Finance (No. 2) Bill

House of Commons

Session 2010 - 11
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Other Bills before Parliament

Finance (No. 2) Bill

Finance (No. 2) Bill
Schedule 11 — Penalty for failure to make payments on time
83

Schedule 11
Section 27

Penalty for failure to make payments on time
1
Schedule 56 to FA 2009 (penalty for failure to make payments on time) is
amended as follows.
2     (1)
Paragraph 1 (penalty for failure) is amended as follows.
5
      (2)
In sub-paragraph (2), for “8” substitute “8J”.
      (3)
After sub-paragraph (4) insert—
    “(5)
Sub-paragraph (4) is subject to paragraph 2A.”
      (4)
The Table is amended as follows.
      (5)
In item 2, in column 3, omit “(except an amount falling within item 20)”.
10
      (6)
In item 4, in column 4, for “section 62” substitute “section 71”.
      (7)
After item 6 insert—

“6A
Value added tax
Amount payable under
The date determined—

section 25(1) of VATA
(a)
by or under regulations under

1994 (except an amount
section 25 of VATA 1994, or

15

falling within item 6B,
(b)
in accordance with an order under

13A, 23 or 24)
section 28 of that Act,

as the date by which the amount must be paid

6B
Value added tax
Amount payable under
The date on or before which P must pay any

section 25(1) of VATA
balancing payment or other outstanding

20

1994 which is an
payment due in respect of amount A

instalment of an amount

due in respect of a period

of 9 months or more

(“amount A”)

25

6C
Insurance
Amount payable under
The date determined by or under regulations

premium tax
regulations under section
under section 54 of FA 1994 as the date by

54 of FA 1994 (except an
which the amount must be paid”.

amount falling within

item 13B, 23 or 24)

30
      (8)
After item 11 insert—

“11A
Aggregates levy
Amount payable under
The date determined by or under regulations

regulations under section
under section 25 of FA 2001 as the date by

25 of FA 2001 (except an
which the amount must be paid

amount falling within

35

item 16A, 23 or 24)

11B
Climate change
Amount payable under
The date determined by or under regulations

levy
regulations under
under paragraph 41 of Schedule 6 to FA 2000

paragraph 41 of Schedule
as the date by which the amount must be paid

6 to FA 2000 (except an

40

amount falling within

item 16B, 23 or 24)

Finance (No. 2) Bill
Schedule 11 — Penalty for failure to make payments on time
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11C
Landfill tax
Amount payable under
The date determined by or under regulations

regulations under section
under section 49 of FA 1996 as the date by

49 of FA 1996 (except an
which the amount must be paid

amount falling within

item 16C, 23 or 24)

5

11D
Air passenger
Amount payable under
The date determined by or under regulations

duty
regulations under section
under section 38 of FA 1994 as the date by

38 of FA 1994 (except an
which the amount must be paid

amount falling within

item 17A, 23 or 24)

10

11E
Alcoholic liquor
Amount payable under
The date determined by or under regulations

duties
regulations under section
under section 13, 49, 56 or 62 of ALDA 1979 as

13, 49, 56 or 62 of ALDA
the date by which the amount must be paid

1979 (except an amount

falling within item 17A,

15

23 or 24)

11F
Tobacco products
Amount payable under
The date determined by or under regulations

duty
regulations under section
under section 7 of TPDA 1979 as the date by

7 of TPDA 1979 (except an
which the amount must be paid

amount falling within

20

item 17A, 23 or 24)

11G
Hydrocarbon oil
Amount payable under
The date determined by or under regulations

duties
regulations under section
under section 21 or 24 of HODA 1979 as the

21 or 24 of HODA 1979
date by which the amount must be paid

(except an amount falling

25

within item 17A, 23 or 24)

