Schedule 41 | Penalties: failure to notify and certain VAT and excise wrongdoing

Failure to notify etc

(1)A penalty is payable by a person (P) where P fails to comply with an obligation specified in the Table below (a “relevant obligation”).^{F1F2F3F4F5F6F7F8F9F10F11F12F13F14F15F16F17F18F19F20F21F22F23F24F25F26F27F28F29}

Issue of invoice showing VAT by unauthorised person

(1)A penalty is payable by a person (P) where P makes an unauthorised issue of an invoice showing VAT.

(2)P makes an unauthorised issue of an invoice showing VAT if P—

(a)is an unauthorised person, and

(b)issues an invoice showing an amount as being value added tax or as including an amount attributable to value added tax.

(3)In sub-paragraph (2)(a) “an unauthorised person” means anyone other than—

(a)a person registered under VATA 1994,

(b)a body corporate treated for the purposes of section 43 of that Act as a member of a group,

(c)a person treated as a taxable person under regulations under section 46(4) of that Act,

(d)a person authorised to issue an invoice under regulations under paragraph 2(12) of Schedule 11 to that Act, or

(e)a person acting on behalf of the Crown.

(4)This paragraph has effect in relation to any invoice which—

(a)for the purposes of any provision made under subsection (3) of section 54 of VATA 1994 shows an amount as included in the consideration for any supply, and

(b)either fails to comply with the requirements of any regulations under that section or is issued by a person who is not for the time being authorised to do so for the purposes of that section,

as if the person issuing the invoice were an unauthorised person and that amount were shown on the invoice as an amount attributable to value added tax.

Putting product to use that attracts higher duty

(1)A penalty is payable by a person (“P”) where P does an act which enables HMRC to assess an amount as duty due from P under any of the provisions in the Table below (a “relevant excise provision”).^F30F31F32

(2)A penalty is payable by a person (“P”) where P supplies a product knowing that it will be used in a way which enables HMRC to assess an amount as duty due from another person under a relevant excise provision.

Involvement in landfill disposal by unregistered person^F33

(3A)A penalty is payable by a person (“P”) where P does an act which enables HMRC to assess an amount as landfill tax due from P under section 50A of FA 1996.^F33

Handling goods subject to unpaid excise duty etc^F34

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

(a)after the excise duty point for any goods which are chargeable with a duty of excise, P acquires possession of the goods or is concerned in carrying, removing, depositing, keeping or otherwise dealing with the goods, and

(b)at the time when P acquires possession of the goods or is so concerned, a payment of duty on the goods is outstanding and has not been deferred.

(1A)A penalty is payable by a person (P) where—^F35

(a)after a charge to soft drinks industry levy has arisen in respect of chargeable soft drinks, P acquires possession of them or is concerned with carrying, removing, depositing, keeping or otherwise dealing with them, and^F35

(b)at the time when P acquires possession of the chargeable soft drinks or is so concerned, a payment of soft drinks industry levy in respect of the chargeable soft drinks is due or payable and has not been paid.^F35

(2)In this paragraph—^F36F37F38

“excise duty point” has the meaning given by section 1 of F(No.2)A 1992 (and includes any excise duty point created or deemed to be created as a result of provision in regulations under section 45 of the Taxation (Cross-border Trade) Act 2018 (general regulation making power for excise duty purposes etc)), and

“goods” has the meaning given by section 1(1) of CEMA 1979.

“chargeable soft drinks” has the same meaning as in Part 2 of FA 2017.

Degrees of culpability

(1)A failure by P to comply with a relevant obligation is—

(a)“deliberate and concealed” if the failure is deliberate and P makes arrangements to conceal the situation giving rise to the obligation, and

(b)“deliberate but not concealed” if the failure is deliberate but P does not make arrangements to conceal the situation giving rise to the obligation.

(2)The making by P of an unauthorised issue of an invoice showing VAT is—

(a)“deliberate and concealed” if it is done deliberately and P makes arrangements to conceal it, and

(b)“deliberate but not concealed” if it is done deliberately but P does not make arrangements to conceal it.

