Finance Bill

House of Commons

Session 2007 - 08
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Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 39 — Time limits for assessments, claims etc.
386

(a)
in paragraph (a), for “at any time after the fifth anniversary of the
31st January next following” substitute “more than 4 years after the
end of”, and
(b)
in paragraph (b), for “6 years” substitute “4 years”.
VATA 1994
5
31
VATA 1994 is amended as follows.
32
In section 33A(4) (refunds of VAT to museums and galleries), for “3 years”
substitute “4 years”.
33    (1)
Section 77 (assessments: time limits and supplementary assessments) is
amended as follows.
10
      (2)
In subsection (1)(a) and (b), for “3 years” substitute “4 years”.
      (3)
For subsection (4) substitute—
“(4)
In any case falling within subsection (4A), an assessment of a person
(“P”), or of an amount payable by P, may be made at any time not
more than 20 years after the end of the prescribed accounting period
15
or the importation, acquisition or event giving rise to the penalty, as
appropriate (subject to subsection (5)).
(4A)
Those cases are—
(a)
a case involving a loss of VAT brought about deliberately by
P (or by another person acting on P’s behalf),
20
(b)
a case in which P has participated in a transaction knowing
that it was part of arrangements of any kind (whether or not
legally enforceable) intended to bring about a loss of VAT,
(c)
a case involving a loss of VAT attributable to a failure by P to
comply with a notification obligation, and
25
(d)
a case involving a loss of VAT attributable to a scheme in
respect of which P has failed to comply with an obligation
under paragraph 6 of Schedule 11A.
(4B)
In subsection (4A) the references to a loss of tax brought about
deliberately by P or another person include a loss that arises as a
30
result of a deliberate inaccuracy in a document given to Her
Majesty’s Revenue and Customs by that person.
(4C)
In subsection (4A)(c) “notification obligation” means an obligation
under—
(a)
paragraph 5, 6, 7 or 14(2) or (3) of Schedule 1,
35
(b)
paragraph 3 of Schedule 2,
(c)
paragraph 3 or 8(2) of Schedule 3,
(d)
paragraph 3, 4 or 7(2) or (3) of Schedule 3A, or
(e)
regulations under paragraph 2(4) of Schedule 11.”
      (4)
In subsection (5)—
40
(a)
in paragraph (a), for “3 years” substitute “4 years”, and
(b)
omit paragraph (b) and the “and” before it.
34
In section 78(11) (interest in certain cases of official error), for “three years”
substitute “4 years”.

Finance Bill
Schedule 39 — Time limits for assessments, claims etc.
387

35
In section 80(4) (credit for, or repayment of, overstated or overpaid VAT), for
“3 years” substitute “4 years”.
FA 1998
36
Schedule 18 to FA 1998 (company tax returns) is amended as follows.
37
In paragraph 36(5) (determination of tax payable if no return delivered), for
5
“five years” substitute “3 years”.
38
In paragraph 37(4) (determination of tax payable if notice complied with in
part), for “five years” substitute “3 years”.
39
In paragraph 40(3) (time limit for self-assessment superseding
determination), for “five years” substitute “3 years”.
10
40    (1)
Paragraph 43 (fraudulent or negligent conduct) is amended as follows.
      (2)
For “is attributable to fraudulent or negligent conduct on the part of”
substitute “was brought about carelessly or deliberately by”.
      (3)
Accordingly, for the heading before the paragraph substitute “Loss of tax
brought about carelessly or deliberately”.
15
41    (1)
Paragraph 46 (general time limits for assessments) is amended as follows.
      (2)
In sub-paragraph (1), for “six years” substitute “4 years”.
      (3)
For sub-paragraph (2) substitute—
    “(2)
An assessment in a case involving a loss of tax brought about
carelessly by the company (or a related person) may be made at
20
any time not more than 6 years after the end of the accounting
period to which it relates (subject to sub-paragraph (2A) and to
any other provision of the Taxes Acts allowing a longer period).
     (2A)
An assessment in a case involving a loss of tax—
(a)
brought about deliberately by the company (or a related
25
person),
(b)
attributable to a failure by the company to comply with an
obligation under paragraph 2, or
(c)
attributable to arrangements in respect of which the
company has failed to comply with an obligation under
30
section 309, 310 or 313 of the Finance Act 2004 (obligation
of parties to tax avoidance schemes to provide information
to Her Majesty’s Revenue and Customs),

