Finance Bill

House of Commons

Session 2008 - 09
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 51 — Time limits for assessments, claims etc
365

Schedule 51
Section 98

Time limits for assessments, claims etc
Insurance premium tax
1
Schedule 7 to FA 1994 (insurance premium tax) is amended as follows.
2
In paragraph 8(4) (recovery of overpaid tax), for “three years” substitute “4
5
years”.
3
In paragraph 22(9) (interest payable by Commissioners), for “three years”
substitute “4 years”.
4     (1)
Paragraph 26 (assessments: time limits) is amended as follows.
      (2)
In sub-paragraph (1), for the words from “three years after” (in the first
10
place) to the end substitute “4 years after the relevant event”.
      (3)
After that sub-paragraph insert—
   “(1A)
In this paragraph “the relevant event”, in relation to an
assessment, means—
(a)
the end of the accounting period concerned, or
15
(b)
in the case of an assessment under paragraph 25 of an
amount due by way of a penalty other than a penalty
referred to in paragraph 25(2), the event giving rise to the
penalty.”
      (4)
In sub-paragraph (3), for “sub-paragraph (1)” substitute “sub-paragraph
20
(1A)”.
      (5)
For sub-paragraph (4) substitute—
    “(4)
An assessment of an amount due from a person in a case involving
a loss of tax—
(a)
brought about deliberately by the person (or by another
25
person acting on that person’s behalf), or
(b)
attributable to a failure by the person to comply with an
obligation under section 53(1) or (2) or 53AA(1) or (3),

may be made at any time not more than 20 years after the relevant
event.
30
      (5)
In sub-paragraph (4)(a) the reference to a loss brought about
deliberately by the person includes a loss brought about 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.”
Inheritance tax
35
5
IHTA 1984 is amended as follows.
6
In section 131 (transfers within 7 years before death: the relief), after
subsection (2) insert—
“(2ZA)
A claim under subsection (2)(b) must be made not more than 4 years
after the transferor’s death.”
40

Finance Bill
Schedule 51 — Time limits for assessments, claims etc
366

7
In section 146(2)(a) (Inheritance (Provision for Family and Dependants) Act
1975), after “claim for the purpose” insert “not more than 4 years after the
date on which the order is made”.
8
In section 150 (voidable transfers), insert at the end—
“(3)
A claim under this section must be made not more than 4 years after
5
the claimant knew, or ought reasonably to have known, that the
relevant transfer has been set aside.”
9
In section 179 (sale of shares etc from deceased’s estate: the relief), after
subsection (2) insert—
“(2A)
A claim under this Chapter must be made not more than 4 years after
10
the end of the period mentioned in subsection (1)(a).”
10
In section 191 (sale of land from deceased’s estate: the relief), after
subsection (1) insert—
“(1A)
A claim under this Chapter must be made not more than 4 years after
the end of the period mentioned in subsection (1)(a).”
15
11    (1)
Section 240 (underpayments) is amended as follows.
      (2)
In subsection (2), for “six years” substitute “4 years”.
      (3)
For subsection (3) substitute—
“(3)
Subsection (2) has effect subject to subsections (4) and (5).
(4)
Proceedings in a case involving a loss of tax brought about carelessly
20
by a person liable for the tax (or a person acting on behalf of such a
person) may be brought at any time not more than 6 years after the
later of the dates in subsection (2)(a) and (b).
(5)
Proceedings in a case involving a loss of tax brought about
deliberately by a person liable for the tax (or a person acting on
25
behalf of such a person) may be brought at any time not more than
20 years after the later of those dates.
(6)
Subsection (7) applies to any case not falling within subsection (2)
where too little tax has been paid in respect of a chargeable transfer,
provided that the case does not involve a loss of tax brought about
30
deliberately by a person liable for the tax (or a person acting on
behalf of such a person).
(7)
Where this subsection applies—
(a)
no proceedings are to be brought for the recovery of the tax
after the end of the period of 20 years beginning with the date
35
on which the chargeable transfer was made, and
(b)
at the end of that period any liability for the tax and any
Inland Revenue charge for that tax is extinguished.
(8)
In relation to cases of tax chargeable under Chapter 3 of Part 3 of this
Act (apart from section 79), the references in subsections (4), (5) and
40
(6) to a person liable for the tax are to be treated as including
references to a person who is the settlor in relation to the settlement.”

