Finance Bill

House of Commons

Session 2007 - 08
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Finance Bill

Finance Bill
Schedule 40 — Penalties: amendments of Schedule 24 to FA 2007
393

6
In paragraph 4 (standard amount), after sub-paragraph (1) insert—
   “(1A)
The penalty payable under paragraph 1A is 100% of the potential
lost revenue.”
7
In paragraph 5(1) (potential lost revenue: normal rule), after “document”
insert “(including an inaccuracy attributable to a supply of false information
5
or withholding of information)”.
8     (1)
Paragraph 6 (potential lost revenue: multiple errors) is amended as follows.
      (2)
In sub-paragraphs (1) and (2), after “penalty” insert “under paragraph 1”.
      (3)
In sub-paragraph (5), after “calculating” insert “for the purposes of a penalty
under paragraph 1”.
10
9     (1)
Paragraph 9 (reductions for disclosure) is amended as follows.
      (2)
Before sub-paragraph (1) insert—
   “(A1)
Paragraph 10 provides for reductions in penalties under
paragraphs 1, 1A and 2 where a person discloses an inaccuracy, a
supply of false information or withholding of information, or a
15
failure to disclose an under-assessment.”
      (3)
In sub-paragraph (1)—
(a)
after “an inaccuracy” insert “, a supply of false information or
withholding of information,”, and
(b)
in paragraphs (b) and (c), for “or” substitute “, the inaccuracy
20
attributable to the supply or false information or withholding of
information, or the”.
      (4)
In sub-paragraph (2)(a), for “or under-assessment” substitute “, the supply
of false information or withholding of information, or the under-
assessment”.
25
10
In paragraph 11(1) (special reduction), after “1” insert “, 1A”.
11    (1)
Paragraph 12 (interaction with other penalties) is amended as follows.
      (2)
In sub-paragraph (2), for the words after “other penalty” substitute
“incurred by P, or any surcharge for late payment of tax imposed on P, if the
amount of the penalty or surcharge is determined by reference to the same
30
tax liability.”
      (3)
After sub-paragraph (3) insert—
    “(4)
Where penalties are imposed under paragraphs 1 and 1A in
respect of the same inaccuracy, the aggregate of the amounts of the
penalties must not exceed 100% of the potential lost revenue.”
35
      (4)
In the heading before paragraph 12, insert at the end “and late payment
surcharges”.
12    (1)
Paragraph 13 (assessment) is amended as follows.
      (2)
In sub-paragraph (1)—
(a)
for “Where P” substitute “Where a person”,
40
(b)
after “1” insert “, 1A”, and
(c)
for “notify P” substitute “notify the person”.

Finance Bill
Schedule 40 — Penalties: amendments of Schedule 24 to FA 2007
394

      (3)
After that sub-paragraph insert—
   “(1A)
A penalty under paragraph 1, 1A or 2 must be paid before the end
of the period of 30 days beginning with the day on which
notification of the penalty is issued.”
      (4)
In sub-paragraph (3)—
5
(a)
after “1” insert “or 1A”,
(b)
for “within the” substitute “before the end of the”, and
(c)
after “assessment” insert “to the tax concerned”.
      (5)
In sub-paragraph (4), for the words after “made” substitute “before the end
of the period of 12 months beginning with—
10
(a)
the end of the appeal period for the assessment of tax
which corrected the understatement, or
(b)
if there is no assessment within paragraph (a), the date on
which the understatement is corrected.”
13
In paragraph 15 (right of appeal)—
15
(a)
for “P may” (in each place) substitute “A person may”, and
(b)
for “by P” (in each place) substitute “by the person”.
14
For paragraph 16 substitute—
“16   (1)
An appeal is to be brought to the First-tier tribunal.
      (2)
An appeal shall be treated for procedural purposes in the same
20
way as an appeal against an assessment to the tax concerned
(except in respect of a matter expressly provided for by this Act).”
15
In paragraph 18(3) (agency), after “penalty” insert “under paragraph 1 or 2”.
16
In paragraph 21 (double jeopardy)—
(a)
for “P is” substitute “A person is”,
25
(b)
after “1” insert “, 1A”, and
(c)
for “P has” substitute “the person has”.
17
In paragraph 22 (interpretation: introduction), for “26” substitute “27”.
18
After paragraph 23 insert—
“23A
“Tax”, without more, includes duty.”
30
19    (1)
Paragraph 28 (interpretation) is amended as follows.
      (2)
In paragraph (c) (meaning of “direct tax”), omit “and” after paragraph (ii)
and after paragraph (iii) insert “and
(iv)
petroleum revenue tax,”.
      (3)
After paragraph (d) insert—
35
“(da)
references to an assessment to tax, in relation to inheritance
tax, means a determination,”.
      (4)
In paragraph (f), insert at the end “against tax or to a payment of a
corporation tax credit”.
      (5)
After that paragraph insert—
40
“(fa)
“corporation tax credit” means—

Finance Bill
Schedule 41 — Penalties: failure to notify and certain VAT and excise wrongdoing
395

