SCHEDULE 17Disclosure of tax avoidance schemes: VAT and other indirect taxes
PART 2Penalties
Penalty for failure to comply with duties under Part 1 (apart from paragraph 26)
39
(1)
A person who fails to comply with any of the provisions of Part 1 of this Schedule mentioned in sub-paragraph (2) is liable—
(a)
to a penalty not exceeding—
(i)
in the case of a failure to comply with paragraph 11(1), 12(1), 17(2), 18(2) F1, 19 or 22C, £600 for each day during the initial period for which the failure continues (but see also paragraphs 40(4) and 41), and
(ii)
in any other case, £5,000, and
(b)
if the failure continues after a penalty is imposed under paragraph (a), to a further penalty or penalties not exceeding £600 for each day on which the failure continues after the day on which the penalty under paragraph (a) was imposed (but excluding any day for which a penalty under this paragraph has already been imposed).
(2)
Those provisions are—
(a)
paragraph 11(1) (duty of promoter in relation to notifiable proposal),
(b)
paragraph 12(1) (duty of promoter in relation to notifiable arrangements),
(c)
paragraph 17(2) (duty of person dealing with promoter outside United Kingdom),
(d)
paragraph 18(2) (duty of parties to notifiable arrangements not involving promoter),
(e)
paragraph 19 (duty to provide further information requested by HMRC),
(f)
paragraph 21 (duty of promoters to provide updated information),
F2(fa)
paragraph 22C (duty to provide further information requested by HMRC: paragraph 22(3) case);
(g)
paragraph 23(2) (duty of promoter to notify client of reference number),
F3(ga)
paragraph 23A(2) (duty to notify client of reference number: paragraph 22(3) case)
(h)
paragraph 24(3) (duty of client to notify parties of reference number),
(i)
paragraph 25(2) (duty of client to provide information to promoter),
(j)
paragraph 27(3) (duty of promoter to provide details of clients),
(k)
paragraph 28(3) (enquiry following disclosure of client details),
(l)
paragraphs 29(4) and 30(2) (duty of promoter to respond to inquiry)
(m)
paragraph 31(4) (duty of introducer to give details of persons who have provided information or have been provided with information, and
(n)
paragraph 33 (duty to provide additional information).
(3)
In this paragraph “the initial period” means the period—
(a)
beginning with the relevant day, and
(b)
ending with the earlier of the day on which the penalty under sub-paragraph (1)(a)(i) is determined and the last day before the failure ceases.
(4)
For the purposes of sub-paragraph (3)(a) “the relevant day” is the day specified in relation to the failure in the following table—
Failure | Relevant day |
|---|---|
A failure to comply with paragraph 11(1) or 12(1) in so far as it applies by virtue of an order under paragraph 5 | The first day after the end of the relevant period described in paragraph 5(6) |
A failure to comply with paragraph 11(1) or 12(1) in so far as it applies by virtue of an order under paragraph 16(2) | The first day after the end of the relevant period (whether that is the period described in sub-paragraph 16(5)(a) or that period as extended by a direction under paragraph 16(5)(b)) |
Any other failure to comply with sub-paragraph (1) of paragraph 11 | The first day after the end of the relevant period described in paragraph 11(2) |
Any other failure to comply with sub-paragraph (1) of paragraph 12 | The first day after the end of the relevant period described in paragraph 12(2) |
A failure to comply with paragraph 17(2) | The first day after the end of the relevant period described in paragraph 17(3) |
A failure to comply with paragraph 18(2) | The first day after the latest time by which paragraph 18(2) should have been complied with in the case concerned |
A failure to comply with paragraph 19 | The first day after the end of the period within which the person must comply with paragraph 19 |
F4A failure to comply with paragraph 22C | The first day after the end of the period before the end of which the person must comply with paragraph 22C |
40
(1)
In the case of a failure to comply with paragraph 11(1), 12(1), 17(2), 18(2) or 19, the amount of the penalty under paragraph 39(1)(a)(i) is to be arrived at after taking account of all relevant considerations.
(2)
Those considerations include the desirability of the penalty being set at a level which appears appropriate for deterring the person, or other persons, from similar failures to comply on future occasions having regard (in particular)—
(a)
in the case of a penalty for a promoter's failure to comply with paragraph 11(1), 12(1) or 19, to the amount of any fees received, or likely to have been received, by the promoter in connection with the notifiable proposal (or arrangements implementing the notifiable proposal), or with the notifiable arrangements,
F5(aa)
in the case of a penalty for a person's failure to comply with paragraph 22C, to the amount of any fees received, or likely to have been received, by the person in connection with the arrangements, the proposed arrangements or the proposal, and
(b)
in the case of a penalty for a relevant person's failure to comply with paragraph 17(2), 18(2) or 19, to the amount of any advantage gained, or sought to be gained, by the person in relation to any tax prescribed under paragraph 3(1)(b) in relation to the notifiable arrangements
(3)
In sub-paragraph (2)(b) “relevant person” means a person who enters into any transaction forming part of notifiable arrangements.
(4)
If the maximum penalty under paragraph 39(1)(a)(i) appears inappropriately low after taking account of all relevant considerations, the penalty is to be of such amount not exceeding £1 million as appears appropriate having regard to those considerations.
41
(1)
This paragraph applies where a failure to comply with a provision mentioned in paragraph 39(2) concerns a proposal or arrangements in respect of which an order has been made under paragraph 4 or 5.
(2)
The amounts specified in paragraph 39(1)(a)(i) and (b) are increased to £5,000 in relation to days falling after the end of the period of 11 days beginning with the day on which the order is made.
42
(1)
The Treasury may by regulations vary—
(a)
any of the sums for the time being specified in paragraph 39(1);
(b)
the sum for the time being specified in paragraph 40(4);
(c)
the period for the time being specified in paragraph 41(2);
(d)
the sum for the time being specified in paragraph 41(2).
(2)
Regulations under this paragraph may include incidental or transitional provision.
43
Where it appears to an officer of Revenue and Customs that—
(a)
a penalty under paragraph 39(1)(a) has been imposed in a case where the maximum penalty is set by paragraph 39(1)(a)(i), and
(b)
the maximum penalty was calculated on the basis that the initial period began with a day later than that which the officer considers to be the relevant day,
an officer of Revenue and Customs may commence proceedings for a re-determination of the penalty.