Finance (No. 2) Bill

House of Commons

Session 2010 - 11
Internet Publications
Other Bills before Parliament

Finance (No. 2) Bill

Finance (No. 2) Bill
Schedule 10 — Penalty for failure to make returns etc
78

24
Pool betting duty
Return under regulations under paragraph 2A of

Schedule 1 to BGDA 1981

25
Bingo duty
Return under regulations under paragraph 9 of

Schedule 3 to BGDA 1981

26
Lottery duty
Return under regulations under section 28(2) of FA

5

1993

27
Gaming duty
Return under directions under paragraph 10 of

Schedule 1 to FA 1997

28
Remote gaming duty
Return under regulations under section 26K of BGDA

1981”.

10

3
For paragraph 2 (amount of penalty for occasional or annual returns) and
the italic heading preceding it substitute—
“Amount of penalty: occasional returns and returns for periods of 6 months or more
2     (1)
Paragraphs 3 to 6 apply in the case of—
(a)
a return falling within any of items 1 to 5, 7 and 8 to 13 in
15
the Table,
(b)
a return falling within any of items 7A, 7B and 14 to 28
which relates to a period of 6 months or more, and
(c)
a return falling within item 7A which relates to a
transitional period for the purposes of the annual
20
accounting scheme.
      (2)
In sub-paragraph (1)(c), a transitional period for the purposes of
the annual accounting scheme is a prescribed accounting period
(within the meaning of section 25(1) of VATA 1994) which—
(a)
ends on the day immediately preceding the date indicated
25
by the Commissioners for Her Majesty’s Revenue and
Customs in a notification of authorisation under
regulation 50 of the Value Added Tax Regulations 1995
(S.I. 1995/2518) (admission to annual accounting scheme),
or
30
(b)
begins on the day immediately following the end of the last
period of 12 months for which such an authorisation has
effect.”
4     (1)
Paragraph 6 (amount of penalty for occasional returns and annual returns)
is amended as follows.
35
      (2)
In sub-paragraph (2), after “P” in the first place it occurs insert
“deliberately”.
      (3)
In sub-paragraph (5), for “any other case” substitute “any case not falling
within sub-paragraph (2)”.
5     (1)
Paragraph 11 (amount of penalty for certain CIS returns after 12 months) is
40
amended as follows.
      (2)
In sub-paragraph (2), after “P” in the first place it occurs insert
“deliberately”.
      (3)
In sub-paragraph (5), for “any other case” substitute “any case not falling
within sub-paragraph (2)”.
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Finance (No. 2) Bill
Schedule 10 — Penalty for failure to make returns etc
79

6     (1)
Paragraph 12 (amount of penalty for other CIS returns after 12 months) is
amended as follows.
      (2)
In sub-paragraph (2), after “P” insert “deliberately”.
7
After paragraph 13 insert—
“Amount of penalty: returns for periods of between 2 and 6 months
5
13A   (1)
Paragraphs 13B to 13E apply in the case of a return falling within
any of items 7A, 7B and 14 to 28 in the Table which relates to a
period of less than 6 months but more than 2 months.
      (2)
But those paragraphs do not apply in the case of a return
mentioned in paragraph 2(1)(c).
10
13B   (1)
P is liable to a penalty under this paragraph of £100.
      (2)
In addition, a penalty period begins to run on the penalty date for
the return.
      (3)
The penalty period ends with the day 12 months after the filing
date for the return, unless it is extended under paragraph
15
13C(2)(c) or 13H(2)(c).
13C   (1)
This paragraph applies if—
(a)
a penalty period has begun under paragraph 13B or 13G
because P has failed to make a return (“return A”), and
(b)
before the end of the period, P fails to make another return
20
(“return B”) falling within the same item in the Table as
return A.
      (2)
In such a case—
(a)
paragraph 13B(1) and (2) do not apply to the failure to
make return B, but
25
(b)
P is liable to a penalty under this paragraph for that failure,
and
(c)
the penalty period that has begun is extended so that it
ends with the day 12 months after the filing date for return
B.
30
      (3)
The amount of the penalty under this paragraph is determined by
reference to the number of returns that P has failed to make during
the penalty period.
      (4)
If the failure to make return B is P’s first failure to make a return
during the penalty period, P is liable, at the time of the failure, to
35
a penalty of £200.
      (5)
If the failure to make return B is P’s second failure to make a return
during the penalty period, P is liable, at the time of the failure, to
a penalty of £300.
      (6)
If the failure to make return B is P’s third or a subsequent failure
40
to make a return during the penalty period, P is liable, at the time
of the failure, to a penalty of £400.
      (7)
For the purposes of this paragraph—

