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Part IU.K. Customs and Excise and Value Added Tax

Chapter IIU.K. Value Added Tax

Modifications etc. (not altering text)

Civil penaltiesU.K.

13 Tax evasion: conduct involving dishonesty. U.K.

(1)In any case where,—

(a)for the purpose of evading tax, a person does any act or omits to take any action, and

(b)his conduct involves dishonesty (whether or not it is such as to give rise to criminal liability),

he shall be liable, subject to [F1subsection (7)] below, to a penalty equal to the amount of tax evaded or, as the case may be, sought to be evaded, by his conduct.

(2)The reference in subsection (1)(a) above to evading tax includes a reference to obtaining any of the following sums,—

(a)a payment under section 14(5) of the principal Act,

(b)a refund under [F2section 20A,] section 21 or section 22 of that Act, . . . F3

[F4(ba)a refund under any regulations made by virtue of section 8C(5) of that Act;]

(c)a repayment under section 23 of that Act, [F5and]

[F5(d)a refund under section 11 of the Finance Act 1990,]

in circumstances where the person concerned is not entitled to that sum.

(3)The reference in subsection (1) above to the amount of the tax evaded or sought to be evaded by a person’s conduct shall be construed,—

(a)in relation to tax itself or a payment under section 14(5) of the principal Act, as a reference to the aggregate of the amount (if any) falsely claimed by way of credit for input tax and the amount (if any) by which output tax was falsely understated; and

(b)in relation to the sums referred to in paragraphs (b), [F6(ba)] and (c) of subsection (2) above, as a reference to the amount falsely claimed by way of refund or repayment.

F7(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)Statements made or documents produced by or on behalf of a person shall not be inadmissible in any such proceedings as are mentioned in subsection (6) below by reason only that it has been drawn to his attention—

(a)that, in relation to tax, the Commissioners may assess an amount due by way of a civil penalty instead of instituting criminal proceedings and, though no undertaking can be given as to whether the Commissioners will make such an assessment in the case of any person, it is their practice to be influenced by the fact that a person has made a full confession of any dishonest conduct to which he has been a party and has given full facilities for investigation, and

(b)that the Commissioners or, on appeal, a value added tax tribunal [F8have power under section 15A below to reduce a penalty under this section,]

and that he was or may have been induced thereby to make the statements or produce the documents.

(6)The proceedings mentioned in subsection (5) above are—

(a)any criminal proceedings against the person concerned in respect of any offence in connection with or in relation to tax, and

(b)any proceedings against him for the recovery of any sum due from him in connection with or in relation to tax.

(7)Where, by reason of conduct falling within subsection (1) above, a person is convicted of an offence (whether under the principal Act or otherwise), that conduct shall not also give rise to liability to a penalty under this section.

Textual Amendments

F1Words in s. 13(1) substituted (27.7.1993 with effect as mentioned in s. 3(3) of the amending Act) by 1993 c. 34, s. 49, Sch. 2, para. 3(2)(a)(3)

F2Words in s. 13(2)(b) inserted (1.12.1992 for certain purposes and 1.1.1993 insofar as not already in force) by Finance (No. 2) Act 1992 (c. 48), s. 14(2), Sch. 3 Pt. II para. 77(1)(a); S.I. 1992/2979, art. 4, Sch. Pt. II and S.I. 1992/3261, art. 3, Sch.

F4S. 13(2)(ba) inserted (1.12.1992 for certain purposes and 1.1.1993 insofar as not already in force) by Finance (No. 2) Act 1992 (c. 48), s. 14(2), Sch. 3 Pt. II para. 77(1)(b); S.I. 1992/2979, art. 4, Sch. Pt. II and S.I. 1992/3261, art. 3, Sch.

F5Word “and” and s. 13(2)(d) inserted by Finance Act 1990 (c. 29, SIF 40:2), s. 11(12)

F6Words in S. 13(3)(b) inserted (1.12.1992 for certain purposes and 1.1.1993 insofar as not already in force) by Finance (No. 2) Act 1992 (c. 48), s. 14(2), Sch. 3 Pt. II para. 77(2); S.I. 1992/2979, art. 4, Sch. Pt. II and S.I. 1992/3261, art.3, Sch.

F7S. 13(4) repealed (27.7.1993 with effect as mentioned in ss. 3(3), 44(4) of the amending Act) by 1993 c. 34, ss. 49, 213, Sch. 2, para. 3(2)(3), Sch. 23,Pt. II

F8Words in s. 13(5) substituted (27.7.1993 with effect as mentioned in s. 3(3) of the amending Act) by 1993 c. 34, s. 49, Sch. 2, para. 3(2)(b)(3)

Modifications etc. (not altering text)