(3)The doing by P of an act which enables HMRC to assess an amount of duty as due from P under a relevant excise provision , or to assess an amount of landfill tax as due from P under section 50A of FA 1996, is—^F39

(a)“deliberate and concealed” if it is done deliberately and P makes arrangements to conceal it, and

(b)“deliberate but not concealed” if it is done deliberately but P does not make arrangements to conceal it.

(4)P's acquiring possession of, or being concerned in dealing with, goods on which a payment of duty is outstanding and has not been deferred or (as the case may be) chargeable soft drinks in respect of which a payment of soft drinks industry levy is due and payable and has not been paid is—^F40

(a)“deliberate and concealed” if it is done deliberately and P makes arrangements to conceal it, and

(b)“deliberate but not concealed” if it is done deliberately but P does not make arrangements to conceal it.

Amount of penalty: standard amount^F41F42F43

(1)This paragraph sets out the penalty payable under paragraph 1.^F41

(2)If the failure is in category 1, the penalty is—^F41

(a)for a deliberate and concealed failure, 100% of the potential lost revenue,^F41

(b)for a deliberate but not concealed failure, 70% of the potential lost revenue, and^F41

(c)for any other case, 30% of the potential lost revenue.^F41

(3)If the failure is in category 2, the penalty is—^F41

(a)for a deliberate and concealed failure, 150% of the potential lost revenue,^F41

(b)for a deliberate but not concealed failure, 105% of the potential lost revenue, and^F41

(c)for any other case, 45% of the potential lost revenue.^F41

(4)If the failure is in category 3, the penalty is—^F41

(a)for a deliberate and concealed failure, 200% of the potential lost revenue,^F41

(b)for a deliberate but not concealed failure, 140% of the potential lost revenue, and^F41

(c)for any other case, 60% of the potential lost revenue.^F41

(5)Paragraph 6A explains the 3 categories of failure.^F41

(1)A failure is in category 1 if—^F41

(a)it involves a domestic matter, or^F41

(b)it involves an offshore matter and—^F41

(i)the territory in question is a category 1 territory, or^F41

(ii)the tax at stake is a tax other than income tax or capital gains tax.^F41

(2)A failure is in category 2 if—^F41

(a)it involves an offshore matter or an offshore transfer,^F41F44

(b)the territory in question is a category 2 territory, and^F41

(c)the tax at stake is income tax or capital gains tax.^F41

(3)A failure is in category 3 if—^F41

(a)it involves an offshore matter or an offshore transfer,^F41F45

(b)the territory in question is a category 3 territory, and^F41

(c)the tax at stake is income tax or capital gains tax.^F41

(4)A failure “involves an offshore matter” if it results in a potential loss of revenue that is charged on or by reference to—^F41

(a)income arising from a source in a territory outside the UK,^F41

(b)assets situated or held in a territory outside the UK,^F41

(c)activities carried on wholly or mainly in a territory outside the UK, or^F41

(d)anything having effect as if it were income, assets or activities of a kind described above.^F41

(4A)A failure “involves an offshore transfer” if—^F41F46

(a)it does not involve an offshore matter,^F41F46

(b)it is deliberate (whether or not concealed) and results in a potential loss of revenue,^F41F46

(c)the tax at stake is income tax or capital gains tax, and^F41F46

(d)the applicable condition in paragraph 6AA is satisfied.^F41F46

(5)A failure “involves a domestic matter” if it results in a potential loss of revenue and does not involve either an offshore matter or an offshore transfer.^F41F47

(6)If a single failure is in more than one category (each referred to as a “relevant category”)—^F41

(a)it is to be treated for the purposes of this Schedule as if it were separate failures, one in each relevant category according to the matters or transfers that it involves, and^F41F48

(b)the potential lost revenue in respect of each separate failure is taken to be such share of the potential lost revenue in respect of the single failure (see paragraphs 7 and 11) as is just and reasonable.^F41

(7)For the purposes of this Schedule—^F41

(a)paragraph 21A of Schedule 24 to FA 2007 (classification of territories) has effect, but^F41

(b)an order under that paragraph does not apply to relevant obligations that are to be complied with by a date before the date on which the order comes into force.^F41

(8)Repealed^F49F41

(9)In this paragraph and paragraph 6AA—^F41F50

“assets” has the meaning given in section 21(1) of TCGA 1992, but also includes sterling;

“UK” means the United Kingdom, including the territorial sea of the United Kingdom.

