Finance Bill

House of Commons

Session 2007 - 08
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Finance Bill

Finance Bill (Volume II)
Schedule 39 — Time limits for assessments, claims etc.
413

(b)
for “subsection (1) above” substitute “subsection (1A) or (1B)”.
      (4)
In subsection (3), after “(1)” insert “or (1A)”.
      (5)
In subsection (4), for “subsection (1)” substitute “subsections (1) and (1A)”.
      (6)
Accordingly, for the heading substitute “Loss of tax brought about
carelessly or deliberately etc”.
10
In section 37A (effect of assessment where allowances transferred), for the
words from “for the purpose” to “conduct” substitute “in a case falling
within section 36(1) or (1A)”.
11    (1)
Section 40 (assessment on personal representatives) is amended as follows.
      (2)
In subsection (1) for “beyond the end of the period of three years beginning
with the 31st January next following” substitute “more than 4 years after the
end of”.
      (3)
In subsection (2)—
(a)
for the words from the beginning to “died” substitute “In a case
involving a loss of tax brought about carelessly or deliberately by a
person who has died (or another person acting on that person’s
behalf before that person’s death)”, and
(b)
for “before the end of the period of three years beginning with the
31st January next following” substitute “not more than 4 years after
the end of”.
12
In section 43(1) (time limit for making claims), for “five years after the 31st
January next following” substitute “4 years after the end of”.
13
In section 43A(1)(b) (further assessments: claims etc), for the words from
“attributable” to the end substitute “brought about carelessly or deliberately
by that person or by someone acting on behalf of that person.”
14
In section 43C(1)(b) (consequential claims etc), for “attributable to
fraudulent or negligent conduct on the part of” substitute “brought about
carelessly or deliberately by”.
15
In section 118 (interpretation), insert at the end—
“(5)
For the purposes of this Act a loss of tax or a situation is brought
about carelessly by a person if the person fails to take reasonable care
to avoid bringing about that loss or situation.
(6)
Where—
(a)
information is provided to Her Majesty’s Revenue and
Customs,
(b)
the person who provided the information, or the person on
whose behalf the information was provided, discovers some
time later that the information was inaccurate, and
(c)
that person fails to take reasonable steps to inform Her
Majesty’s Revenue and Customs,

any loss of tax or situation brought about by the inaccuracy shall be
treated for the purposes of this Act as having been brought about
carelessly by that person.
(7)
In this Act, references to a loss of tax or a situation brought about
deliberately by a person include a loss of tax or a situation that arises

Finance Bill (Volume II)
Schedule 39 — Time limits for assessments, claims etc.
414

as a result of a deliberate inaccuracy in a document given to Her
Majesty’s Revenue and Customs by or on behalf of that person.”
ICTA
16
ICTA is amended as follows.
17
In section 36(2)(b) (claims for repayment of tax on sale of land with right to
reconveyance), for “six years” substitute “4 years”.
18
In section 257AB(9) (elections in respect of married couple’s allowance
(post-5th December 2005 marriages and civil partnerships)), for “on or
before the 5th anniversary of the 31st January next following” substitute “not
more than 4 years after”.
19
In section 257BB(5)(a) (notices in respect of transfer of relief under section
257A or 257AB), for “on or before the fifth anniversary of the 31st January
next following” substitute “not more than 4 years after”.
20
In section 265(5) (notices in respect of transfer of blind person’s allowance),
for “on or before the fifth anniversary of the 31st January next following”
substitute “not more than 4 years after”.
21
In section 270(4) (claims for repayment of excess paid on surrender etc of life
insurance policy), for “six years” substitute “4 years”.
22
In section 419(4) (claims for relief from tax where loan surrendered etc), for
“six years” substitute “4 years”.
23
In section 500(4) and (9) (additional assessment to corporation tax where
petroleum revenue tax repaid), for “six years” substitute “4 years”.
24
In section 806(1) (time limit for claims for allowance under arrangements by
way of credit for foreign tax) is amended as follows—
(a)
in paragraph (a)(i), for “the fifth anniversary of the 31st January next
following” substitute “the 4th anniversary of the end of”, and
(b)
in paragraph (b)(i), for “six years” substitute “4 years”.
25
In section 806G(3)(a) (claims for the purposes of utilisation of eligible
unrelieved foreign tax), for “six years” substitute “4 years”.
26
In section 806M(7)(a) (claims for the purpose of carry forward or carry back
of unrelieved foreign tax), for “six years” substitute “4 years”.
FA 1991
27
In section 65(6) of FA 1991 (additional assessment to corporation tax on
receipt of reimbursement expenditure), for “six years” substitute “4 years”.
TCGA 1992
28
TCGA 1992 is amended as follows.
29
In section 203(2) (claims in respect of certain capital losses), for “6 years”
substitute “4 years”.
30
In section 253(4A) (claims for relief for loans to traders)—

