Finance Bill

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Session 2007 - 08
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Finance Bill

Finance Bill (Volume II)
Schedule 37 — Record-keeping
406

VATA 1994
4
Schedule 11 to VATA 1994 (administration, collection and enforcement) is
amended as follows.
5     (1)
Paragraph 6 (duty to keep records) is amended as follows.
      (2)
In sub-paragraph (3), for the second “require” substitute “specify in writing
(and different periods may be specified for different cases)”.
      (3)
For sub-paragraphs (4) to (6) substitute—
    “(4)
The duty under this paragraph to preserve records may be
discharged—
(a)
by preserving them in any form and by any means, or
(b)
by preserving the information contained in them in any
form and by any means,

subject to any conditions or exceptions specified in writing by the
Commissioners for Her Majesty’s Revenue and Customs.”
6
In paragraph 6A(7) (application of provisions of paragraph 6 where
directions under paragraph 6A require records to be kept)—
(a)
for “Sub-paragraphs (4) to (6) of paragraph 6 (preservation of
information by means approved by the Commissioners) apply”
substitute “Sub-paragraph (4) of paragraph 6 (preservation of
information) applies”, and
(b)
for “they apply” substitute “it applies”.
FA 1998
7
Schedule 18 to FA 1998 (company tax returns) is amended as follows.
8     (1)
Paragraph 21 (duty to keep and preserve records) is amended as follows.
      (2)
In sub-paragraph (2), for the words from “for six years” to the end substitute
“until the end of the relevant day.”
      (3)
After that sub-paragraph insert—
   “(2A)
In this paragraph “relevant day” means—
(a)
the sixth anniversary of the end of the period for which the
company may be required to deliver a company tax return,
or
(b)
such earlier day as may be specified in writing by the
Commissioners for Her Majesty’s Revenue and Customs
(and different days may be specified for different cases).”
      (4)
In sub-paragraph (3), for “that six year period” substitute “the relevant day”.
      (5)
In sub-paragraph (4), for “that six year period” substitute “the relevant day”.
      (6)
After sub-paragraph (5) insert—
   “(5A)
The Commissioners for Her Majesty’s Revenue and Customs may
by regulations—
(a)
provide that the records required to be kept and preserved
under this paragraph include, or do not include, records
specified in the regulations, and

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Schedule 37 — Record-keeping
407

(b)
provide that those records include supporting documents
so specified.
     (5B)
Regulations under this paragraph may—
(a)
make different provision for different cases, and
(b)
make provision by reference to things specified in a notice
published by the Commissioners for Her Majesty’s
Revenue and Customs in accordance with the regulations
(and not withdrawn by a subsequent notice).”
      (7)
In sub-paragraph (6), omit the first sentence.
9     (1)
Paragraph 22 (preservation of information instead of original records) is
amended as follows.
      (2)
For sub-paragraph (1) substitute—
    “(1)
The duty under paragraph 21 to preserve records may be
discharged—
(a)
by preserving them in any form and by any means, or
(b)
by preserving the information contained in them in any
form and by any means,

subject to sub-paragraph (3) and any conditions or exceptions
specified in writing by the Commissioners for Her Majesty’s
Revenue and Customs.”
      (3)
Omit sub-paragraph (2).
      (4)
In sub-paragraph (3), for “The records excluded from sub-paragraph (1) are”
substitute “Sub-paragraph (1)(b) does not apply in the case of the following
kinds of records”.
      (5)
Accordingly, in the heading before that paragraph, for “instead of original
records” substitute “etc”.
Consequential provisions
10
In section 13(6) of FA 1999 (VAT and gold)—
(a)
for “(6)” substitute “(4)”,
(b)
after “above” insert “, and to records kept in pursuance of such
regulations,”, and
(c)
insert at the end “and to records kept in pursuance of that
paragraph”.
11
In consequence of the amendments made by paragraph 2 omit—
(a)
section 105(4)(b) of FA 1995, and
(b)
section 124(2) and (6) of FA 1996.