(1)This paragraph makes provision in relation to offshore transfers.^F41F42

(2)Where the tax at stake is income tax, the applicable condition is satisfied if the income on or by reference to which the tax is charged, or any part of the income—^F41F42

(a)is received in a territory outside the UK, or^F41F42

(b)is transferred before the calculation date to a territory outside the UK.^F41F42

(3)Where the tax at stake is capital gains tax, the applicable condition is satisfied if the proceeds of the disposal on or by reference to which the tax is charged, or any part of the proceeds—^F41F42

(a)are received in a territory outside the UK, or^F41F42

(b)are transferred before the calculation date to a territory outside the UK.^F41F42

(4)In the case of a transfer falling within sub-paragraph (2)(b) or (3)(b), references to the income or proceeds transferred are to be read as including references to any assets derived from or representing the income or proceeds.^F41F42

(5)In relation to an offshore transfer, the territory in question for the purposes of paragraph 6A is the highest category of territory by virtue of which the failure involves an offshore transfer.^F41F42

(6)In this paragraph “calculation date” means the date by reference to which the potential lost revenue is to be calculated (see paragraph 7).^F41F42

(6AB)Regulations under paragraph 21B of Schedule 24 to FA 2007 (location of assets etc) apply for the purposes of paragraphs 6A and 6AA of this Schedule as they apply for the purposes of paragraphs 4A and 4AA of that Schedule.^F41F42

(6B)The penalty payable under any of paragraphs 2, 3(1) and 4 is—^F41

(a)for a deliberate and concealed act or failure, 100% of the potential lost revenue,^F41

(b)for a deliberate but not concealed act or failure, 70% of the potential lost revenue, and^F41

(c)for any other case, 30% of the potential lost revenue.^F41

(6C)The penalty payable under paragraph 3(2) is 100% of the potential lost revenue.^F41

(1)The penalty payable under paragraph 3A is—^F41F43

(a)for a deliberate and concealed act or failure, 100% of the potential lost revenue, and^F41F43

(b)for a deliberate but not concealed act or failure, 70% of the potential lost revenue.^F41F43

(2)No penalty is payable under paragraph 3A in any other case.^F41F43

(6D)Paragraphs 7 to 11 define “potential lost revenue”.^F41

Potential lost revenue

(1)“The potential lost revenue” in respect of a failure to comply with a relevant obligation is as follows.

(1A)In the case of an obligation under section 7 of TMA 1970 which arises by virtue of subsection (1B) of that section, the potential lost revenue is so much of any income tax or capital gains tax to which P is liable in respect of the tax year in question as is, by reason of the failure to comply with the obligation—^F51

(a)where the period specified in subsection (1C)(b)(ii) of that section applies and ends after the relevant date, unpaid at the end of that period, or^F51

(b)in any other case, unpaid on the relevant date.^F51

(1B)For the purposes of sub-paragraph (1A) the relevant date is—^F51

(a)31 January following the tax year, or^F51

(b)if, after that date, HMRC refund a payment on account in respect of the tax year to P, the day after the refund is issued.^F51

(2)In the case of a relevant obligation relating to income tax or capital gains tax and a tax year (not falling within sub-paragraph (1A)), the potential lost revenue is so much of any income tax or capital gains tax to which P is liable in respect of the tax year as by reason of the failure is unpaid on 31 January following the tax year.^F52

(3)In the case of a relevant obligation relating to corporation tax and an accounting period, the potential lost revenue is (subject to sub-paragraph (4)) so much of any corporation tax to which P is liable in respect of the accounting period as by reason of the failure is unpaid 12 months after the end of the accounting period.

