Finance Bill

House of Commons

Session 2007 - 08
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Finance Bill

Finance Bill (Volume II)
Schedule 35 — Set off against oil profits: minor and consequential amendments
378

Schedule 35
Section 109

Set off against oil profits: minor and consequential amendments
TMA 1970
1
In section 87A of TMA 1970 (interest on overdue corporation tax), in
subsection (6)(a), after “set off” insert “(whether under section 393A(1) or
393B(3))”.
ICTA
2
ICTA is amended as follows.
3
In section 343 (company reconstructions without change of ownership), in
subsection (3), after “section 393A(1)” insert “(including a case where section
393B applies)”.
4
In section 393 (losses other than terminal losses), in subsection (1), for the
words after “cannot” substitute “be relieved under this subsection, or (if a
claim is made under section 393A(1)) under section 393A(1) or 393B(3),
against income or profits of an earlier accounting period.”
5
In section 393A (losses: set off against profits of the same, or an earlier,
accounting period), after subsection (2C) insert—
“(2D)
Section 393B makes further provision about setting off losses in cases
where subsection (2C) applies.”
6
In section 768A (change in ownership: disallowance of carry back of trading
losses), in subsection (1), after “section 393A(1)” insert “or 393B(3)”.
7
In section 826 (interest on tax overpaid), in subsection (7A)(b), after “set off”
insert “(whether under section 393A(1) or 393B(3))”.
8     (1)
Schedule 19B (petroleum extraction activities: exploration expenditure
supplement) is amended as follows.
      (2)
In paragraph 1 (provision about the Schedule), in sub-paragraph (7)(b), after
“section 393A” insert “or 393B”.
      (3)
In paragraph 17 (ring fence losses and qualifying E&A losses), in sub-
paragraph (2)—
(a)
the words after “assumed” become sub-paragraph (a), and
(b)
at the end of that sub-paragraph insert “and—
(b)
that (where appropriate) section 393B applies in
relation to every such claim.”
9     (1)
Schedule 19C (petroleum extraction activities: ring fence expenditure
supplement) is amended as follows.
      (2)
In paragraph 1 (provision about the Schedule), in sub-paragraph (6)(b), after
“section 393A” insert “or 393B”.
      (3)
In paragraph 17 (ring fence losses)—
(a)
in sub-paragraph (2), for “assumption is” substitute “assumptions
are”,

Finance Bill (Volume II)
Schedule 36 — Information and inspection powers
Part 1 — Powers to obtain information and documents
379

(b)
in sub-paragraph (3), for “The assumption” substitute “The first
assumption”, and
(c)
after that sub-paragraph insert—
   “(3A)
The second assumption is that (where appropriate) section
393B applies in relation to every such claim under section
393A.”
FA 2000
10    (1)
Schedule 20 to FA 2000 (tax relief for expenditure on research and
development) is amended as follows.
      (2)
In paragraph 15 (entitlement to R&D tax credit)—
(a)
in sub-paragraph (4)(b), after “section 393A(1)(b)” insert “or
393B(3)”, and
(b)
in sub-paragraph (5)(b), after “section 393A(1)(b)” insert “or
393B(3)”.
      (3)
In paragraph 23 (treatment of deemed trading loss), in sub-paragraph (2),
after “section 393A(1)(b)” insert “or 393B(3)”.
Schedule 36
Section 111

Information and inspection powers
Part 1
Powers to obtain information and documents
Power to obtain information and documents from taxpayer
1     (1)
An officer of Revenue and Customs may by notice in writing require a
person (“the taxpayer”)—
(a)
to provide information, or
(b)
to produce a document,

if the information or document is reasonably required by the officer for the
purpose of checking the taxpayer’s tax position.
      (2)
In this Schedule, “taxpayer notice” means a notice under this paragraph.
Power to obtain information and documents from third party
2     (1)
An officer of Revenue and Customs may by notice in writing require a
person—
(a)
to provide information, or
(b)
to produce a document,

if the information or document is reasonably required by the officer for the
purpose of checking the tax position of another person whose identity is
known to the officer (“the taxpayer”).

Finance Bill (Volume II)
Schedule 36 — Information and inspection powers
Part 1 — Powers to obtain information and documents
380

