Finance Bill

House of Commons

Session 2008 - 09
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Finance Bill

Finance Bill
Schedule 56 — Penalty for failure to make payments on time
426

(b)
if there is no such assessment, the date on which that amount of tax
is ascertained.
      (4)
In sub-paragraph (3)(a) “appeal period” means the period during which—
(a)
an appeal could be brought, or
(b)
an appeal that has been brought has not been determined or
5
withdrawn.
Appeal
13    (1)
P may appeal against a decision of HMRC that a penalty is payable by P.
      (2)
P may appeal against a decision of HMRC as to the amount of a penalty
payable by P.
10
14    (1)
An appeal under paragraph 13 is to be treated in the same way as an appeal
against an assessment to the tax concerned (including by the application of
any provision about bringing the appeal by notice to HMRC, about HMRC
review of the decision or about determination of the appeal by the First-tier
Tribunal or Upper Tribunal).
15
      (2)
Sub-paragraph (1) does not apply—
(a)
so as to require P to pay a penalty before an appeal against the
assessment of the penalty is determined, or
(b)
in respect of any other matter expressly provided for by this Act.
15    (1)
On an appeal under paragraph 13(1) that is notified to the tribunal, the
20
tribunal may affirm or cancel HMRC’s decision.
      (2)
On an appeal under paragraph 13(2) that is notified to the tribunal, the
tribunal may—
(a)
affirm HMRC’s decision, or
(b)
substitute for HMRC’s decision another decision that HMRC had
25
power to make.
      (3)
If the tribunal substitutes its decision for HMRC’s, the tribunal may rely on
paragraph 9—
(a)
to the same extent as HMRC (which may mean applying the same
percentage reduction as HMRC to a different starting point), or
30
(b)
to a different extent, but only if the tribunal thinks that HMRC’s
decision in respect of the application of paragraph 9 was flawed.
      (4)
In sub-paragraph (3)(b) “flawed” means flawed when considered in the light
of the principles applicable in proceedings for judicial review.
      (5)
In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal
35
(as appropriate by virtue of paragraph 14(1)).
Reasonable excuse
16    (1)
Liability to a penalty under any paragraph of this Schedule does not arise in
relation to a failure to make a payment if P satisfies HMRC or (on appeal) the
First-tier Tribunal or Upper Tribunal that there is a reasonable excuse for the
40
failure.
      (2)
For the purposes of sub-paragraph (1)—

Finance Bill
Schedule 57 — Amendments relating to penalties
Part 1 — Amendments of Schedule 24 to FA 2007
427

(a)
an insufficiency of funds is not a reasonable excuse unless
attributable to events outside P’s control,
(b)
where P relies on any other person to do anything, that is not a
reasonable excuse unless P took reasonable care to avoid the failure,
and
5
(c)
where P had a reasonable excuse for the failure but the excuse has
ceased, P is to be treated as having continued to have the excuse if the
failure is remedied without unreasonable delay after the excuse
ceased.
Double jeopardy
10
17
P is not liable to a penalty under any paragraph of this Schedule in respect
of a failure or action in respect of which P has been convicted of an offence.
Interpretation
18    (1)
This paragraph applies for the construction of this Schedule.
      (2)
“HMRC” means Her Majesty’s Revenue and Customs.
15
      (3)
References to tax include construction industry deductions under Chapter 3
of Part 3 of FA 2004.
      (4)
References to a determination, in relation to an amount payable under PAYE
regulations or under Chapter 3 of Part 3 of FA 2004, include a certificate.
      (5)
References to an assessment to tax, in relation to inheritance tax and stamp
20
duty reserve tax, are to a determination.
Schedule 57
Section 108

Amendments relating to penalties
Part 1
Amendments of Schedule 24 to FA 2007
25
1
Schedule 24 to FA 2007 (penalties for errors) is amended as follows.
2
In paragraph 2 (under-assessment by HMRC), insert at the end—
    “(4)
In this paragraph (and in Part 2 of this Schedule so far as relating
to this paragraph)—
(a)
“assessment” includes determination, and
30
(b)
accordingly, references to an under-assessment include an
under-determination.”
3
In paragraph 5 (normal rule for calculating potential lost revenue), for sub-
paragraph (4)(b) substitute—
“(b)
any relief under subsection (4) of section 419 of ICTA
35
(relief in respect of repayment etc of loan) which is
deferred under subsection (4A) of that section;”.

