Finance (No. 2) Bill

House of Commons

Session 2010 - 11
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Finance (No. 2) Bill

Finance (No. 2) Bill
Schedule 11 — Penalty for failure to make payments on time
90

(b)
in accordance with sub-paragraph (1)(b), the references in
sub-paragraphs (3) to (7) 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
5
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.
      (9)
A penalty period may be extended more than once under sub-
paragraph (2)(c).
10
8I
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.
8J
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
15
5% of that amount.”
8
After paragraph 8J insert—
“Calculation of unpaid VAT: treatment of payments on account
8K    (1)
Where P is required, by virtue of an order under section 28 of
VATA 1994, to make any payment on account of VAT—
20
(a)
each payment is to be treated for the purposes of this
Schedule as relating to the prescribed accounting period in
respect of which it is to be paid (and not as relating to the
interval between the dates on which payments on account
are required to be made), and
25
(b)
the amount of tax unpaid in respect of the prescribed
accounting period is the total of the amounts produced by
paragraphs (a) and (b) of sub-paragraph (3).
      (2)
In determining that total—
(a)
if there is more than one amount of POAD or POAT, those
30
amounts are to be added together, and
(b)
if the amount produced by sub-paragraph (3)(b) is less
than zero, that amount is to be disregarded.
      (3)
The amounts are—
(a)
35
(b)
      (4)
In this paragraph—
POAD is the amount of any payment on account due in
respect of the prescribed accounting period,
POAT is the amount of any payment on account paid on time
40
(that is, on or before the date on which it was required to
be made),
BPD (which is the balancing payment due in respect of the
prescribed accounting period) is equal to
and
45

Finance (No. 2) Bill
Schedule 12 — Recovery of overpaid tax etc
Part 1 — Stamp duty land tax
91

BPT (which is the amount paid on time in satisfaction of any
liability to pay BPD) is equal to
      (5)
In sub-paragraph (4)—
PAPD is the amount of VAT due in respect of the prescribed
accounting period,
5
PAPP is the total amount paid, on or before the last day on
which P is required to make payments in respect of that
period, in satisfaction of any liability to pay PAPD, and
POAP is the total amount paid, on or before that day (but
whether or not paid on time), in satisfaction of any liability
10
to pay POAD.”
9     (1)
Paragraph 11 (assessment) is amended as follows.
      (2)
In sub-paragraph (4), for “unpaid tax” substitute “tax which was due or
payable”.
      (3)
After sub-paragraph (4) insert—
15
   “(4A)
A replacement assessment may be made in respect of a penalty if
an earlier assessment operated by reference to an overestimate of
an amount of tax which was due or payable.”
10
For paragraph 16(1) (no liability where there is reasonable excuse for failure)
substitute—
20
    “(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
payment—
(a)
liability to a penalty under any paragraph of this Schedule
does not arise in relation to that failure, and
25
(b)
the failure does not count as a default for the purposes of
paragraphs 6, 8B, 8C, 8G and 8H.”
Schedule 12
Section 28

Recovery of overpaid tax etc
Part 1
30
Stamp duty land tax
1
Part 4 of FA 2003 (stamp duty land tax) is amended as follows.
New provisions relating to overpaid tax
2
In Schedule 10 (returns, enquiries, assessments and appeals), for paragraph
34 and the italic heading preceding it substitute—
35
“Claim for relief for overpaid tax etc
34    (1)
This paragraph applies where—

Finance (No. 2) Bill
Schedule 12 — Recovery of overpaid tax etc
Part 1 — Stamp duty land tax
92

(a)
a person has paid an amount by way of tax but believes
that the tax was not due, or
(b)
a person has been assessed as liable to pay an amount by
way of tax, or there has been a determination to that effect,
but the person believes that the tax is not due.
5
      (2)
The person may make a claim to the Commissioners for Her
Majesty’s Revenue and Customs for repayment or discharge of the
amount.
      (3)
Paragraph 34A makes provision about cases in which the
Commissioners for Her Majesty’s Revenue and Customs are not
10
liable to give effect to a claim under this paragraph.
      (4)
The following make further provision about making and giving
effect to claims under this paragraph—
(a)
paragraphs 34B to 34D, and
(b)
Schedule 11A.
15
      (5)
Paragraph 34E makes provision about the application of this
paragraph and paragraphs 34A to 34D to amounts paid under
contract settlements.
      (6)
The Commissioners for Her Majesty’s Revenue and Customs are
not liable to give relief in respect of a case described in sub-
20
paragraph (1)(a) or (b) except as provided—
(a)
by this Schedule and Schedule 11A (following a claim
under this paragraph), or
(b)
by or under another provision of this Part of this Act.
      (7)
For the purposes of this paragraph and paragraphs 34A to 34E, an
25
amount paid by one person on behalf of another is treated as paid
by the other person.
Cases in which Commissioners not liable to give effect to a claim
34A   (1)
The Commissioners for Her Majesty’s Revenue and Customs are
not liable to give effect to a claim under paragraph 34 if or to the
30
extent that the claim falls within a case described in this
paragraph.
      (2)
Case A is where the amount paid, or liable to be paid, is excessive
by reason of—
(a)
a mistake in a claim or election, or
35
(b)
a mistake consisting of making or giving, or failing to make
or give, a claim or election.
      (3)
Case B is where the claimant is or will be able to seek relief by
taking other steps under this Part of this Act.
      (4)
Case C is where the claimant—
40
(a)
could have sought relief by taking such steps within a
period that has now expired, and
(b)
knew, or ought reasonably to have known, before the end
of that period that such relief was available.
      (5)
Case D is where the claim is made on grounds that—
45