      (2)
A third party notice must name the taxpayer to whom it relates, unless the
First-tier Tribunal has approved the giving of the notice and disapplied this
requirement under paragraph 3.
      (3)
In this Schedule, “third party notice” means a notice under this paragraph.
Approval etc of taxpayer notices and third party notices
3     (1)
An officer of Revenue and Customs may not give a third party notice
without—
(a)
the agreement of the taxpayer, or
(b)
the approval of the First-tier Tribunal.
      (2)
An officer of Revenue and Customs may ask for the approval of the First-tier
Tribunal to the giving of any taxpayer notice or third party notice (and for
the effect of obtaining such approval see paragraphs 29, 30 and 53 (appeals
against notices and offence)).
      (3)
The First-tier Tribunal may not approve the giving of a taxpayer notice or
third party notice unless—
(a)
an application for approval is made by, or with the agreement of, an
authorised officer of Revenue and Customs,
(b)
the Tribunal is satisfied that, in the circumstances, the officer giving
the notice is justified in doing so,
(c)
the person to whom the notice is addressed has been told that the
information or documents referred to in the notice are required and
given a reasonable opportunity to make representations to an officer
of Revenue and Customs,
(d)
the First-tier Tribunal has been given a summary of any
representations made by that person, and
(e)
in the case of a third party notice, the taxpayer has been given a
summary of the reasons why an officer of Revenue and Customs
requires the information and documents.
      (4)
Paragraphs (c) to (e) of sub-paragraph (3) do not apply to the extent that the
First-tier Tribunal is satisfied that taking the action specified in those
paragraphs might prejudice the assessment or collection of tax.
      (5)
Where the First-tier Tribunal approves the giving of a third party notice
under this paragraph, it may also disapply the requirement to name the
taxpayer in the notice if it is satisfied that the officer has reasonable grounds
for believing that naming the taxpayer might seriously prejudice the
assessment or collection of tax.
Copying third party notice to taxpayer
4     (1)
An officer of Revenue and Customs who gives a third party notice must give
a copy of the notice to the taxpayer to whom it relates, unless the First-tier
Tribunal has disapplied this requirement.
      (2)
The First-tier Tribunal may not disapply that requirement unless—
(a)
an application for approval is made by, or with the agreement of, an
authorised officer of Revenue and Customs, and
(b)
the Tribunal is satisfied that the officer has reasonable grounds for
believing that giving a copy of the notice to the taxpayer might
prejudice the assessment or collection of tax.

Finance Bill (Volume II)
Schedule 36 — Information and inspection powers
Part 1 — Powers to obtain information and documents
381

Power to obtain information and documents about persons whose identity is not known
5     (1)
An authorised officer of Revenue and Customs may by notice in writing
require a person—
(a)
to provide information, or
(b)
to produce a document,

if the condition in sub-paragraph (2) is met.
      (2)
That condition is that the information or document is reasonably required by
the officer for the purpose of checking the UK tax position of—
(a)
a person whose identity is not known to the officer, or
(b)
a class of persons whose individual identities are not known to the
officer.
      (3)
An officer of Revenue and Customs may not give a notice under this
paragraph without the approval of the First-tier Tribunal.
      (4)
The First-tier Tribunal may not give its approval for the purpose of this
paragraph unless it is satisfied that—
(a)
the notice would meet the condition in sub-paragraph (2),
(b)
there are reasonable grounds for believing that the person or any of
the class of persons to whom the notice relates may have failed or
may fail to comply with any provision of the Taxes Acts, VATA 1994
or any other enactment relating to value added tax charged in
accordance with that Act,
(c)
any such failure is likely to have led or to lead to serious prejudice to
the assessment or collection of UK tax, and
(d)
the information or document to which the notice relates is not readily
available from another source.
      (5)
In this paragraph “UK tax” means any tax other than relevant foreign tax
and value added tax charged in accordance with the law of another member
State.
Notices
6     (1)
In this Schedule, “information notice” means a notice under paragraph 1, 2
or 5.
      (2)
An information notice may specify or describe the information or
documents to be provided or produced.
      (3)
If an information notice is given with the approval of the First-tier Tribunal,
it must state that it is given with that approval.
Complying with notices
7     (1)
Where a person is required by an information notice to provide information
or produce a document, the person must do so—
(a)
within such period, and
(b)
at such time, by such means and in such form (if any),

as is reasonably specified or described in the notice.
      (2)
Where an information notice requires a person to produce a document, it
must be produced for inspection—

Finance Bill (Volume II)
Schedule 36 — Information and inspection powers
Part 2 — Powers to inspect businesses etc
382

(a)
at a place agreed to by that person and an officer of Revenue and
Customs, or
(b)
at such place as an officer of Revenue and Customs may reasonably
specify.
      (3)
An officer of Revenue and Customs must not specify a place that is used
solely as a dwelling.
      (4)
The production of a document in compliance with an information notice is
not to be regarded as breaking any lien claimed on the document.
Producing copies of documents
8     (1)
Where an information notice requires a person to produce a document, the
person may comply with the notice by producing a copy of the document,
subject to any conditions or exceptions set out in regulations made by the
Commissioners.
      (2)
Sub-paragraph (1) does not apply where—
(a)
the notice requires the person to produce the original document, or
(b)
an officer of Revenue and Customs subsequently makes a request in
writing to the person for the original document.
      (3)
Where an officer of Revenue and Customs requests a document under sub-
paragraph (2)(b), the person to whom the request is made must produce the
document—
(a)
within such period, and
(b)
at such time and by such means (if any),

as is reasonably requested by the officer.
Restrictions and special cases
9
This Part of this Schedule has effect subject to Parts 4 and 6 of this Schedule.
Part 2
Powers to inspect businesses etc
Power to inspect business premises etc
10    (1)
An officer of Revenue and Customs may enter a person’s business premises
and inspect—
(a)
the premises,
(b)
business assets that are on the premises, and
(c)
business documents that are on the premises,

if the inspection is reasonably required for the purpose of checking that
person’s tax position.
      (2)
The powers under this paragraph do not include power to enter or inspect
any part of the premises that is used solely as a dwelling.
      (3)
In this Schedule—
“business assets” means assets that an officer of Revenue and Customs
has reason to believe are owned, leased or used in connection with
the carrying on of a business by any person, excluding documents,

