Finance Act 2007

Part 1 U.K. Liability for penalty

Error in taxpayer's document U.K.

1 (1) A penalty is payable by a person (P) where— U.K.

(a) P gives HMRC a document of a kind listed in the Table below, and

(b) Conditions 1 and 2 are satisfied.

(2) Condition 1 is that the document contains an inaccuracy which amounts to, or leads to—

(a) an understatement of [F1 a] liability to tax,

(b) a false or inflated statement of a loss F2 ..., or

(c) a false or inflated claim to repayment of tax.

(3) Condition 2 is that the inaccuracy was [F3 careless (within the meaning of paragraph 3) or deliberate on P’s part].

(4) Where a document contains more than one inaccuracy, a penalty is payable for each inaccuracy.

[F4 (4A) In this paragraph “return under a special scheme” means any of the following, so far as relating to supplies of services treated as made in the United Kingdom—

(a) a special accounting return under paragraph 11 of Schedule 3B;

(b) a value added tax return submitted under any provision of the law of a member State other than the United Kingdom which implements Article 364 of the VAT Directive (as substituted by Article 5(11) of the Amending Directive);

(c) a value added tax return submitted under any provision of the law of a member State other than the United Kingdom which implements Article 369f of the VAT Directive (as inserted by Article 5(15) of the Amending Directive).

(4B) A value added tax return mentioned in paragraph (b) or (c) of sub-paragraph (4A) is regarded for the purposes of sub-paragraph (1) as given to HMRC when it is submitted to the authority to whom it is required to be submitted.

(4C) In sub-paragraph (4A)—

• “the VAT Directive” means Directive 2006/112/EC;

• “the Amending Directive” means Council Directive 2008/8/EC.]

[F5 (5) In relation to a return under paragraph 2 of Schedule 2 to the Oil Taxation Act 1975 [F6 or a statement or declaration under paragraph 13A of that Schedule], references in this Schedule to P include any person who, after the giving of the return for a taxable field (within the meaning of that Act), becomes the responsible person for the field (within the meaning of that Act).]

Tax	Document
Income tax or capital gains tax	Return under section 8 of TMA 1970 (personal return).
Income tax or capital gains tax	Return under section 8A of TMA 1970 (trustee's return).
Income tax or capital gains tax	Return, statement or declaration in connection with a claim for an allowance, deduction or relief.
Income tax or capital gains tax	Accounts in connection with ascertaining liability to tax.
Income tax or capital gains tax	Partnership return.
Income tax or capital gains tax	Statement or declaration in connection with a partnership return.
Income tax or capital gains tax	Accounts in connection with a partnership return.
[F7 Capital gains tax	Return under section 12ZB of TMA 1970 (NRCGT return).]
[F8 Income tax	Return under section 254 of FA 2004.]
Income tax	Return for the purposes of PAYE regulations.
Construction industry deductions	Return for the purposes of regulations under section 70(1)(a) of FA 2004 in connection with deductions on account of tax under the Construction Industry Scheme.
Corporation tax	Company tax return under paragraph 3 of Schedule 18 to FA 1998.
Corporation tax	Return, statement or declaration in connection with a claim for an allowance, deduction or relief.
Corporation tax	Accounts in connection with ascertaining liability to tax.
VAT	VAT return under regulations made under paragraph 2 of Schedule 11 to VATA 1994.
VAT	Return, statement or declaration in connection with a claim.
[F9 VAT	Return under a special scheme.]
[F10 Insurance premium tax	Return under regulations under section 54 of FA 1994.
Insurance premium tax	Return, statement or declaration in connection with a claim.
Inheritance tax	Account under section 216 or 217 of IHTA 1984.
Inheritance tax	Information or document under regulations under section 256 of IHTA 1984.
Inheritance tax	Statement or declaration in connection with a deduction, exemption or relief.
Stamp duty land tax	Return under section 76 of FA 2003.
Stamp duty reserve tax	Return under regulations under section 98 of FA 1986.
[F11 Annual tax on enveloped dwellings	Annual tax on enveloped dwellings return.]
[F11 Annual tax on enveloped dwellings	Return of adjusted chargeable amount.]
Petroleum revenue tax	Return under paragraph 2 of Schedule 2 to the Oil Taxation Act 1975.
[F12 Petroleum revenue tax	Statement or declaration in connection with a claim under paragraph 13A of Schedule 2 to the Oil Taxation Act 1975.]
Petroleum revenue tax	Statement or declaration in connection with a claim under Schedule 5, 6, 7 or 8 to the Oil Taxation Act 1975.
Petroleum revenue tax	Statement under section 1(1)(a) of the Petroleum Revenue Tax Act 1980.
Aggregates levy	Return under regulations under section 25 of FA 2001.
Climate change levy	Return under regulations under paragraph 41 of Schedule 6 to FA 2000.
Landfill tax	Return under regulations under section 49 of FA 1996.
Air passenger duty	Return under section 38 of FA 1994.
Alcoholic liquor duties	Return under regulations under section 13, 49, 56 or 62 of the Alcoholic Liquor Duties Act 1979.
Alcoholic liquor duties	Statement or declaration in connection with a claim for repayment of duty under section 4(4) of FA 1995.
Tobacco products duty	Return under regulations under section 7 of the Tobacco Products Duties Act 1979.
Hydrocarbon oil duties	Return under regulations under section 21 of the Hydrocarbon Oil Duties Act 1979.
Excise duties	Return under regulations under section 93 of CEMA 1979.
Excise duties	Return under regulations under section 100G or 100H of CEMA 1979.
Excise duties	Statement or declaration in connection with a claim.
General betting duty	Return under regulations under paragraph 2 of Schedule 1 to BGDA 1981.
Pool betting duty	Return under regulations under paragraph 2A of Schedule 1 to BGDA 1981.
Bingo duty	Return under regulations under paragraph 9 of Schedule 3 to BGDA 1981.
Lottery duty	Return under regulations under section 28(2) of FA 1993.
Gaming duty	Return under directions under paragraph 10 of Schedule 1 to FA 1997.
Remote gaming duty	Return under regulations under section 26K of BGDA 1981.]
[F13 Machine games duty	Return under regulations under paragraph 18 of Schedule 24 to FA 2012]
[F14 Any of the taxes mentioned above ]	Any document which is likely to be relied upon by HMRC to determine, without further inquiry, a question about— (a) P's liability to tax, (b) payments by P by way of or in connection with tax, (c) any other payment by P (including penalties), or (d) repayments, or any other kind of payment or credit, to P.