Finance Bill (Volume II)
Schedule 38 — Disclosure of tax avoidance schemes
408

Schedule 38
Section 114

Disclosure of tax avoidance schemes
Amendments of Part 7 of FA 2004
1
Part 7 of FA 2004 (disclosure of tax avoidance schemes) is amended as
follows.
2     (1)
Section 308 (duties of promoter) is amended as follows.
      (2)
In subsection (1)—
(a)
for “The promoter” substitute “A person who is a promoter in
relation to a notifiable proposal”, and
(b)
for “any” substitute “the”.
      (3)
In subsection (2)(a), for “a” substitute “the”.
      (4)
In subsection (3)—
(a)
for “The promoter” substitute “A person who is a promoter in
relation to notifiable arrangements”, and
(b)
for “any notifiable” substitute “the notifiable”.
      (5)
For subsection (4) substitute—
“(4)
Subsection (4A) applies where a person complies with subsection (1)
in relation to a notifiable proposal for arrangements and another
person is—
(a)
also a promoter in relation to the notifiable proposal or is a
promoter in relation to a notifiable proposal for
arrangements which are substantially the same as the
proposed arrangements (whether they relate to the same or
different parties), or
(b)
a promoter in relation to notifiable arrangements
implementing the notifiable proposal or notifiable
arrangements which are substantially the same as notifiable
arrangements implementing the notifiable proposal
(whether they relate to the same or different parties).
(4A)
Any duty of the other person under subsection (1) or (3) in relation
to the notifiable proposal or notifiable arrangements is discharged
if—
(a)
the person who complied with subsection (1) has notified the
identity and address of the other person to HMRC or the
other person holds the reference number allocated to the
proposed notifiable arrangements under section 311, and
(b)
the other person holds the information provided to HMRC in
compliance with subsection (1).
(4B)
Subsection (4C) applies where a person complies with subsection (3)
in relation to notifiable arrangements and another person is—
(a)
a promoter in relation to a notifiable proposal for
arrangements which are substantially the same as the
notifiable arrangements (whether they relate to the same or
different parties), or

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Schedule 38 — Disclosure of tax avoidance schemes
409

(b)
also a promoter in relation to the notifiable arrangements or
notifiable arrangements which are substantially the same
(whether they relate to the same or different parties).
(4C)
Any duty of the other person under subsection (1) or (3) in relation
to the notifiable proposal or notifiable arrangements is discharged
if—
(a)
the person who complied with subsection (3) has notified the
identity and address of the other person to HMRC or the
other person holds the reference number allocated to the
notifiable arrangements under section 311, and
(b)
the other person holds the information provided to HMRC in
compliance with subsection (3).”
3
In section 311(1) (arrangements to be given reference number)—
(a)
after “complies” insert “or purports to comply”,
(b)
omit “may within 30 days”,
(c)
before “allocate” insert “may within 30 days”, and
(d)
for “notify the person of that number” substitute “must notify that
number to the person and (where the person is one who has
complied or purported to comply with section 308(1) or (3)) to any
other person—
(i)
who is a promoter in relation to the notifiable
proposal (or arrangements implementing the
notifiable proposal) or the notifiable
arrangements (or proposal implemented by
the notifiable arrangements), and
(ii)
whose identity and address has been notified
to HMRC by the person.”
4
For section 312 substitute—
“312
Duty of promoter to notify client of number
(1)
This section applies where a person who is a promoter in relation to
notifiable arrangements is providing (or has provided) services to
any person (“the client”) in connection with the notifiable
arrangements.
(2)
The promoter must, within 30 days after the relevant date, provide
the client with prescribed information relating to any reference
number (or, if more than one, any one reference number) that has
been notified to the promoter (whether by HMRC or any other
person) in relation to—
(a)
the notifiable arrangements, or
(b)
any arrangements substantially the same as the notifiable
arrangements (whether involving the same or different
parties).
(3)
In subsection (2) “the relevant date” means the later of—
(a)
the date on which the promoter becomes aware of any
transaction which forms part of the notifiable arrangements,
and
(b)
the date on which the reference number is notified to the
promoter.

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Schedule 38 — Disclosure of tax avoidance schemes
410

(4)
But where the conditions in subsection (5) are met the duty imposed
on the promoter under subsection (2) to provide the client with
information in relation to notifiable arrangements is discharged.
(5)
Those conditions are—
(a)
that the promoter is also a promoter in relation to a notifiable
proposal and provides services to the client in connection
with them both,
(b)
the notifiable proposal and the notifiable arrangements are
substantially the same, and
(c)
the promoter has provided to the client, in a form and
manner specified by HMRC, prescribed information relating
to the reference number that has been notified to the
promoter in relation to the proposed notifiable
arrangements.
(6)
HMRC may give notice that, in relation to notifiable arrangements
specified in the notice, promoters are not under the duty under
subsection (2) after the date specified in the notice.
312A
Duty of client to notify parties of number
(1)
This section applies where a person (a “client”) to whom a person
who is a promoter in relation to notifiable arrangements or a
notifiable proposal is providing (or has provided) services in
connection with the notifiable arrangements or notifiable proposal
receives prescribed information relating to the reference number
allocated to the notifiable arrangements or proposed notifiable
arrangements.
(2)
The client must, within the prescribed period, provide prescribed
information relating to the reference number to any other person—
(a)
who the client might reasonably be expected to know is or is
likely to be a party to the arrangements or proposed
arrangements, and
(b)
who might reasonably be expected to gain a tax advantage in
relation to any relevant tax by reason of the arrangements or
proposed arrangements.
(3)
For the purposes of subsection (1) a tax is a “relevant tax” in relation
to arrangements or arrangements proposed in a proposal of any
description if it is prescribed in relation to arrangements or proposals
of that description by regulations under section 306.
(4)
HMRC may give notice that, in relation to notifiable arrangements or
a notifiable proposal specified in the notice, persons are not under
the duty under subsection (2) after the date specified in the notice.
(5)
The duty under subsection (2) does not apply in prescribed
circumstances.”
5     (1)
Section 313 (duty of parties to notifiable arrangements to notify HMRC of
number etc) is amended as follows.
      (2)
In subsection (1)(a), omit “under section 311 by the Board or under section
312 by the promoter”.
      (3)
In subsection (3)—