Finance Bill
Schedule 57 — Amendments relating to penalties
Part 2 — Amendments of Schedule 41 to FA 2008
428

4
In paragraph 9(1)(b) and (c) (reductions for disclosure), for “supply or false
information” substitute “supply of false information”.
5
In paragraph 13 (assessment), insert at the end—
    “(7)
In this Part of this Schedule references to an assessment to tax, in
relation to inheritance tax and stamp duty reserve tax, are to a
5
determination.”
6
For paragraph 16(2) (appeals) substitute—
    “(2)
Sub-paragraph (1) does not apply—
(a)
so as to require P to pay a penalty before an appeal against
the assessment of the penalty is determined, or
10
(b)
in respect of any other matter expressly provided for by
this Act.”
7     (1)
Paragraph 19 (companies: officers’ liability) is amended as follows.
      (2)
In sub-paragraph (3)—
(a)
after “a body corporate” insert “other than a limited liability
15
partnership”,
(b)
in paragraph (a), omit the “or” at the end, and
(c)
after that paragraph insert—
“(aa)
a manager, and”.
      (3)
After sub-paragraph (3) insert—
20
   “(3A)
In the application of sub-paragraph (1) to a limited liability
partnership, “officer” means a member.”
      (4)
Insert at the end—
    “(6)
In this paragraph “company” means any body corporate or
unincorporated association, but does not include a partnership, a
25
local authority or a local authority association.”
8
Omit paragraph 28(da) (interpretation of references to assessment).
9
In paragraphs 30 and 31 (consequential amendments) for “paragraph 7”
substitute “paragraphs 7 and 7B”.
Part 2
30
Amendments of Schedule 41 to FA 2008
10
Schedule 41 to FA 2008 (penalties for failure to notify and certain other
wrongdoing) is amended as follows.
11
For paragraph 18(2) (appeals) substitute—
    “(2)
Sub-paragraph (1) does not apply—
35
(a)
so as to require P to pay a penalty before an appeal against
the assessment of the penalty is determined, or
(b)
in respect of any other matter expressly provided for by
this Act.”
12    (1)
Paragraph 22 (companies: officers’ liability) is amended as follows.
40

Finance Bill
Schedule 58 — Recovery of debts under PAYE regulations
429

      (2)
In sub-paragraph (3)—
(a)
after “a body corporate” insert “other than a limited liability
partnership”,
(b)
in paragraph (a), omit the “or” at the end,
(c)
after that paragraph insert—
5
“(aa)
a manager, and”.
      (3)
After sub-paragraph (3) insert—
   “(3A)
In the application of sub-paragraph (1) to a limited liability
partnership, “officer” means a member.”
      (4)
Insert at the end—
10
    “(6)
In this paragraph “company” means any body corporate or
unincorporated association, but does not include a partnership, a
local authority or a local authority association.”
Part 3
Other amendments
15
13    (1)
TMA 1970 is amended as follows.
      (2)
In section 100(2) (determination of penalties by officer), omit paragraph (g)
and the “or” before it.
      (3)
After section 103 insert—
“103A
Disapplication of sections 100 to 103 in the case of certain penalties
20
Sections 100 to 103 do not apply to a penalty under—
(a)
Schedule 24 to FA 2007 (penalties for errors),
(b)
Schedule 36 to FA 2008 (information and inspection powers),
(c)
Schedule 41 to that Act (penalties for failure to notify and
certain other wrongdoing),
25
(d)
Schedule 55 to FA 2009 (penalties for failure to make returns
etc), or
(e)
Schedule 56 to that Act (penalties for failure to make
payments on time).”
14
In FA 2008 omit—
30
(a)
paragraph 74 of Schedule 36 (information and inspection powers);
(b)
paragraph 20(3) of Schedule 40 (amendment of Schedule 24 to FA
2007).
Schedule 58
Section 109

Recovery of debts under PAYE regulations
35
PAYE regulations
1
Section 684 of ITEPA 2003 (PAYE regulations) is amended as follows.
2
In subsection (1), omit “for Her Majesty’s Revenue and Customs”.

Finance Bill
Schedule 58 — Recovery of debts under PAYE regulations
430

3     (1)
Subsection (2) is amended as follows.
      (2)
For “PAYE regulations may, in particular, include” substitute “The
provision that may be made in PAYE regulations includes”.
      (3)
In the list of provisions, in item 1, in paragraph (a), omit “for Her Majesty’s
Revenue and Customs”.
5
      (4)
In item 2, for “or remaining unpaid (or treated as overpaid or remaining
unpaid)” substitute “(or treated as overpaid) on account of, or any amounts
other than relevant debts remaining unpaid (or treated as remaining
unpaid)”.
      (5)
After item 2 insert—
10

“2A.
Provision—

(a)
for deductions to be made in respect of relevant debts of a

payee,

(b)
as to the circumstances in which such deductions may be

made, and

15

(c)
where such deductions are made, as to the date on which

the relevant debts are to be treated as paid.”