11H
General betting
Amount payable under
The date determined—

duty
section 5B of BGDA 1981
(a)
under section 5B of BGDA 1981, or

(except an amount falling
(b)
by or under regulations under para-

within item 17A, 23 or 24)
graph 2 of Schedule 1 to that Act,

30

as the date by which the amount must be paid

11I
Pool betting duty
Amount payable under
The date determined—

section 8 of BGDA 1981
(a)
under section 8 of BGDA 1981, or

(except an amount falling
(b)
by or under regulations under that

within item 17A, 23 or 24)
section or directions under para-

35

graph 3 of Schedule 1 to that Act,

as the date by which the amount must be paid

11J
Bingo duty
Amount payable under
The date determined by or under regulations

regulations under
under paragraph 9 of Schedule 3 to BGDA

paragraph 9 of Schedule 3
1981 as the date by which the amount must be

40

to BGDA 1981 (except an
paid

amount falling within

item 17A, 23 or 24)

11K
Lottery duty
Amount payable under
The date determined—

section 26 of FA 1993
(a)
by section 26 of FA 1993, or

45

(except an amount falling
(b)
by or under regulations under that

within item 17A, 23 or 24)
section,

as the date by which the amount must be paid

11L
Gaming duty
Amount payable under
The date determined by or under regulations

section 12 of FA 1997
under—

50

(except an amount falling
(a)
section 12 of FA 1997, or

within item 17A, 23 or 24)
(b)
paragraph 11 of Schedule 1 to that

Act,

as the date by which the amount must be paid

11M
Remote gaming
Amount payable under
The date determined by or under regulations

55

duty
section 26I of BGDA 1981
under section 26I of BGDA 1981 as the date

(except an amount falling
by which the amount must be paid”.

within item 17A, 23 or 24)

Finance (No. 2) Bill
Schedule 11 — Penalty for failure to make payments on time
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      (9)
After item 13 insert—

“13A
Value added tax
Amount assessed under
The date by which the amount would have

section 73(1) of VATA
been required to be paid if it had been shown

1994 in the absence of a
in the return

return

5

13B
Insurance
Amount assessed under
The date by which the amount would have

premium tax
section 56(1) of FA 1994 in
been required to be paid if it had been shown

the absence of a return
in the return”.

     (10)
After item 16 insert—

“16A
Aggregates levy
Amount assessed under
The date by which the amount would have

10

paragraph 2 or 3 of
been required to be paid if it had been shown

Schedule 5 to FA 2001 in
in the return

the absence of a return

16B
Climate change
Amount assessed under
The date by which the amount would have

levy
paragraph 78 or 79 of
been required to be paid if it had been shown

15

Schedule 6 to FA 2000 in
in the return

the absence of a return

16C
Landfill tax
Amount assessed under
The date by which the amount would have

section 50(1) of FA 1996 in
been required to be paid if it had been shown

the absence of a return
in the return”.

20
     (11)
After item 17 insert—

“17A
Tax falling within
Amount assessed under
The date by which the amount would have

any of items 11D
section 12(1) of FA 1994 in
been required to be paid if it had been shown

to 11M
the absence of a return
in the return”.

     (12)
Omit item 20.
25
     (13)
In item 23—
(a)
in columns 2 and 3, for “items 1 to 6, 9 or 10” substitute “items 1 to
6A, 6C, 9, 10 or 11A to 11M”, and
(b)
in column 3, for “any of items 18 to 20” substitute “item 18 or 19”.
     (14)
In item 24—
30
(a)
in column 2, for “items 1 to 6, 9 or 10” substitute “items 1 to 6A, 6C,
9, 10 or 11A to 11M”, and
(b)
in column 3, for “any of items 18 to 20” substitute “item 18 or 19”.
3
In paragraph 2 (assessments and determinations in default of return), in
paragraph (c), for “10” substitute “11M”.
35
4
After paragraph 2 insert—
“Different penalty date for certain PAYE payments
2A    (1)
PAYE regulations may provide that, in relation to specified
payments of tax falling within item 2, the penalty date is a
specified date later than that determined in accordance with
40
column 4 of the Table.

