1)
In this Schedule (subject to regulations under this paragraph), references to
carrying on a business include—
(a)
the letting of property,
(b)
the activities of a charity, and
20
(c)
the activities of a government department, a local authority, a local
authority association and any other public authority.
      (2)
In sub-paragraph (1)—
“charity” means a body of persons or trust established for charitable
purposes only,
25
“local authority” has the meaning given in section 999 of ITA 2007, and
“local authority association” has the meaning given in section 1000 of
that Act.
      (3)
The Commissioners may by regulations provide that for the purposes of this
Schedule—
30
(a)
the carrying on of an activity specified in the regulations, or
(b)
the carrying on of such an activity (or any activity) by a person
specified in the regulations,

is or is not to be treated as the carrying on of a business.
Chargeable period
35
59
In this Schedule, “chargeable period” means—
(a)
in relation to income tax or capital gains tax, a tax year, and
(b)
in relation to corporation tax, an accounting period.
Statutory records
60    (1)
For the purposes of this Schedule, information or a document forms part of
40
a person’s statutory records if it is information or a document which the
person is required to keep and preserve under or by virtue of—
(a)
the Taxes Acts, or

Finance Bill
Schedule 36 — Information and inspection powers
Part 9 — Miscellaneous provisions and interpretation
370

(b)
VATA 1994 or any other enactment relating to value added tax
charged in accordance with that Act,

subject to the following provisions of this paragraph.
      (2)
To the extent that any information or document that is required to be kept
and preserved under or by virtue of the Taxes Acts—
5
(a)
does not relate to the carrying on of a business, and
(b)
is not also required to be kept or preserved under or by virtue of
VATA 1994 or any other enactment relating to value added tax,

it only forms part of a person’s statutory records to the extent that the
chargeable period or periods to which it relates has or have ended.
10
      (3)
Information and documents cease to form part of a person’s statutory
records when the period for which they are required to be preserved by the
enactments mentioned in sub-paragraph (1) has expired.
Tax
61    (1)
In this Schedule, except where the context otherwise requires, “tax” means
15
all or any of the following—
(a)
income tax,
(b)
capital gains tax,
(c)
corporation tax,
(d)
VAT, and
20
(e)
relevant foreign tax,

and references to “a tax” are to be interpreted accordingly.
      (2)
In this Schedule, “corporation tax” includes any amount assessable or
chargeable as if it were corporation tax.
      (3)
In this Schedule, “VAT” means—
25
(a)
value added tax charged in accordance with VATA 1994, and
(b)
value added tax charged in accordance with the law of another
member State,

and includes any amount that is recoverable under paragraph 5(2) of
Schedule 11 to VATA 1994 (amounts shown on invoices as VAT).
30
      (4)
In this Schedule, “relevant foreign tax” means—
(a)
a tax of a member State, other than the United Kingdom, which is
covered by the provisions for the exchange of information under the
Directive of the Council of the European Communities dated 19
December 1977 No. 77/799/EEC (as amended from time to time),
35
and
(b)
any tax or duty which is imposed under the law of a territory in
relation to which arrangements having effect by virtue of section 173
of FA 2006 (international tax enforcement arrangements) have been
made and which is covered by the arrangements.
40
Tax position
62    (1)
In this Schedule, except as otherwise provided, “tax position”, in relation to
a person, means the person’s position as regards any tax, including the
person’s position as regards—
(a)
past, present and future liability to pay any tax,
45

Finance Bill
Schedule 36 — Information and inspection powers
Part 10 — Consequential provisions
371

(b)
penalties and other amounts that have been paid, or are or may be
payable, by or to the person in connection with any tax, and
(c)
claims, elections, applications and notices that have been or may be
made or given in connection with any tax,

and references to a person’s position as regards a particular tax (however
5
expressed) are to be interpreted accordingly.
      (2)
References in this Schedule to a person’s tax position include, where
appropriate, a reference to the person’s position as regards any deductions
or repayments of tax, or of sums representing tax, that the person is required
to make—
10
(a)
under PAYE regulations,
(b)
under Chapter 3 of Part 3 of FA 2003 or regulations made under that
Chapter (construction industry scheme), or
(c)
by or under any other provision of the Taxes Acts.
      (3)
References in this Schedule to the tax position of a person include the tax
15
position of—
(a)
a company that has ceased to exist, and
(b)
an individual who has died.
      (4)
References in this Schedule to a person’s tax position are to the person’s tax
position at any time or in relation to any period, unless otherwise stated.
20
Part 10
Consequential provisions
TMA 1970
63
TMA 1970 is amended as follows.
64
Omit section 19A (power to call for documents for purposes of enquiries).
25
65
Omit section 20 (power to call for documents of taxpayer and others).
66    (1)
Section 20B (restrictions on powers to call for documents under ss20 and
20A) is amended as follows.
      (2)
In the heading, for “ss 20 and” substitute “section”.
      (3)
In subsection (1)—
30
(a)
omit “under section 20(1), (3) or (8A), or”,
(b)
omit “(or, in the case of section 20(3), to deliver or make available)”,
(c)
omit “, or to furnish the particulars in question”, and
(d)
omit “section 20(7) or (8A) or, as the case may be,”.
      (4)
Omit subsections (1A) and (1B).
35
      (5)
In subsection (2), omit from the beginning to “taxpayer;”.
      (6)
In subsection (3)—
(a)
omit “under section 20(1) or (3) or”, and
(b)
omit “section 20(3) and (4) and”.
      (7)
In subsection (4)—
40
(a)
omit “section 20(1) or”, and