Finance (No. 2) Bill
Schedule 10 — Penalty for failure to make returns etc
80

(a)
in accordance with sub-paragraph (1)(b), the references in
sub-paragraphs (3) to (6) to a return are references to a
return falling within the same item in the Table as returns
A and B, and
(b)
a failure to make a return counts for the purposes of those
5
sub-paragraphs if (but only if) the return relates to a period
of less than 6 months.
      (8)
A penalty period may be extended more than once under sub-
paragraph (2)(c).
13D   (1)
P is liable to a penalty under this paragraph if (and only if) P’s
10
failure continues after the end of the period of 6 months beginning
with the penalty date.
      (2)
The penalty under this paragraph is the greater of—
(a)
5% of any liability to tax which would have been shown in
the return in question, and
15
(b)
£300.
13E   (1)
P is liable to a penalty under this paragraph if (and only if) P’s
failure continues after the end of the period of 12 months
beginning with the penalty date.
      (2)
Where, by failing to make the return, P deliberately withholds
20
information which would enable or assist HMRC to assess P’s
liability to tax, the penalty under this paragraph is determined in
accordance with sub-paragraphs (3) and (4).
      (3)
If the withholding of the information is deliberate and concealed,
the penalty is the greater of—
25
(a)
100% of any liability to tax which would have been shown
in the return in question, and
(b)
£300.
      (4)
If the withholding of the information is deliberate but not
concealed, the penalty is the greater of—
30
(a)
70% of any liability to tax which would have been shown
in the return in question, and
(b)
£300.
      (5)
In any case not falling within sub-paragraph (2), the penalty under
this paragraph is the greater of—
35
(a)
5% of any liability to tax which would have been shown in
the return in question, and
(b)
£300.
Amount of penalty: returns for periods of 2 months or less
13F   (1)
Paragraphs 13G to 13J apply in the case of a return falling within
40
any of items 7A, 7B and 14 to 28 in the Table which relates to a
period of 2 months or less.
      (2)
But those paragraphs do not apply in the case of a return
mentioned in paragraph 2(1)(c).
13G   (1)
P is liable to a penalty under this paragraph of £100.
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Finance (No. 2) Bill
Schedule 10 — Penalty for failure to make returns etc
81

      (2)
In addition, a penalty period begins to run on the penalty date for
the return.
      (3)
The penalty period ends with the day 12 months after the filing
date for the return, unless it is extended under paragraph
13C(2)(c) or 13H(2)(c).
5
13H   (1)
This paragraph applies if—
(a)
a penalty period has begun under paragraph 13B or 13G
because P has failed to make a return (“return A”), and
(b)
before the end of the period, P fails to make another return
(“return B”) falling within the same item in the Table as
10
return A.
      (2)
In such a case—
(a)
paragraph 13G(1) and (2) do not apply to the failure to
make return B, but
(b)
P is liable to a penalty under this paragraph for that failure,
15
and
(c)
the penalty period that has begun is extended so that it
ends with the day 12 months after the filing date for return
B.
      (3)
The amount of the penalty under this paragraph is determined by
20
reference to the number of returns that P has failed to make during
the penalty period.
      (4)
If the failure to make return B is P’s first, second, third, fourth or
fifth failure to make a return during the penalty period, P is liable,
at the time of the failure, to a penalty of £100.
25
      (5)
If the failure to make return B is P’s sixth or a subsequent failure
to make a return during the penalty period, P is liable, at the time
of the failure, to a penalty of £200.
      (6)
For the purposes of this paragraph—
(a)
in accordance with sub-paragraph (1)(b), the references in
30
sub-paragraphs (3) to (5) to a return are references to a
return falling within the same item in the Table as returns
A and B, and
(b)
a failure to make a return counts for the purposes of those
sub-paragraphs if (but only if) the return relates to a period
35
of less than 6 months.
      (7)
A penalty period may be extended more than once under sub-
paragraph (2)(c).
13I   (1)
P is liable to a penalty under this paragraph if (and only if) P’s
failure continues after the end of the period of 6 months beginning
40
with the penalty date.
      (2)
The penalty under this paragraph is the greater of—
(a)
5% of any liability to tax which would have been shown in
the return in question, and
(b)
£300.
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Finance (No. 2) Bill
Schedule 10 — Penalty for failure to make returns etc
82

13J   (1)
P is liable to a penalty under this paragraph if (and only if) P’s
failure continues after the end of the period of 12 months
beginning with the penalty date.
      (2)
Where, by failing to make the return, P deliberately withholds
information which would enable or assist HMRC to assess P’s
5
liability to tax, the penalty under this paragraph is determined in
accordance with sub-paragraphs (3) and (4).
      (3)
If the withholding of the information is deliberate and concealed,
the penalty is the greater of—
(a)
100% of any liability to tax which would have been shown
10
in the return in question, and
(b)
£300.
      (4)
If the withholding of the information is deliberate but not
concealed, the penalty is the greater of—
(a)
70% of any liability to tax which would have been shown
15
in the return in question, and
(b)
£300.
      (5)
In any case not falling within sub-paragraph (2), the penalty under
this paragraph is the greater of—
(a)
5% of any liability to tax which would have been shown in
20
the return in question, and
(b)
£300.”
8
In paragraph 14(1) (reductions for disclosure), for “or 11(3) or (4)” substitute
“, 11(3) or (4), 13E(3) or (4) or 13J(3) or (4)”.
9
In paragraph 15(5) (reductions for disclosure not below certain amounts)—
25
(a)
for “paragraph 11(3) or (4)” substitute “sub-paragraph (3) or (4) of
any of paragraphs 11, 13E and 13J”, and
(b)
for “paragraph 11(3)(b) or (4)(b) (as the case may be)” substitute
“paragraph (b) of that sub-paragraph”.
10
In paragraph 18 (assessment), after sub-paragraph (4) insert—
30
    “(5)
A replacement assessment may be made in respect of a penalty if
an earlier assessment operated by reference to an overestimate of
the liability to tax which would have been shown in a return.”
11
For paragraph 23(1) (no liability where there is reasonable excuse for failure)
substitute—
35
    “(1)
If P satisfies HMRC or (on appeal) the First-tier Tribunal or Upper
Tribunal that there is a reasonable excuse for a failure to make a
return—
(a)
liability to a penalty under any paragraph of this Schedule
does not arise in relation to that failure, and
40
(b)
the failure does not count for the purposes of paragraphs
13B(2), 13C, 13G(2) and 13H.”