Finance (No. 2) Bill
Schedule 11 — Penalty for failure to make payments on time
86

      (2)
In sub-paragraph (1) “specified” means specified in the
regulations.”
5     (1)
Paragraph 3 (amount of penalty for occasional amounts and amounts due
for periods of 6 months or more) is amended as follows.
      (2)
Sub-paragraph (1) is amended as follows.
5
      (3)
In paragraph (a), for “items 1, 3 and 7 to 24” substitute “items 1, 3, 6B, 7 to 11
and 12 to 24”.
      (4)
In paragraph (b)—
(a)
for “item 2 or 4” substitute “any of items 2, 4, 6A, 6C and 11A to 11M”,
and
10
(b)
omit the “and” at the end.
      (5)
After paragraph (c) insert “, and
(d)
a payment of tax falling within item 6A which relates to a
transitional period for the purposes of the annual
accounting scheme.”
15
      (6)
After sub-paragraph (1) insert—
   “(1A)
In sub-paragraph (1)(d), 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
20
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
25
(b)
begins on the day immediately following the end of the last
period of 12 months for which such an authorisation has
effect.”
6
For paragraph 6 substitute—
“6    (1)
P is liable to a penalty, in relation to each tax, of an amount
30
determined by reference to—
(a)
the number of defaults that P has made during the tax year
(see sub-paragraphs (2) and (3)), and
(b)
the amount of that tax comprised in the total of those
defaults (see sub-paragraphs (4) to (7)).
35
      (2)
For the purposes of this paragraph, P makes a default when P fails
to make one of the following payments (or to pay an amount
comprising two or more of those payments) in full on or before the
date on which it becomes due and payable—
(a)
a payment under PAYE regulations;
40
(b)
a payment of earnings-related contributions within the
meaning of the Social Security (Contributions) Regulations
2001 (S.I. 2001/1004);
(c)
a payment due under the Income Tax (Construction
Industry Scheme) Regulations 2005 (S.I. 2005/2045);
45
(d)
a repayment in respect of a student loan due under the
Education (Student Loans) (Repayments) Regulations 2009

Finance (No. 2) Bill
Schedule 11 — Penalty for failure to make payments on time
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(S.I. 2009/470) or the Education (Student Loans)
(Repayments) Regulations (Northern Ireland) 2000 (S.R.
2000 No. 121).
      (3)
But the first failure during a tax year to make one of those
payments (or to pay an amount comprising two or more of those
5
payments) does not count as a default for that tax year.
      (4)
If P makes 1, 2 or 3 defaults during the tax year, the amount of the
penalty is 1% of the amount of the tax comprised in the total of
those defaults.
      (5)
If P makes 4, 5 or 6 defaults during the tax year, the amount of the
10
penalty is 2% of the amount of the tax comprised in the total of
those defaults.
      (6)
If P makes 7, 8 or 9 defaults during the tax year, the amount of the
penalty is 3% of the amount of the tax comprised in the total of
those defaults.
15
      (7)
If P makes 10 or more defaults during the tax year, the amount of
the penalty is 4% of the amount of the tax comprised in the total of
those defaults.
      (8)
For the purposes of this paragraph—
(a)
the amount of a tax comprised in a default is the amount of
20
that tax comprised in the payment which P fails to make;
(b)
a default counts for the purposes of sub-paragraphs (4) to
(7) even if it is remedied before the end of the tax year.
      (9)
The Treasury may by order made by statutory instrument make
such amendments to sub-paragraph (2) as they think fit in
25
consequence of any amendment, revocation or re-enactment of the
regulations mentioned in that sub-paragraph.”
7
After paragraph 8 insert—
“Amount of penalty: amounts in respect of periods of between 2 and 6 months
8A    (1)
Paragraphs 8B to 8E apply in the case of a payment of tax falling
30
within any of items 6A, 6C and 11A to 11M 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 payment
mentioned in paragraph 3(1)(d).
      (3)
Paragraph 8K sets out how payments on account of VAT (item 6A)
35
are to be treated for the purposes of paragraphs 8B to 8E.
8B    (1)
A penalty period begins to run on the penalty date for the
payment of tax.
      (2)
The penalty period ends with the day 12 months after the date
specified in or for the purposes of column 4 for the payment,
40
unless it is extended under paragraph 8C(2)(c) or 8H(2)(c).
8C    (1)
This paragraph applies if—