Finance (No. 2) Bill
Schedule 12 — Recovery of overpaid tax etc
Part 1 — Stamp duty land tax
93

(a)
have been put to a court or tribunal in the course of an
appeal by the claimant relating to the amount paid or liable
to be paid, or
(b)
have been put to Her Majesty’s Revenue and Customs in
the course of an appeal by the claimant relating to that
5
amount that is treated as having been determined by a
tribunal (by virtue of paragraph 37 (settling of appeals by
agreement)).
      (6)
Case E is where the claimant knew, or ought reasonably to have
known, of the grounds for the claim before the latest of the
10
following—
(a)
the date on which an appeal by the claimant relating to the
amount paid, or liable to be paid, in the course of which the
ground could have been put forward (a “relevant appeal”)
was determined by a court or tribunal (or is treated as
15
having been so determined),
(b)
the date on which the claimant withdrew a relevant appeal
to a court or tribunal, and
(c)
the end of the period in which the claimant was entitled to
make a relevant appeal to a court or tribunal.
20
      (7)
Case F is where the amount in question was paid or is liable to be
paid—
(a)
in consequence of proceedings enforcing the payment of
that amount brought against the claimant by Her Majesty’s
Revenue and Customs, or
25
(b)
in accordance with an agreement between the claimant
and Her Majesty’s Revenue and Customs settling such
proceedings.
      (8)
Case G is where—
(a)
the amount paid, or liable to be paid, is excessive by reason
30
of a mistake in calculating the claimant’s liability to tax,
and
(b)
liability was calculated in accordance with the practice
generally prevailing at the time.
Making a claim
35
34B   (1)
A claim under paragraph 34 may not be made more than 4 years
after the effective date of the transaction.
      (2)
A claim under paragraph 34 may not be made by being included
in a land transaction return.
The claimant: partnerships
40
34C   (1)
This paragraph applies where an amount is paid, or is liable to be
paid, in respect of a land transaction entered into as purchaser by
or on behalf of the members of a partnership (within the meaning
of Schedule 15).
      (2)
Paragraphs 6 and 8 of Schedule 15 do not apply to a claim under
45
paragraph 34 in respect of the amount.

Finance (No. 2) Bill
Schedule 12 — Recovery of overpaid tax etc
Part 1 — Stamp duty land tax
94

      (3)
A claim under paragraph 34 in respect of the amount—
(a)
may be made by a relevant person who has been
nominated to make the claim by all of the relevant persons,
and
(b)
may not be made by any other person.
5
      (4)
In relation to such a claim, references in paragraph 34A to the
claimant are to any of the relevant persons.
      (5)
The relevant persons are—
(a)
any person who was a partner in the partnership at the
effective date of the transaction, and
10
(b)
the personal representative of such a person.
Assessment of claimant in connection with claim
34D   (1)
This paragraph applies where—
(a)
a claim is made under paragraph 34,
(b)
the grounds for giving effect to the claim also provide
15
grounds for a discovery assessment on the claimant in
respect of any land transaction, and
(c)
such an assessment could be made but for a relevant
restriction.
      (2)
The reference to the claimant in subsection (1)(b) includes—
20
(a)
in relation to a claim for an amount paid or liable to be paid
in respect of a land transaction entered into as purchaser
by or on behalf of the members of a partnership (within the
meaning of Schedule 15), a responsible partner within the
meaning of paragraph 6(2) of Schedule 15;
25
(b)
in relation to a claim for an amount paid or liable to be paid
in respect of a land transaction entered into by trustees of
a settlement (within the meaning of Schedule 16), a
responsible trustee within the meaning of paragraph 5(3)
of Schedule 16.
30
      (3)
The following are relevant restrictions—
(a)
the restrictions in paragraph 30, and
(b)
the expiry of a time limit for making a discovery
assessment.
      (4)
Where this paragraph applies—
35
(a)
the relevant restrictions are to be disregarded, and
(b)
the discovery assessment is not out of time if it is made
before the final determination of the claim.
      (5)
A claim is not finally determined until it, or the amount to which
it relates, can no longer be varied (whether on appeal or
40
otherwise).
Contract settlements
34E   (1)
In paragraph 34(1)(a) the reference to an amount paid by a person
by way of tax includes an amount paid by a person under a
contract settlement in connection with tax believed to be due.
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Finance (No. 2) Bill
Schedule 12 — Recovery of overpaid tax etc
Part 1 — Stamp duty land tax
95