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Schedule 39 — Time limits for assessments, claims etc.
411

(a)
for “under subsection (1)” substitute “made by HMRC”,
(b)
in paragraph (a), for “number and other information” substitute
“information prescribed under subsection (1)”, and
(c)
in paragraph (b), for “number and other information” substitute
“information prescribed under subsection (1) and such other
information as is prescribed”.
      (4)
Insert at the end—
“(5)
HMRC may give notice that, in relation to notifiable arrangements
specified in the notice, persons are not under the duty under
subsection (1) after the date specified in the notice.”
6
For section 316 substitute—
“316
Information to be provided in form and manner specified by HMRC
(1)
HMRC may specify the form and manner in which information
required to be provided by any of the information provisions must
be provided if the provision is to be complied with.
(2)
The “information provisions” are sections 308(1) and (3), 309(1), 310,
312(2), 312A(2) and 313(1) and (3).”
Amendments of TMA 1970
7     (1)
Section 98C of TMA 1970 (penalties for failure to comply with duties under
Part 7 of FA 2004) is amended as follows.
      (2)
In subsection (2)—
(a)
in paragraph (d), for “312(1)” substitute “312(2)”, and
(b)
after that paragraph (but before the “and”) insert—
“(da)
section 312A(2) (duty of client to notify parties of
reference number),”.
      (3)
In subsection (3)—
(a)
for “section 313(1)” substitute “subsection (1) of section 313”, and
(b)
after “etc.)” insert “or regulations under subsection (3) of that
section”.
      (4)
In subsection (4), for “313(1)” (in both places) substitute “subsection (1) of
section 313 or regulations under subsection (3) of that section”.
Schedule 39
Section 116

Time limits for assessments, claims etc.
TMA 1970
1
TMA 1970 is amended as follows.
2
In section 28C(5)(a) (time limit for determination of tax where no return
delivered and self-assessment superseding determination), for “five years”
substitute “3 years”.

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Schedule 39 — Time limits for assessments, claims etc.
412

3
In section 29(4) (assessment where loss of tax discovered), for “is attributable
to fraudulent or negligent conduct on the part of” substitute “was brought
about carelessly or deliberately by”.
4
In section 30B(5) (amendment of partnership statement where loss of tax
discovered), for “is attributable to fraudulent or negligent conduct on the
part of” substitute “was brought about carelessly or deliberately by”.
5
In section 33(1) (claim for error or mistake), for “not later than five years after
the 31st January next following” substitute “not more than 4 years after the
end of”.
6
In section 33A(2) (error or mistake in partnership return), for “not later than
31st January of Year 6” substitute “not more than 4 years after the end of the
year of assessment in question, or in which the relevant period ends,”.
7     (1)
Section 34 (ordinary time limit for assessments) is amended as follows.
      (2)
In subsection (1), for “not later than five years after the 31st January next
following” substitute “not more than 4 years after the end of”.
      (3)
Accordingly, in the heading, for “six years” substitute “4 years”.
8
In section 35 (time limit: income received after year for which it is
assessable), for “within six years after” substitute “not more than 4 years
after the end of”.
9     (1)
Section 36 (fraudulent or negligent conduct) is amended as follows.
      (2)
For subsection (1) substitute—
“(1)
An assessment on a person in a case involving a loss of income tax or
capital gains tax brought about carelessly by the person may be
made at any time not more than 6 years after the end of the year of
assessment to which it relates (subject to subsection (1A) and any
other provision of the Taxes Acts allowing a longer period).
(1A)
An assessment on a person in a case involving a loss of income tax or
capital gains tax —
(a)
brought about deliberately by the person,
(b)
attributable to a failure by the person to comply with an
obligation under section 7, or
(c)
attributable to arrangements in respect of which the person
has failed to comply with an obligation under 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
year of assessment to which it relates (subject to any provision of the
Taxes Acts allowing a longer period).
(1B)
In subsections (1) and (1A), references to a loss brought about by the
person who is the subject of the assessment include a loss brought
about by another person acting on behalf of that person.”
      (3)
In subsection (2)—
(a)
for “Where the person in default” substitute “Where the person
mentioned in subsection (1) or (1A) (“the person in default”)”, and