(i)
a R&D tax credit under Schedule 20 to FA 2000,
(ii)
a land remediation tax credit or life assurance
company tax credit under Schedule 22 to FA 2001,
(iii)
a tax credit under Schedule 13 to FA 2002 (vaccine
research etc),
5
(iv)
a film tax credit under Schedule 5 to FA 2006, or
(v)
a first-year tax credit under Schedule A1 to CAA
2001,”.
20
In consequence of this Schedule the following provisions are omitted—
(a)
paragraphs 8 and 9 of Schedule 2 to OTA 1975,
10
(b)
in section 1(3B) of the Petroleum Revenue Tax Act 1980, “, 8 and 9”
(c)
in IHTA 1984—
(i)
section 247(1) and (2),
(ii)
in section 248, in subsection (1), “account,” and “delivered,”
(in both places) and, in subsection (2), “under section 247
15
above”, and
(iii)
section 250(2),
(d)
in FA 1994—
(i)
section 8, and
(ii)
paragraphs 12 and 13 of Schedule 7,
20
(e)
paragraphs 18 to 20 of Schedule 5 to FA 1996,
(f)
paragraphs 83ZA(4) and (5), 83F, 83L, 83R and 83X of Schedule 18 to
FA 1998,
(g)
section 108(2)(a) of FA 1999,
(h)
paragraphs 98 to 100 of Schedule 6 to FA 2000,
25
(i)
in Schedule 6 to FA 2001, paragraphs 7 to 9, and in paragraph 9A(5),
paragraph (b) and the “or” before it,
(j)
section 133(2) to (4) of FA 2002,
(k)
in FA 2003—
(i)
section 192(8), and
30
(ii)
paragraph 8 of Schedule 10 to FA 2003, and
(l)
section 295(4)(a) of FA 2004.
Schedule 41
Section 118

Penalties: failure to notify and certain VAT and excise wrongdoing
Failure to notify etc
35
1
A penalty is payable by a person (P) where P fails to comply with an
obligation specified in the Table below (a “relevant obligation”).

Tax to which obligation relates
Obligation

Income tax and capital gains tax
Obligation under section 7 of TMA

1970 (obligation to give notice of

40

liability to income tax or capital

gains tax).

Finance Bill
Schedule 41 — Penalties: failure to notify and certain VAT and excise wrongdoing
396

Tax to which obligation relates
Obligation

Corporation tax
Obligation under paragraph 2 of

Schedule 18 to FA 1998 (obligation

to give notice of chargeability to

corporation tax).

5

Value added tax
Obligations under paragraphs 5, 6, 7

and 14(2) and (3) of Schedule 1 to

VATA 1994 (obligations to notify

liability to register and notify

material change in nature of

10

supplies made by person exempted

from registration).

Value added tax
Obligation under paragraph 3 of

Schedule 2 to VATA 1994

(obligation to notify liability to

15

register).

Value added tax
Obligations under paragraphs 3 and

8(2) of Schedule 3 to VATA 1994

(obligations to notify liability to

register and notify acquisition

20

affecting exemption from

registration).

Value added tax
Obligations under paragraphs 3, 4

and 7(2) and (3) of Schedule 3A to

VATA 1994 (obligations to notify

25

liability to register and notify

relevant change in supplies made by

person exempted from registration).

Value added tax
Obligation under regulations under

paragraph 2(4) of Schedule 11 to

30

VATA 1994 (obligation to give

notification of acquisition of goods

from another member State).

Insurance premium tax
Obligations under section 53(1) and

(2) of FA 1994 (obligations to

35

register in respect of receipt of

premiums in course of taxable

business and notify intended receipt

of premiums in course of taxable

business).

40

Insurance premium tax
Obligations under section 53AA(1)

and (3) of FA 1994 (obligations to

register as taxable intermediary and

notify intention to charge taxable

intermediary’s fees).

45

Aggregates levy
Obligations under section 24(2) of,

and paragraph 1 of Schedule 4 to,

FA 2001 (obligations to register in

respect of carrying out of taxable

activities and notify intention of

50

carrying out such activities).

Climate change levy
Obligations under paragraphs 53

and 55 of Schedule 6 to FA 2000

(obligations to register in respect of

taxable supplies and notify

55

intention to make, or have made,

taxable supply).

Finance Bill
Schedule 41 — Penalties: failure to notify and certain VAT and excise wrongdoing
397

Tax to which obligation relates
Obligation

Landfill tax
Obligations under section 47(2) and

(3) of FA 1996 (obligations to

register in respect of carrying out of

taxable activities and notify

5

intention of carrying out such

activities).

Air passenger duty
Obligation under section 33(4) of FA

1994 (obligation to give notice of

liability to register to operate

10

chargeable aircraft).

Alcohol liquor duties
Obligation to be authorised and

registered to obtain and use duty

stamps under regulations under

paragraph 4 of Schedule 2A to

15

ALDA 1979 (duty stamps).

Alcohol liquor duties
Obligations under sections 12(1),

47(1), 54(2), 55(2) and 62(2) of ALDA

1979 (obligations to hold licence to

manufacture spirits, register to brew

20

beer, hold licence to produce wine

or made-wine and register to make

cider).