      (2)
Sub-paragraphs (3) to (6) apply if the person who paid the amount
under the contract settlement (“the payer”) and the person from
whom the tax was due (“the taxpayer”) are not the same person.
      (3)
In relation to a claim under paragraph 34 in respect of that
amount—
5
(a)
the references to the claimant in paragraph 34A(5) to (7)
(Cases D, E and F) have effect as if they included the
taxpayer,
(b)
the reference to the claimant in paragraph 34A(8) (Case G)
has effect as if it were a reference to the taxpayer,
10
(c)
the reference to the claimant in paragraph 34D(1)(b) has
effect as if it were a reference to the taxpayer, and
(d)
references to tax in Schedule 11A (as it applies to a claim
under paragraph 34) include such an amount.
      (4)
Sub-paragraph (5) applies where the grounds for giving effect to a
15
claim by the payer in respect of the amount also provide grounds
for a discovery assessment on the taxpayer in respect of any land
transaction.
      (5)
The Commissioners for Her Majesty’s Revenue and Customs may
set any amount repayable to the payer by virtue of the claim
20
against any amount payable by the taxpayer by virtue of the
assessment.
      (6)
The obligations of the Commissioners for Her Majesty’s Revenue
and Customs and the taxpayer are discharged to the extent of any
set-off under sub-paragraph (5).
25
      (7)
“Contract settlement” means an agreement made in connection
with any person’s liability to make a payment to the
Commissioners for Her Majesty’s Revenue and Customs under or
by virtue of an enactment.”
Consequential amendments
30
3
In section 113 (functions conferred on “the Inland Revenue”), omit
subsection (3)(b)(ii).
4     (1)
Schedule 10 (returns, enquiries, assessments and appeals) is amended as
follows.
      (2)
In the heading at the beginning of Part 6, after “Relief in the case of” insert
35
“overpaid tax or”.
      (3)
In paragraph 45(1) (determination of market value by relevant tribunal), for
“paragraphs 34(6) or” substitute “paragraph”.
5
In Schedule 11A (claims not included in returns etc), in paragraph 14(5)
(application of provisions of Schedule 10)—
40
(a)
for “and 44” substitute “, 44 and 45”, and
(b)
omit “(settling of appeals by agreement)”.

Finance (No. 2) Bill
Schedule 12 — Recovery of overpaid tax etc
Part 2 — Petroleum revenue tax
96

Part 2
Petroleum revenue tax
Claims for recovery of overpaid tax etc
6
Schedule 2 to OTA 1975 (management and collection of petroleum revenue
tax) is amended as follows.
5
7
In the Table in paragraph 1(1) (applying provisions of TMA 1970 in relation
to management and collection of petroleum revenue tax), omit the entry
relating to section 33 of TMA 1970.
8
In paragraph 10(1A) (time limit for assessments and determinations) for
“and 12B” substitute “, 12B and 13E”.
10
9
In paragraph 12(1B) (disapplication of time limits for further assessments
and determinations)—
(a)
omit the “or” at the end of paragraph (a), and
(b)
after that paragraph insert—
“(aa)
a claim under paragraph 13A (see paragraph 13E),
15
or”.
10
After paragraph 13 insert—
“Claim for relief for overpaid tax etc
13A   (1)
This paragraph applies where—
(a)
a participator has paid an amount by way of tax but
20
believes that the tax was not due, or
(b)
a participator has been assessed as liable to pay an amount
by way of tax but believes that the tax is not due.
      (2)
The participator may make a claim to the Commissioners for Her
Majesty’s Revenue and Customs (“HMRC”) for repayment or
25
discharge of the amount.
      (3)
Paragraph 13B makes provision about cases in which HMRC are
not liable to give effect to a claim under this paragraph.
      (4)
Paragraphs 13C to 14I make further provision about making and
giving effect to claims under this paragraph.
30
      (5)
Paragraph 13F makes provision about the application of this
paragraph and paragraphs 13B to 13E to amounts paid under
contract settlements.
      (6)
HMRC are not liable to give relief in respect of a case described in
sub-paragraph (1)(a) or (b) except as provided—
35
(a)
by this Schedule (following a claim under this paragraph),
or
(b)
by or under another provision of the Oil Taxation Acts.
      (7)
For the purposes of this paragraph and paragraphs 13B to 13F, an
amount paid by one person on behalf of another is treated as paid
40
by the other person.