may be made at any time not more than 20 years after the end of
the accounting period to which it relates (subject to any provision
35
of the Taxes Acts allowing a longer period).
     (2B)
In this paragraph, “related person”, in relation to a company,
means—
(a)
a person acting on behalf of the company, or
(b)
a person who was a partner of the company at the relevant
40
time.”
42
In paragraph 51(1)(c) (relief in case of mistake in return), for “six years”
substitute “4 years”.

Finance Bill
Schedule 39 — Time limits for assessments, claims etc.
388

43    (1)
Paragraph 53 (time limit for recovery of excessive payments etc) is amended
as follows.
      (2)
In sub-paragraph (1), for “six year” substitute “4 year”.
      (3)
In sub-paragraph (2), for “paragraph 46(2) (time limit for assessment in case
of fraud or negligence)” substitute “paragraph 46(2) and (2A) (time limit for
5
assessment in case of loss of tax brought about carelessly or deliberately)”.
44
In paragraph 55 (general time limit for making claims), for “six years”
substitute “4 years”.
45
In paragraph 61(2) (consequential claims etc arising out of certain Revenue
amendments or assessments), for “fraudulent or negligent conduct on the
10
part of” substitute “a loss of tax brought about carelessly or deliberately by”.
46    (1)
Paragraph 65 (consequential claims) is amended as follows.
      (2)
In sub-paragraph (1), for “fraudulent or negligent conduct on the part of”
substitute “a loss of tax brought about carelessly or deliberately by”.
      (3)
Accordingly, in the heading before the paragraph, for “fraud or negligence”
15
substitute “loss of tax brought about carelessly or deliberately”.
FA 2002
47
In paragraph 27 of Schedule 16 (withdrawal or reduction of community
investment tax relief), insert at the end—
    “(5)
An assessment under this paragraph may be made at any time not
20
more than 6 years after the end of the accounting period for which
the relief was obtained.
      (6)
Sub-paragraph (5) is without prejudice to paragraph 46(2A) of
Schedule 18 to the Finance Act 1998 (loss of tax brought about
deliberately).”
25
ITEPA 2003
48
In section 711(2) (notice requiring officer of Revenue and Customs to give
notice requiring tax return), for “5 years” substitute “3 years”.
ITTOIA 2005
49
ITTOIA 2005 is amended as follows.
30
50
In section 301(3) (claims for repayment of tax payable in connection with sale
with right to reconveyance), for “6 years” substitute “4 years”.
51
In section 302(3) (claims for repayment of tax payable in connection with sale
and leaseback transactions), for “6 years” substitute “4 years”.
ITA 2007
35
52
ITA 2007 is amended as follows.
53
In section 40(1)(a) (election for transfer of blind person’s allowance), for “on
or before the fifth anniversary of the normal self-assessment filing date for”
substitute “not more than 4 years after the end of”.