Finance Bill
Schedule 51 — Time limits for assessments, claims etc
367

12
After that section insert—
“240A
Underpayments: supplementary
(1)
This section applies for the purposes of section 240.
(2)
A loss of tax is brought about carelessly by a person if the person fails
to take reasonable care to avoid bringing about that loss.
5
(3)
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
10
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 brought about by the inaccuracy is to be treated as
having been brought about carelessly by that person.
15
(4)
References to a loss of tax brought about deliberately by a person
include a loss of tax brought about 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.”
13
In section 241(1) (overpayments), for “six years” substitute “4 years”.
20
Stamp duty land tax
14
Part 4 of FA 2003 (stamp duty land tax) is amended as follows.
15    (1)
Schedule 10 (returns, enquiries, assessments and appeals) is amended as
follows.
      (2)
In paragraph 25(3) (determination of tax chargeable if no return delivered),
25
for “six years” substitute “4 years”.
      (3)
In paragraph 27(2)(a) (determination superseded by actual self-assessment),
for “six years” substitute “4 years”.
      (4)
Paragraph 31 (time limit for assessment) is amended in accordance with sub-
paragraphs (5) to (8).
30
      (5)
In sub-paragraph (1), for “six years” substitute “4 years”.
      (6)
For sub-paragraph (2) substitute—
    “(2)
An assessment of a person to tax in a case involving a loss of tax
brought about carelessly by the purchaser or a related person may
be made at any time not more than 6 years after the effective date
35
of the transaction to which it relates (subject to sub-paragraph
(2A)).
     (2A)
An assessment of a person to tax in a case involving a loss of tax—
(a)
brought about deliberately by the purchaser or a related
person,
40
(b)
attributable to a failure by the person to comply with an
obligation under section 76(1) or paragraph 3(3)(a), 4(3)(a)
or 8(3)(a) of Schedule 17A, or

Finance Bill
Schedule 51 — Time limits for assessments, claims etc
368

(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),
5

may be made at any time not more than 20 years after the effective
date of the transaction to which it relates.”
      (7)
In sub-paragraph (4)(a), for “three years” substitute “4 years”.
      (8)
After sub-paragraph (5) insert—
    “(6)
In this paragraph “related person”, in relation to a purchaser,
10
means—
(a)
a person acting on behalf of the purchaser, or
(b)
a person who was a partner of the purchaser at the relevant
time.”
      (9)
After paragraph 31 insert—
15
“Losses brought about carelessly or deliberately
31A   (1)
This paragraph applies for the purposes of paragraph 31.
      (2)
A loss of tax is brought about carelessly by a person if the person
fails to take reasonable care to avoid bringing about that loss.
      (3)
Where—
20
(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
25
(c)
that person fails to take reasonable steps to inform Her
Majesty’s Revenue and Customs,

any loss of tax brought about by the inaccuracy is to be treated as
having been brought about carelessly by that person.
      (4)
References to a loss of tax brought about deliberately by a person
30
include a loss of tax brought about 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.”
     (10)
In paragraph 34(2) (relief in case of mistake in return), for “six years”
substitute “4 years”.
35
16    (1)
Paragraph 8 of Schedule 14 (time limit for determination of penalties) is
amended as follows.
      (2)
In sub-paragraph (2)—
(a)
for “six years” substitute “4 years”, and
(b)
after “began to be incurred” insert “(“the relevant date”)”.
40
      (3)
In sub-paragraph (3), insert at the end “(subject to any of the following
provisions of this paragraph allowing a longer period)”.

Finance Bill
Schedule 51 — Time limits for assessments, claims etc
369

      (4)
After sub-paragraph (4) insert—
   “(4A)
Where a person is liable to a penalty in a case involving a loss of
tax brought about carelessly by the person (or by another person
acting on that person’s behalf), the penalty may be determined, or
the proceedings may be brought, at any time not more than 6 years
5
after the relevant date (subject to sub-paragraphs (4B) and (5)).
     (4B)
Where a person is liable to a penalty in a case involving a loss of
tax—
(a)
brought about deliberately by the person (or by another
person acting on that person’s behalf),
10
(b)
attributable to a failure by the person to comply with an
obligation under section 76(1) or paragraph 3(3)(a), 4(3)(a)
or 8(3)(a) of Schedule 17A, or
(c)
attributable to arrangements in respect of which the person
has failed to comply with an obligation under section 309,
15
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),

the penalty may be determined, or the proceedings may be
brought, at any time not more than 20 years after the relevant date.
20
     (4C)
Paragraph 31A of Schedule 10 (losses brought about carelessly or
deliberately) applies for the purpose of this paragraph.”
Petroleum revenue tax
17
OTA 1975 is amended as follows.
18    (1)
The Table in paragraph 1(1) of Schedule 2 (applying provisions of TMA 1970
25
in relation to management and collection of petroleum revenue tax) is
amended as follows.
      (2)
In the entry relating to section 33 of TMA 1970, in the second column, for the
entry relating to subsection (1) substitute “In subsection (1), for “year of
assessment” substitute “chargeable period”.”
30
      (3)
Omit the entries relating to sections 34 and 36 of TMA 1970.
19
In paragraph 10 of Schedule 2 (assessments to tax and determinations of loss
etc), after sub-paragraph (1) insert—
   “(1A)
An assessment under sub-paragraph (1) may be made at any time
not more than 4 years after the end of the chargeable period to
35
which it relates (subject to paragraphs 12A and 12B).”
20    (1)
Paragraph 12 of Schedule 2 (further assessments and determinations) is
amended as follows.
      (2)
After sub-paragraph (1) insert—
   “(1A)
An assessment (or an amendment of an assessment) under sub-
40
paragraph (1) may be made at any time not more than 4 years after
the end of the chargeable period to which the assessment relates
(subject to sub-paragraph (1B) and paragraphs 12A and 12B).