Finance Bill (Volume II)
Schedule 39 — Time limits for assessments, claims etc.
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(a)
in paragraph (a), for “on or before the fifth anniversary of the 31st
January next following” substitute “not more than 4 years after the
end of”, and
(b)
in paragraph (b), for “6 years” substitute “4 years”.
31
In section 279(5) (claims in respect of delayed remittance of gain from
disposal of foreign assets)—
(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
32
VATA 1994 is amended as follows.
33
In section 33A(4) (refunds of VAT to museums and galleries), for “3 years”
substitute “4 years”.
34    (1)
Section 77 (assessments: time limits and supplementary assessments) is
amended as follows.
      (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
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),
(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
(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
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,
(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.”

Finance Bill (Volume II)
Schedule 39 — Time limits for assessments, claims etc.
416

      (4)
In subsection (5)—
(a)
in paragraph (a), for “3 years” substitute “4 years”, and
(b)
omit paragraph (b) and the “and” before it.
35
In section 78(11) (interest in certain cases of official error), for “three years”
substitute “4 years”.
36
In section 80(4) (credit for, or repayment of, overstated or overpaid VAT), for
“3 years” substitute “4 years”.
FA 1998
37
Schedule 18 to FA 1998 (company tax returns) is amended as follows.
38
In paragraph 36(5) (determination of tax payable if no return delivered), for
“five years” substitute “3 years”.
39
In paragraph 37(4) (determination of tax payable if notice complied with in
part), for “five years” substitute “3 years”.
40
In paragraph 40(3) (time limit for self-assessment superseding
determination), for “five years” substitute “3 years”.
41    (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”.
42    (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
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
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
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
of the Taxes Acts allowing a longer period).
     (2B)
In this paragraph, “related person”, in relation to a company,
means—

Finance Bill (Volume II)
Schedule 39 — Time limits for assessments, claims etc.
417

(a)
a person acting on behalf of the company, or
(b)
a person who was a partner of the company at the relevant
time.”
43
In paragraph 51(1)(c) (relief in case of mistake in return), for “six years”
substitute “4 years”.
44    (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
assessment in case of loss of tax brought about carelessly or deliberately)”.
45
In paragraph 55 (general time limit for making claims), for “six years”
substitute “4 years”.
46
In paragraph 61(2) (consequential claims etc arising out of certain Revenue
amendments or assessments), for “fraudulent or negligent conduct on the
part of” substitute “a loss of tax brought about carelessly or deliberately by”.
47    (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”
substitute “loss of tax brought about carelessly or deliberately”.
FA 2002
48
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
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).”
ITEPA 2003
49
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
50
ITTOIA 2005 is amended as follows.
51
In section 301(3) (claims for repayment of tax payable in connection with sale
with right to reconveyance), for “6 years” substitute “4 years”.
52
In section 302(3) (claims for repayment of tax payable in connection with sale
and leaseback transactions), for “6 years” substitute “4 years”.

Finance Bill (Volume II)
Schedule 39 — Time limits for assessments, claims etc.
418

53
In section 840A(1) (claims for relief for backdated pensions charged on
arising basis) (inserted by Schedule 7 to this Act), 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”.
ITA 2007
54
ITA 2007 is amended as follows.
55
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”.
56
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”.
57
In section 53(4)(a) (notice in respect of transfer of unused 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”.
58
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
end of”.
59    (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”.
      (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)”.
60
In section 372 (withdrawal or reduction of community investment tax relief),
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
(loss of tax brought about deliberately etc).”
61
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”.
62
In section 669(4) (claim for relief for unremittable transfer proceeds: section
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”.

Finance Bill (Volume II)
Schedule 40 — Penalties: amendments of Schedule 24 to FA 2007
419

Consequential amendments
63
In section 178(3) of FA 1993 (stop-loss and quota share insurance)—
(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”.
64
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
carelessly or deliberately”.
65
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,
(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
66
The amendments of sections 33, 34 and 36 of TMA 1970 made by this
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 120

Penalties: amendments of Schedule 24 to FA 2007
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”.
      (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—

“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.