Finance Bill
Schedule 39 — Time limits for assessments, claims etc.
389

54
In section 46(6)(b) (marriages and civil partnerships on or after 5 December
2005: election specifying person entitled to relief), for “on or before the fifth
anniversary of the normal self-assessment filing date for” substitute “not
more than 4 years after the end of”.
55
In section 53(4)(a) (notice in respect of transfer of unused relief), for “on or
5
before the fifth anniversary of the normal self-assessment filing date for”
substitute “not more than 4 years after the end of”.
56
In section 155 (claim for loss relief against miscellaneous income), in each of
subsections (1) and (2), for “on or before the fifth anniversary of the normal
self-assessment filing date for” substitute “not more than 4 years after the
10
end of”.
57    (1)
Section 237 (EIS relief: time limits for assessments) is amended as follows.
      (2)
In subsection (1)—
(a)
omit “not”, and
(b)
for “more than” substitute “at any time not more than”.
15
      (3)
In subsection (3)—
(a)
for “36” substitute “36(1A)”, and
(b)
for “(fraudulent or negligent conduct)” substitute “(loss of tax
brought about deliberately etc)”.
58
In section 372 (withdrawal or reduction of community investment tax relief),
20
insert at the end—
“(4)
An assessment under this paragraph may be made at any time not
more than 6 years after the end of the tax year for which the relief was
obtained.
(5)
Subsection (4) is without prejudice to section 36(1A) of TMA 1970
25
(loss of tax brought about deliberately etc).”
59
In section 668(7) (claim for relief for unremittable transfer proceeds), for “on
or before the fifth anniversary of the normal self-assessment filing date for”
substitute “not more than 4 years after the end of”.
60
In section 669(4) (claim for relief for unremittable transfer proceeds: section
30
630 profits), for “on or before the fifth anniversary of the normal self-
assessment filing date for” substitute “not more than 4 years after the end
of”.
Consequential amendments
61
In section 178(3) of FA 1993 (stop-loss and quota share insurance)—
35
(a)
in paragraph (a), for “six years” substitute “4 years”, and
(b)
in paragraph (b), for “fraudulent or negligent conduct” substitute
“loss of tax brought about carelessly or deliberately”.
62
In section 225(3)(b) of FA 1994 (stop-loss and quota share insurance), for
“fraudulent or negligent conduct” substitute “loss of tax brought about
40
carelessly or deliberately”.
63
In consequence of the preceding provisions of this Schedule, omit—
(a)
section 149(4)(a)(i) and (ii) of FA 1989,
(b)
paragraphs 4 and 6 of Schedule 21 to FA 1996,

Finance Bill
Schedule 40 — Penalties: amendments of Schedule 24 to FA 2007
390

(c)
section 47(10) of FA 1997,
(d)
paragraph 18 of Schedule 19 to FA 1998, and
(e)
section 91(6)(b) of FA 2007.
Saving
64
The amendments of sections 33, 34 and 36 of TMA 1970 made by this
5
Schedule do not have effect for the purposes of those sections as applied by
paragraph 1 of Schedule 1 to OTA 1975 (management and collection of
petroleum revenue tax).
Schedule 40
Section 117

Penalties: amendments of Schedule 24 to FA 2007
10
1
Schedule 24 to FA 2007 (penalties for errors) is amended as follows.
2     (1)
Paragraph 1 (error in taxpayer’s document) is amended as follows.
      (2)
In sub-paragraph (2)—
(a)
for “P’s” substitute “a”, and
(b)
omit “by P”.
15
      (3)
In sub-paragraph (3), for careless or deliberate (within the meaning of
paragraph 3)” substitute “careless (within the meaning of paragraph 3) or
deliberate on P’s part”.
      (4)
In the Table, after the entry relating to income tax and capital gains tax:
accounts in connection with a partnership return insert—
20

“Income tax
Return under section 254 of FA

2004.”

      (5)
In the Table, after the entries relating to VAT insert—

“Insurance premium tax
Return under regulations under

section 54 of FA 1994.

25

Insurance premium tax
Return, statement or declaration in

connection with a claim.

Inheritance tax
Account under section 216 or 217 of

IHTA 1984.

Inheritance tax
Information or document under

30

regulations under section 256 of

IHTA 1984.

Inheritance tax
Statement or declaration in

connection with a deduction,

exemption or relief.

35

Stamp duty land tax
Return under section 76 of FA 2003.

Stamp duty reserve tax
Return under regulations under

section 98 of FA 1986.

Finance Bill
Schedule 40 — Penalties: amendments of Schedule 24 to FA 2007
391

Petroleum revenue tax
Return under paragraph 2 of

Schedule 2 to the Oil Taxation Act

1975.

