Finance Bill

House of Commons

Session 2007 - 08
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Other Bills before Parliament

Finance Bill

Finance Bill (Volume II)
Schedule 40 — Penalties: amendments of Schedule 24 to FA 2007
420

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

regulations under section 256 of

IHTA 1984.

Inheritance tax
Statement or declaration in

connection with a deduction,

exemption or relief.

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

Stamp duty reserve tax
Return under regulations under

section 98 of FA 1986.

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

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.

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.

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

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.

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

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

1979.

Excise duties
Statement or declaration in

connection with a claim.

Finance Bill (Volume II)
Schedule 40 — Penalties: amendments of Schedule 24 to FA 2007
421

General betting duty
Return under regulations under

paragraph 2 of Schedule 1 to BGDA

1981.

Pool betting duty
Return under regulations under

paragraph 2A of Schedule 1 to

BGDA 1981.

Bingo duty
Return under regulations under

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

paragraph 10 of Schedule 1 to FA

1997.

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)
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).”
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,
(b)
the document contains a relevant inaccuracy, and
(c)
the inaccuracy was attributable to T deliberately 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.
      (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.
      (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”.

Finance Bill (Volume II)
Schedule 40 — Penalties: amendments of Schedule 24 to FA 2007
422

      (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)—
(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”.
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
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”.
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
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
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”.
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
tax liability.”

Finance Bill (Volume II)
Schedule 40 — Penalties: amendments of Schedule 24 to FA 2007
423

      (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.”
      (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”,
(b)
after “1” insert “, 1A”, and
(c)
for “notify P” substitute “notify the person”.
      (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)—
(a)
after “1” insert “or 1A”,
(b)
for “within the” substitute “before the end of the”, and
(c)
after “no 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—
(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)—
(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
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    (1)
Paragraph 19 (companies: officers’ liability) is amended as follows.
      (2)
In sub-paragraph (1), for the words from “of the company” to “as they”
substitute “of the company, the officer is liable to pay such portion of the
penalty (which may be 100%) as HMRC”.
      (3)
For sub-paragraph (5) substitute—
    “(5)
Where HMRC have specified a portion of a penalty in a notice
given to an officer under sub-paragraph (1)—

Finance Bill (Volume II)
Schedule 40 — Penalties: amendments of Schedule 24 to FA 2007
424

(a)
paragraph 11 applies to the specified portion as to a
penalty,
(b)
the officer must pay the specified portion before the end of
the period of 30 days beginning with the day on which the
notice is given,
(c)
paragraph 13(2), (3) and (5) apply as if the notice were an
assessment of a penalty,
(d)
a further notice may be given in respect of a portion of any
additional amount assessed in a supplementary
assessment in respect of the penalty under paragraph
13(6),
(e)
paragraphs 15(1) and (2), 16 and 17(1) to (3) and (6) apply
as if HMRC had decided that a penalty of the amount of
the specified portion is payable by the officer, and
(f)
paragraph 21 applies as if the officer were liable to a
penalty.”
17
In paragraph 21 (double jeopardy)—
(a)
for “P is” substitute “A person is”,
(b)
after “1” insert “, 1A”, and
(c)
for “P has” substitute “the person has”.
18
In paragraph 22 (interpretation: introduction), for “26” substitute “27”.
19
After paragraph 23 insert—
“23A
“Tax”, without more, includes duty.”
20    (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—
“(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—
“(fa)
“corporation tax credit” means—
(i)
an 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),
(iv)
a film tax credit under Schedule 5 to FA 2006, or
(v)
a first-year tax credit under Schedule A1 to CAA
2001,”.
21
In consequence of this Schedule the following provisions are omitted—
(a)
paragraphs 8 and 9 of Schedule 2 to OTA 1975,
(b)
in section 1(3B) of the Petroleum Revenue Tax Act 1980, “, 8 and 9”

Finance Bill (Volume II)
Schedule 41 — Penalties: failure to notify and certain VAT and excise wrongdoing
425

(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
above”, and
(iii)
section 250(2),
(d)
in FA 1994—
(i)
section 8, and
(ii)
paragraphs 12 and 13 of Schedule 7,
(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,
(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
(ii)
paragraph 8 of Schedule 10 to FA 2003, and
(l)
section 295(4)(a) of FA 2004.
Schedule 41
Section 121

Penalties: failure to notify and certain VAT and excise wrongdoing
Failure to notify etc
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

liability to income tax or capital

gains tax).

Corporation tax
Obligation under paragraph 2 of

Schedule 18 to FA 1998 (obligation

to give notice of chargeability to

corporation tax).

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

supplies made by person exempted

from registration).

Finance Bill (Volume II)
Schedule 41 — Penalties: failure to notify and certain VAT and excise wrongdoing
426

Tax to which obligation relates
Obligation

Value added tax
Obligation under paragraph 3 of

Schedule 2 to VATA 1994

(obligation to notify liability to

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

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

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

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

register in respect of receipt of

premiums in course of taxable

business and notify intended receipt

of premiums in course of taxable

business).

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).

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

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

intention to make, or have made,

taxable supply).

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

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

chargeable aircraft).