Finance Bill (Volume II)
Schedule 36 — Information and inspection powers
Part 2 — Powers to inspect businesses etc
383

“business documents” means documents (or copies of documents)—
(a)
that relate to the carrying on of a business by any person, and
(b)
that form part of any person’s statutory records, and
“business premises”, in relation to a person, means premises (or any
part of premises) that an officer of Revenue and Customs has reason
to believe are (or is) used in connection with the carrying on of a
business by or on behalf of the person.
Power to inspect premises used in connection with taxable supplies etc
11    (1)
This paragraph applies where an officer of Revenue and Customs has reason
to believe that—
(a)
premises are used in connection with the supply of goods under
taxable supplies and goods to be so supplied are on those premises,
(b)
premises are used in connection with the acquisition of goods from
other member States under taxable acquisitions and goods to be so
acquired are on those premises, or
(c)
premises are used as a fiscal warehouse.
      (2)
An officer of Revenue and Customs may enter the premises and inspect—
(a)
the premises,
(b)
any goods that are on the premises, and
(c)
any documents on the premises that appear to the officer to relate to
such goods.
      (3)
The powers under this paragraph do not include power to enter or inspect
any part of the premises that is used solely as a dwelling.
      (4)
Terms used both in sub-paragraph (1) and in VATA 1994 have the same
meaning in that sub-paragraph as they have in that Act.
Carrying out inspections
12    (1)
An inspection under this Part of this Schedule may be carried out only—
(a)
at a time agreed to by the occupier of the premises, or
(b)
if sub-paragraph (2) is satisfied, at any reasonable time.
      (2)
This sub-paragraph is satisfied if—
(a)
the occupier of the premises has been given at least 7 days’ notice of
the time of the inspection (whether in writing or otherwise), or
(b)
the inspection is carried out by, or with the agreement of, an
authorised officer of Revenue and Customs.
      (3)
An officer of Revenue and Customs seeking to carry out an inspection under
sub-paragraph (2)(b) must provide a notice in writing as follows—
(a)
if the occupier of the premises is present at the time the inspection is
to begin, the notice must be provided to the occupier,
(b)
if the occupier of the premises is not present but a person who
appears to the officer to be in charge of the premises is present, the
notice must be provided to that person, and
(c)
in any other case, the notice must be left in a prominent place on the
premises.

Finance Bill (Volume II)
Schedule 36 — Information and inspection powers
Part 3 — Further powers
384

      (4)
The notice referred to in sub-paragraph (3) must state the possible
consequences of obstructing the officer in the exercise of the power.
      (5)
If a notice referred to in sub-paragraph (3) is given with the approval of the
First-tier Tribunal (see paragraph 13), it must state that it is given with that
approval.
Approval of First-tier Tribunal
13    (1)
An officer of Revenue and Customs may ask the First-tier Tribunal to
approve an inspection under this Part of this Schedule.
      (2)
The First-tier Tribunal may not approve an inspection unless—
(a)
an application for approval is made by, or with the agreement of, an
authorised officer of Revenue and Customs, and
(b)
the Tribunal is satisfied that, in the circumstances, the inspection is
justified.
Restrictions and special cases
14
This Part of this Schedule has effect subject to Parts 4 and 6 of this Schedule.
Part 3
Further powers
Power to copy documents
15
Where a document (or a copy of a document) is produced to, or inspected
by, an officer of Revenue and Customs, such an officer may take copies of,
or make extracts from, the document.
Power to remove documents
16    (1)
Where a document is produced to, or inspected by, an officer of Revenue
and Customs, such an officer may—
(a)
remove the document at a reasonable time, and
(b)
retain it for a reasonable period,

if it appears to the officer to be necessary to do so.
      (2)
Where a document is removed in accordance with sub-paragraph (1), the
person who produced the document may request—
(a)
a receipt for the document, and
(b)
if the document is reasonably required for any purpose, a copy of the
document,

and an officer of Revenue and Customs must comply with such a request
without charge.
      (3)
The removal of a document under this paragraph is not to be regarded as
breaking any lien claimed on the document.
      (4)
Where a document removed under this paragraph is lost or damaged, the
Commissioners are liable to compensate the owner of the document for any
expenses reasonably incurred in replacing or repairing the document.
      (5)
In this paragraph, references to a document include a copy of a document.