Finance Bill
Schedule 51 — Time limits for assessments, claims etc
370

     (1B)
The time limits in sub-paragraph (1A) and paragraphs 12A and
12B do not apply to an amendment of an assessment where the
amendment is made in consequence (directly or indirectly) of—
(a)
the granting of relief under section 7(2) or (3) to any
participator for allowable losses accruing in any
5
chargeable period, or
(b)
a notice of variation served under paragraph 9 of Schedule
5 on any responsible person in respect of a claim for any
claim period.”
      (3)
In sub-paragraph (2)—
10
(a)
omit “(notwithstanding anything in section 34 of the Taxes
Management Act 1970 (ordinary time limit for assessment))”,
(b)
for “six years” substitute “4 years”, and
(c)
insert at the end “(subject to paragraphs 12A and 12B)”.
21
In paragraph 12A(1) of Schedule 2 (time limit for assessment following
15
extension of time for delivery of return), for “five years” substitute “4 years”.
22
In that Schedule, after paragraph 12A insert—
“12B  (1)
In a case involving a relevant situation brought about carelessly by
a participator (or a person acting on behalf of a participator), an
assessment (or an amendment of an assessment) under this
20
Schedule on the participator may be made at any time not more
than 6 years after the end of the relevant chargeable period
(subject to sub-paragraph (2)).
      (2)
In a case involving a relevant situation brought about deliberately
by a participator (or a person acting on behalf of a participator), an
25
assessment (or an amendment of an assessment) on the
participator may be made at any time not more than 20 years after
the end of the relevant chargeable period.
      (3)
“Relevant situation” means a situation in which—
(a)
there is a loss of tax,
30
(b)
the assessable profit charged to tax by or stated in an
assessment for a chargeable period ought to be or to have
been larger,
(c)
the allowable loss stated in an assessment or a
determination of loss for a chargeable period ought to be or
35
to have been smaller, or
(d)
an assessment to tax should have been made for a
chargeable period but was not made.
      (4)
“Relevant chargeable period” means—
(a)
in the case of a further assessment under paragraph 12(2),
40
the chargeable period in which the excessive allowable loss
accrued, and
(b)
in any other case, the chargeable period to which the
assessment relates.
      (5)
Where the participator carried on a trade or business with one or
45
more other persons at any time in the chargeable period for which
the assessment under sub-paragraph (1) or (2) is made, an

Finance Bill
Schedule 51 — Time limits for assessments, claims etc
371

assessment to tax in respect of the profits of that trade or business
may also be made on any of the participator’s partners.
      (6)
In determining the amount of the tax to be charged on a person for
a chargeable period in an assessment in a case mentioned in sub-
paragraph (1) or (2) (including an assessment under sub-
5
paragraph (5)), effect must be given to any relief or allowance to
which that person would have been entitled for that period if a
valid claim or application had been made.
      (7)
Sub-paragraph (6) only applies if the person on whom the
assessment is made so requires.
10
      (8)
Subsections (5) to (7) of section 118 of the Taxes Management Act
1970 (losses and situations brought about carelessly or
deliberately) apply for the purposes of this paragraph as they
apply for the purposes of that Act.
      (9)
In subsection (6)(b) of that section (as it applies for the purposes of
15
this paragraph), the reference to the person who provides the
information has effect as if it included any person who becomes
the responsible person for the oil field after the information is
provided.”
23    (1)
Paragraph 2 of Schedule 5 (allowance of expenditure other than abortive
20
exploration expenditure: claim period) is amended as follows.
      (2)
In sub-paragraph (1), for “six years” substitute “4 years”.
      (3)
In sub-paragraph (7)—
(a)
in paragraph (c), for “four years” substitute “2 years”, and
(b)
in the words after that paragraph, for “six years” substitute “4 years”.
25
24    (1)
Paragraph 9 of Schedule 5 (allowance of expenditure other than abortive
exploration expenditure: notice of variation) is amended as follows.
      (2)
In sub-paragraph (1)—
(a)
omit the words from “, within” to “field,”,
(b)
for “in the notice” substitute “in a notice of a decision under
30
paragraph 3 above given to the responsible person for an oil field”,
and
(c)
for “that period” substitute “the permitted period”.
      (3)
Omit sub-paragraphs (1A) to (1C) and (2A).
      (4)
After sub-paragraph (2A) insert—
35
   “(2B)
In this paragraph “permitted period” means the period of 4 years
beginning with the date on which the notice of the decision under
paragraph 3 was given (but see sub-paragraph (2C)).
     (2C)
Where the relevant amount was overstated in the notice of
decision as a result of an inaccuracy in a statement or declaration
40
made by the responsible person (or a person acting on behalf of the
responsible person) in connection with the claim—
(a)
if the inaccuracy was careless, the permitted period is
extended to 6 years, and