Finance (No. 2) Bill
Schedule 11 — Penalty for failure to make payments on time
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(a)
a penalty period has begun under paragraph 8B or 8G
because P has failed to make a payment (“payment A”),
and
(b)
before the end of the period, P fails to make another
payment (“payment B”) falling within the same item in the
5
Table as payment A.
      (2)
In such a case—
(a)
paragraph 8B(1) does not apply to the failure to make
payment B,
(b)
P is liable to a penalty under this paragraph for that failure,
10
and
(c)
the penalty period that has begun is extended so that it
ends with the day 12 months after the date specified in or
for the purposes of column 4 for payment B.
      (3)
The amount of the penalty under this paragraph is determined by
15
reference to the number of defaults that P has made during the
penalty period.
      (4)
If the default is P’s first default during the penalty period, P is
liable, at the time of the default, to a penalty of 2% of the amount
of the default.
20
      (5)
If the default is P’s second default during the penalty period, P is
liable, at the time of the default, to a penalty of 3% of the amount
of the default.
      (6)
If the default is P’s third or a subsequent default during the
penalty period, P is liable, at the time of the default, to a penalty of
25
4% of the amount of the default.
      (7)
For the purposes of this paragraph—
(a)
P makes a default when P fails to pay an amount of tax in
full on or before the date on which it becomes due and
payable;
30
(b)
in accordance with sub-paragraph (1)(b), the references in
sub-paragraphs (3) to (6) to a default are references to a
default in relation to the tax to which payments A and B
relate;
(c)
a default counts for the purposes of those sub-paragraphs
35
if (but only if) the period to which the payment relates is
less than 6 months;
(d)
the amount of a default is the amount which P fails to pay.
      (8)
A penalty period may be extended more than once under sub-
paragraph (2)(c).
40
8D
If any amount of the tax is unpaid after the end of the period of 6
months beginning with the penalty date, P is liable to a penalty of
5% of that amount.
8E
If any amount of the tax is unpaid after the end of the period of 12
months beginning with the penalty date, P is liable to a penalty of
45
5% of that amount.

Finance (No. 2) Bill
Schedule 11 — Penalty for failure to make payments on time
89

Amount of penalty: amounts in respect of periods of 2 months or less
8F    (1)
Paragraphs 8G to 8J apply in the case of a payment of tax falling
within any of items 6A, 6C and 11A to 11M 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 payment
5
mentioned in paragraph 3(1)(d).
8G    (1)
A penalty period begins to run on the penalty date for the
payment of tax.
      (2)
The penalty period ends with the day 12 months after the date
specified in or for the purposes of column 4 for the payment,
10
unless it is extended under paragraph 8C(2)(c) or 8H(2)(c).
8H    (1)
This paragraph applies if—
(a)
a penalty period has begun under paragraph 8B or 8G
because P has failed to make a payment (“payment A”),
and
15
(b)
before the end of the period, P fails to make another
payment (“payment B”) falling within the same item in the
Table as payment A.
      (2)
In such a case—
(a)
paragraph 8G(1) does not apply to the failure to make
20
payment B,
(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 date specified in or
25
for the purposes of column 4 for payment B.
      (3)
The amount of the penalty under this paragraph is determined by
reference to the number of defaults that P has made during the
penalty period.
      (4)
If the default is P’s first, second or third default during the penalty
30
period, P is liable, at the time of the default, to a penalty of 1% of
the amount of the default.
      (5)
If the default is P’s fourth, fifth or sixth default during the penalty
period, P is liable, at the time of the default, to a penalty of 2% of
the amount of the default.
35
      (6)
If the default is P’s seventh, eighth or ninth default during the
penalty period, P is liable, at the time of the default, to a penalty of
3% of the amount of the default.
      (7)
If the default is P’s tenth or a subsequent default during the
penalty period, P is liable, at the time of the default, to a penalty of
40
4% of the amount of the default.
      (8)
For the purposes of this paragraph—
(a)
P makes a default when P fails to pay an amount of tax in
full on or before the date on which it becomes due and
payable;
45