      (6)
In item 3, for “income tax has been and is” substitute “amounts have been
and are”.
4
After subsection (3) insert—
20
“(3A)
PAYE regulations under item 2A in the above list may not make
provision enabling deductions totalling more than £2,000 to be made
from a payee’s income for a tax year without the payee’s consent.
(3B)
The Treasury may by order amend the amount specified in
subsection (3A).”
25
5
In subsection (7A)(a), after “tax” insert “or other amounts”.
6
After that subsection insert—
“(7AA)
In this section “relevant debt”, in relation to a payee, means—
(a)
a sum payable by the payee to the Commissioners under or
by virtue of an enactment, other than an excluded debt, and
30
(b)
a sum payable by the payee to the Commissioners under a
contract settlement.
(7AB)
For the purposes of subsection (7AA)—
(a)
child tax credit or working tax credit that the payee is liable
to repay is an excluded debt, and
35
(b)
if the payee is an employer, any amount that the payee is
required to deduct from the PAYE income of employees for a
tax year is an excluded debt until the tax year has ended.”
7
In subsection (7C), before the definition of “payer” insert—
““the Commissioners” means the Commissioners for Her
40
Majesty’s Revenue and Customs;
“contract settlement” means an agreement made in connection
with the liability of the payee or another person to make a

Finance Bill
Schedule 59 — Climate change levy: removal of reduced rate
Part 1 — New provision for removal of reduced rate
431

payment to the Commissioners under or by virtue of an
enactment.”
Consequential provision
8
In section 29(5) of the Tax Credits Act 2002 (recovery of overpayments)—
(a)
for “tax” substitute “income tax”, and
5
(b)
insert at the end “that is not a relevant debt (within the meaning of
section 684 of the Income Tax (Earnings and Pensions) Act 2003))”.
9     (1)
Part 11 of ITEPA 2003 (pay as you earn) is amended as follows.
      (2)
In section 682(1) (scope of Part), insert at the end “and includes provision in
respect of the deduction of certain other amounts from, and the repayment
10
of certain other amounts with, PAYE income”.
      (3)
In section 685 (tax tables)—
(a)
in subsection (1), omit “for Her Majesty’s Revenue and Customs”,
and
(b)
in subsection (2)(b), for “or 2” substitute “, 2 or 2A”.
15
10    (1)
The Treasury may by order make provision—
(a)
amending or repealing provisions of Part 11 of ITEPA 2003,
(b)
amending, repealing or revoking provisions of enactments or
instruments that refer to provisions of that Part, and
(c)
amending, repealing or revoking provisions of enactments or
20
instruments that apply, or confer power to apply, PAYE regulations
or otherwise refer to such regulations.
      (2)
An order under this paragraph may only make provision to the extent that
it is appropriate in consequence of, or in connection with, the amendments
made by this Schedule.
25
      (3)
An order under this paragraph may include transitional provision and
savings.
      (4)
An order under this paragraph is to be made by statutory instrument.
      (5)
A statutory instrument containing an order under this paragraph is subject
to annulment in pursuance of a resolution of the House of Commons.
30
Schedule 59
Section 117

Climate change levy: removal of reduced rate
Part 1
New provision for removal of reduced rate
1
In Schedule 6 to FA 2000 (climate change levy), after paragraph 45A insert—
35
“Removal of reduced rate where targets set by climate change agreement not met
45B   (1)
This paragraph applies where, by virtue of such a certificate as is
mentioned in paragraph 44(1), a facility is to be taken as being

Finance Bill
Schedule 59 — Climate change levy: removal of reduced rate
Part 1 — New provision for removal of reduced rate
432

covered by a climate change agreement for a period specified in
that certificate (“the certification period”).
      (2)
If it appears to the Secretary of State that the progress made in the
certification period towards meeting targets set for the facility by
the agreement has been such as under the provisions of the
5
agreement is unsatisfactory, the Secretary of State may issue a
certificate under this paragraph.
      (3)
The certificate must (in addition to specifying the facility,
agreement and certification period to which it applies) specify—
(a)
T, that is, the value (expressed in terms of a reduction in
10
tonnes of carbon dioxide equivalent) of achieving the
targets set for the facility by the agreement, and
(b)
P, that is, the value (expressed in the same terms) of the
progress made by the facility, during the certification
period, towards meeting those targets.
15
      (4)
Where a certificate has been issued under this paragraph—
(a)
each taxable supply made to the facility at any time falling
within the certification period is to be treated as not being
a reduced-rate supply, and
(b)
accordingly, an amount (determined in accordance with
20
sub-paragraph (5)) is payable by way of levy on that
taxable supply.
      (5)
The amount payable under this paragraph on a taxable supply
is—

where—
25
T and P have the values mentioned in sub-paragraph (3);
R is the amount which would have been payable by way of
levy on the supply (had it not been a reduced-rate supply)
at the time that it was made, in accordance with paragraph
42(1)(a).
30
      (6)
The Secretary of State must send the certificate to—
(a)
the Commissioners, and
(b)
the person who is the operator of the facility.
      (7)
A certificate under this paragraph may be issued after the
certification period ends.
35
      (8)
A person liable to account for levy under this paragraph—
(a)
is liable to account for it otherwise than by reference to an
accounting period, and
(b)
must not (by virtue of regulations under paragraph 41)
become liable to pay it as from a date before the date on
40
which the certificate under this paragraph is issued.
      (9)
Levy due under this paragraph is payable in addition to any levy
already payable on any supply made in the certification period.
     (10)
In this paragraph—