Textual Amendments

F1 Word in Sch. 24 para. 1(2) substituted (1.4.2009) by Finance Act 2008 (c. 9), s. 122(2), Sch. 40 para. 2(2)(a); S.I. 2009/571, art. 2

F2 Words in Sch. 24 para. 1(2) omitted (1.4.2009) by virtue of Finance Act 2008 (c. 9), s. 122(2), Sch. 40 para. 2(2)(b); S.I. 2009/571, art. 2

F3 Words in Sch. 24 para. 1(3) substituted (1.4.2009) by Finance Act 2008 (c. 9), s. 122(2), Sch. 40 para. 2(3); S.I. 2009/571, art. 2

F4 Sch. 24 para. 1(4A)-(4C) inserted (with effect in accordance with Sch. 22 para. 23 of the amending Act) by Finance Act 2014 (c. 26), Sch. 22 para. 19(3)

F5 Sch. 24 para. 1(5) inserted (1.4.2009) by Finance Act 2008 (c. 9), s. 122(2), Sch. 40 para. 2(7); S.I. 2009/571, art. 2

F6 Words in Sch. 24 para. 1(5) inserted (with effect in accordance with s. 28(2) of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 12 para. 12(3)

F7 Words in Sch. 24 para. 1(4) inserted (with effect in accordance with Sch. 7 para. 60 of the amending Act) by Finance Act 2015 (c. 11), Sch. 7 para. 56(2)

F8 Words in Sch. 24 para. 1 inserted (with effect in accordance with art. 3-5 of the commencing S.I.) by Finance Act 2008 (c. 9), s. 122(2), Sch. 40 para. 2(4); S.I. 2009/571, art. 2

F9 Words in Sch. 24 para. 1 inserted (with effect in accordance with Sch. 22 para. 23 of the amending Act) by Finance Act 2014 (c. 26), Sch. 22 para. 19(2)

F10 Words in Sch. 24 para. 1 inserted (with effect in accordance with art. 3-5 of the commencing S.I.) by Finance Act 2008 (c. 9), s. 122(2), Sch. 40 para. 2(5); S.I. 2009/571, art. 2

F11 Words in Sch. 24 para. 1 inserted (17.7.2013) by Finance Act 2013 (c. 29), Sch. 34 para. 6

F12 Words in Sch. 24 para. 1 inserted (with effect in accordance with s. 28(2) of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 12 para. 12(2)

F13 Words in Sch. 24 para. 1 inserted (with effect in accordance with Sch. 24 para. 66(2) of the amending Act) by Finance Act 2012 (c. 14), Sch. 24 para. 29

F14 Words in Sch. 24 para. 1 substituted (1.4.2009) by Finance Act 2008 (c. 9), s. 122(2), Sch. 40 para. 2(6); S.I. 2009/571, art. 2

Commencement Information

I1 Sch. 24 para. 1 in force at 1.4.2008 for certain purposes, 1.7.2008 for certain purposes, 1.1.2009 for certain purposes, and 1.4.2009 in so far as not already in force by S.I. 2008/568, art. 2 (with art. 3)

[F15 Error in taxpayer's document attributable to another person U.K.