Petroleum revenue tax
Statement or declaration in

connection with a claim under

5

Schedule 5, 6, 7 or 8 to the Oil

Taxation Act 1975.

Petroleum revenue tax
Statement under section 1(1)(a) of

the Petroleum Revenue Tax Act

1980.

10

Aggregates levy
Return under regulations under

section 25 of FA 2001.

Climate change levy
Return under regulations under

paragraph 41 of Schedule 6 to FA

2000.

15

Landfill tax
Return under regulations under

section 49 of FA 1996.

Air passenger duty
Return under section 38 of FA 1994.

Alcoholic liquor duties
Return under regulations under

section 13, 49, 56 or 62 of the

20

Alcoholic Liquor Duties Act 1979.

Alcoholic liquor duties
Statement or declaration in

connection with a claim for

repayment of duty under section

4(4) of FA 1995.

25

Tobacco products duty
Return under regulations under

section 7 of the Tobacco Products

Duties Act 1979.

Hydrocarbon oil duties
Return under regulations under

section 21 of the Hydrocarbon Oil

30

Duties Act 1979.

Excise duties
Return under regulations under

section 93 of CEMA 1979.

Excise duties
Return under regulations under

section 100G or 100H of CEMA

35

1979.

Excise duties
Statement or declaration in

connection with a claim.

General betting duty
Return under regulations under

paragraph 2 of Schedule 1 to BGDA

40

1981.

Pool betting duty
Return under regulations under

paragraph 2A of Schedule 1 to

BGDA 1981.

Bingo duty
Return under regulations under

45

paragraph 9 of Schedule 3 to BGDA

1981.

Lottery duty
Return under regulations under

section 28(2) of FA 1993.

Gaming duty
Return under directions under

50

paragraph 10 of Schedule 1 to FA

1997.

Finance Bill
Schedule 40 — Penalties: amendments of Schedule 24 to FA 2007
392

Remote gaming duty
Return under regulations under

section 26K of BGDA 1981.”

      (6)
In the Table, in the last entry, in column 1, for “Income tax, capital gains tax,
corporation tax or VAT” substitute “Any of the taxes mentioned above”.
      (7)
Insert at the end—
5
    “(5)
In relation to a return under paragraph 2 of Schedule 2 to the Oil
Taxation Act 1975, references in this Schedule to P include any
person who, after the giving of the return for a taxable field
(within the meaning of that Act), becomes the responsible person
for the field (within the meaning of that Act).”
10
3
After that paragraph insert—
“Error in taxpayer’s document attributable to another person
1A    (1)
A penalty is payable by a person (T) where—
(a)
another person (P) gives HMRC a document of a kind
listed in the Table in paragraph 1,
15
(b)
the document contains a relevant inaccuracy, and
(c)
the inaccuracy was attributable to T supplying false
information to P (whether directly or indirectly), or to T
deliberately withholding information from P, with the
intention of the document containing the inaccuracy.
20
      (2)
A “relevant inaccuracy” is an inaccuracy which amounts to, or
leads to—
(a)
an understatement of a liability to tax,
(b)
a false or inflated statement of a loss, or
(c)
a false or inflated claim to repayment of tax.
25
      (3)
A penalty is payable under this paragraph in respect of an
inaccuracy whether or not P is liable to a penalty under paragraph
1 in respect of the same inaccuracy.”
4     (1)
Paragraph 2 (under-assessment by HMRC) is amended as follows.
      (2)
In sub-paragraph (1), for “tax” substitute “a relevant tax”.
30
      (3)
For sub-paragraph (3) substitute—
    “(3)
In sub-paragraph (1) “relevant tax” means any tax mentioned in
the Table in paragraph 1.”
5     (1)
Paragraph 3 (degrees of culpability) is amended as follows
      (2)
In sub-paragraph (1)—
35
(a)
for “Inaccuracy in” substitute “For the purposes of a penalty under
paragraph 1, inaccuracy in”, and
(b)
after “is deliberate” (in both places) insert “on P’s part”.
      (3)
In sub-paragraph (2), after “deliberate” insert “on P’s part”.