Alcohol liquor duties
Obligation to have plant and

processes approved for the

25

manufacture of spirits under

regulations under section 15(6) of

ALDA 1979 (distillers’ warehouses).

Tobacco products duty
Obligation to manufacture tobacco

products only on premises

30

registered under regulations under

section 7 of TPDA 1979

(management of tobacco products

duty).

Hydrocarbon oil duties
Obligation to make entry of

35

premises intended to be used for

production of oil under regulations

under section 21 of HODA 1979

(administration and enforcement).

Excise duties
Obligation to receive, deposit or

40

hold duty suspended excise goods

only in premises approved under

regulations under section 92 of

CEMA 1979 (approval of

warehouses).

45

Excise duties
Obligation to receive duty

suspended excise goods only if

approved or registered (or

approved and registered) as a REDS

or an Occasional Importer under

50

regulations under section 100G or

100H of CEMA 1979 (registered

excise dealers and shippers etc).

Finance Bill
Schedule 41 — Penalties: failure to notify and certain VAT and excise wrongdoing
398

Tax to which obligation relates
Obligation

Excise duties
Obligation to receive, deposit or

hold duty suspended excise goods

only if approved or registered (or

approved and registered) as a

5

registered owner, a duty

representative, a registered mobile

operator or a fiscal representative of

a registered mobile operator or an

authorised warehousekeeper under

10

regulations under section 100G or

100H of CEMA 1979 (registered

excise dealers and shippers etc).

General betting duty
Obligations under paragraph 4(1) to

(3) of Schedule 1 to BGDA 1981

15

(obligation to notify intention to

carry on general betting business

and make entry of, or notify,

premises).

Pool betting duty
Obligations under paragraphs 4(2)

20

and 5(1) of Schedule 1 to BGDA

1981 (obligation to make entry and

hold permit for carrying on pool

betting business).

Bingo duty
Obligations under paragraph 10(1)

25

and (1A) of Schedule 3 to BGDA

1981 (obligation to notify and

register in respect of bingo-

promotion).

Lottery duty
Obligation under section 29(1) of FA

30

1993 (obligation to register in

respect of promotion of lotteries).

Gaming duty
Obligations under paragraphs 3 and

6 of Schedule 1 to FA 1997

(obligations to register in respect of

35

gaming and to notify premises).

Remote gaming duty
Obligation to register under

regulations under section 26J of

BGDA 1981 (facilities for remote

gaming).

40

Amusement machine licence duty
Obligation under section 21 of

BGDA 1981 (obligation to licence

amusement machine or premises on

which amusement machine is

provided for play).

45

Issue of invoice showing VAT by unauthorised person
2     (1)
A penalty is payable by a person (P) where P makes an unauthorised issue
of an invoice showing VAT.
      (2)
P makes an unauthorised issue of an invoice showing VAT if P—
(a)
is an unauthorised person, and
50
(b)
issues an invoice showing an amount as being value added tax or as
including an amount attributable to value added tax.
      (3)
In sub-paragraph (2)(a) “an unauthorised person” means anyone other
than—
(a)
a person registered under VATA 1994,
55

Finance Bill
Schedule 41 — Penalties: failure to notify and certain VAT and excise wrongdoing
399

(b)
a body corporate treated for the purposes of section 43 of that Act as
a member of a group,
(c)
a person treated as a taxable person under regulations under section
46(4) of that Act,
(d)
a person authorised to issue an invoice under regulations under
5
paragraph 2(12) of Schedule 11 to that Act, or
(e)
a person acting on behalf of the Crown.
      (4)
This paragraph has effect in relation to any invoice which—
(a)
for the purposes of any provision made under subsection (3) of
section 54 of VATA 1994 shows an amount as included in the
10
consideration for any supply, and
(b)
either fails to comply with the requirements of any regulations under
that section or is issued by a person who is not for the time being
authorised to do so for the purposes of that section,

as if the person issuing the invoice were an unauthorised person and that
15
amount were shown on the invoice as an amount attributable to value added
tax.
Putting product to use that attracts higher duty
3     (1)
A penalty is payable by a person (“P”) where P does an act which enables
HMRC to assess an amount as duty due from P under any of the provisions
20
in the Table below (a “relevant excise provision”).

Provision under which assessment may
Subject-matter of provision

be made

ALDA 1979 section 8(4)
Spirits for use for medical or

scientific purposes.

25

ALDA 1979 section 10(4)
Spirits for use in art or manufacture.

ALDA 1979 section 11(3)
Imported goods not for human

consumption containing spirits.

HODA section 10(3)
Duty-free oil.

HODA section 13(1A)
Rebated heavy oil.

30

HODA section 13AB(1)(a) or (2)(a)
Kerosene.

HODA section 13AD(2)
Kerosene.

HODA section 13ZB(1)
Heating oil etc.

HODA section 14(4)
Light oil for use as furnace oil.

HODA section 14D(1)
Rebated biodiesel or bioblend.

35

HODA section 14F(2)
Rebated heavy oil or bioblend.

HODA section 23(1B)
Road fuel gas on which no duty

paid.

HODA section 24(4A)
Duty-free and rebated oil.