Textual Amendments

F15 Sch. 24 para. 1A and cross-heading inserted (1.4.2009) by Finance Act 2008 (c. 9), s. 122(2), Sch. 40 para. 3; S.I. 2009/571, art. 2

1A (1) A penalty is payable by a person (T) where— U.K.

(a) another person (P) gives HMRC a document of a kind listed in the Table in paragraph 1,

(b) the document contains a relevant inaccuracy, and

(c) the inaccuracy was attributable to T deliberately supplying false information to P (whether directly or indirectly), or to T deliberately withholding information from P, with the intention of the document containing the inaccuracy.

(2) A “relevant inaccuracy” is an inaccuracy which amounts to, or leads to—

(a) an understatement of a liability to tax,

(b) a false or inflated statement of a loss, or

(c) a false or inflated claim to repayment of tax.

(3) A penalty is payable under this paragraph in respect of an inaccuracy whether or not P is liable to a penalty under paragraph 1 in respect of the same inaccuracy.]

Under-assessment by HMRC U.K.

2 (1) A penalty is payable by a person (P) where— U.K.

(a) an assessment issued to P by HMRC understates P's liability to [F16 a relevant tax], and

(b) P has failed to take reasonable steps to notify HMRC, within the period of 30 days beginning with the date of the assessment, that it is an under-assessment.

(2) In deciding what steps (if any) were reasonable HMRC must consider—

(a) whether P knew, or should have known, about the under-assessment, and

(b) what steps would have been reasonable to take to notify HMRC.

[F17 (3) In sub-paragraph (1) “relevant tax” means any tax mentioned in the Table in paragraph 1.]

[F18 (4) In this paragraph (and in Part 2 of this Schedule so far as relating to this paragraph)—

(a) “assessment” includes determination, and

(b) accordingly, references to an under-assessment include an under-determination.]

Textual Amendments

F16 Words in Sch. 24 para. 2(1) substituted (1.4.2009) by Finance Act 2008 (c. 9), s. 122(2), Sch. 40 para. 4(2); S.I. 2009/571, art. 2

F17 Sch. 24 para. 2(3) substituted (1.4.2009) by Finance Act 2008 (c. 9), s. 122(2), Sch. 40 para. 4(3); S.I. 2009/571, art. 2

F18 Sch. 24 para. 2(4) inserted (21.7.2009) by Finance Act 2009 (c. 10), Sch. 57 para. 2

Commencement Information

I2 Sch. 24 para. 2 in force at 1.4.2008 for certain purposes, 1.7.2008 for certain purposes, 1.1.2009 for certain purposes, and 1.4.2009 in so far as not already in force by S.I. 2008/568, art. 2 (with art. 3)

Degrees of culpability U.K.

3 (1) [F19 For the purposes of a penalty under paragraph 1, inaccuracy in] a document given by P to HMRC is— U.K.

(a) “careless” if the inaccuracy is due to failure by P to take reasonable care,

(b) “deliberate but not concealed” if the inaccuracy is deliberate [F20 on P's part] but P does not make arrangements to conceal it, and

(c) “deliberate and concealed” if the inaccuracy is deliberate [F20 on P's part] and P makes arrangements to conceal it (for example, by submitting false evidence in support of an inaccurate figure).

(2) An inaccuracy in a document given by P to HMRC, which was neither careless nor deliberate [F21 on P's part] when the document was given, is to be treated as careless if P—

(a) discovered the inaccuracy at some later time, and

(b) did not take reasonable steps to inform HMRC.

Textual Amendments

F19 Words in Sch. 24 para. 3(1) substituted (1.4.2009) by Finance Act 2008 (c. 9), s. 122(2), Sch. 40 para. 5(2)(a); S.I. 2009/571, art. 2

F20 Words in Sch. 24 para. 3(1) inserted (1.4.2009) by Finance Act 2008 (c. 9), s. 122(2), Sch. 40 para. 5(2)(b); S.I. 2009/571, art. 2

F21 Words in Sch. 24 para. 3(2) inserted (1.4.2009) by Finance Act 2008 (c. 9), s. 122(2), Sch. 40 para. 5(3); S.I. 2009/571, art. 2

Commencement Information

I3 Sch. 24 para. 3 in force at 1.4.2008 for certain purposes, 1.7.2008 for certain purposes, 1.1.2009 for certain purposes, and 1.4.2009 in so far as not already in force by S.I. 2008/568, art. 2 (with art. 3)