(4)In computing the amount of that tax no account shall be taken of any relief under section 458 of CTA 2010 (relief in respect of repayment etc of loan) which is deferred under subsection (5) of that section.^F53F54

(4A)Repealed^F55

(4B)In the case of a relevant obligation relating to digital services tax and an accounting period, the potential lost revenue is so much of any digital services tax payable by members of the group for the accounting period as by reason of the failure is unpaid 12 months after the end of the accounting period.^F56

(5)Repealed^F57

(6)In the case of a relevant obligation relating to value added tax, the potential lost revenue is the amount of the value added tax (if any) for which P is, or but for any exemption from registration would be, liable for the relevant period (see sub-paragraph (7)) ....^F58F59

(7)“The relevant period” is—

(a)in relation to a failure to comply with paragraph 14(2) or (3) of Schedule 1 to VATA 1994 ... or paragraph 7(2) or (3) of Schedule 3A to that Act, the period beginning on the date of the change or alteration concerned and ending on the date on which HMRC received notification of, or otherwise became fully aware of, that change or alteration, and^F60

(b)in relation to a failure to comply with an obligation under any other provision, the period beginning on the date with effect from which P is required in accordance with that provision to be registered and ending on the date on which HMRC received notification of, or otherwise became fully aware of, P's liability to be registered.

(8)Repealed^F61

(8A)In the case of a relevant obligation under section 47 of FA 1996 (which relates to landfill tax), the potential lost revenue is the amount of tax (if any) for which P is liable for the period—^F62

(a)beginning with the date with effect from which P is required in accordance with that section to be registered or (as the case may be) from which the Commissioners may register P under that section, and^F62

(b)ending with the day on which HMRC received notification of, or otherwise became fully aware of, P's liability to be registered or (as the case may be) the Commissioners' power to register P.^F62

(9)In the case of a relevant obligation under any provision relating to insurance premium tax, plastic packaging tax, aggregates levy, climate change levy ... or air passenger duty, the potential lost revenue is the amount of the tax (if any) for which P is liable for the period—^F63F64

(a)beginning on the date with effect from which P is required in accordance with that provision to be registered, and

(b)ending on the date on which HMRC received notification of, or otherwise became fully aware of, P's liability to be registered.

(10)In the case of a relevant obligation under paragraph 2 of Schedule 17 to FA 2026 (which relates to the carbon border adjustment mechanism), the potential lost revenue is the amount of the tax (if any) for which P is liable for the period—^F65

(a)beginning with the end of the period specified in paragraph 2(4) of Schedule 17 of FA 2026, and^F65

(b)ending with the day on which P registers under paragraph 2 of Schedule 17 to FA 2026 or HMRC otherwise becomes fully aware of P’s obligation to register.^F65

(10)In the case of a failure to comply with a relevant obligation relating to any other tax, the potential lost revenue is the amount of any tax which is unpaid by reason of the failure.

(8)In the case of the making of an unauthorised issue of an invoice showing VAT, the potential lost revenue is the amount shown on the invoice as value added tax or the amount to be taken as representing value added tax.

(9)In the case of—

(a)the doing of an act which enables HMRC to assess an amount of duty as due under a relevant excise provision, or

(b)supplying a product knowing that it will be used in a way which enables HMRC to assess an amount as duty due from another person under a relevant excise provision,

the potential lost revenue is the amount of the duty which may be assessed as due.

(9A)In the case of the doing of an act which enables HMRC to assess an amount of landfill tax as due under section 50A of FA 1996, the potential lost revenue is the amount of the tax which may be assessed as due.^F66

(10)In the case of acquiring possession of, or being concerned in dealing with, goods the payment of duty on which is outstanding and has not been deferred or (as the case may be) chargeable soft drinks in respect of which a payment of soft drinks industry levy is due and payable and has not been paid, the potential lost revenue is an amount equal to the amount of duty due on the goods.^F67

(1)In calculating potential lost revenue in respect of a relevant act or failure on the part of P no account is to be taken of the fact that a potential loss of revenue from P is or may be balanced by a potential over-payment by another person (except to the extent that an enactment requires or permits a person's tax liability to be adjusted by reference to P's).

(2)In this Schedule “a relevant act or failure” means—

(a)a failure to comply with a relevant obligation,

(b)the making of an unauthorised issue of an invoice showing VAT,

(c)the doing of an act which enables HMRC to assess an amount of duty as due under a relevant excise provision or supplying a product knowing that it will be used in a way which enables HMRC to assess an amount as duty due from another person under a relevant excise provision, or

(d)acquiring possession of, or being concerned in dealing with, goods the payment of duty on which is outstanding and has not been deferred or (as the case may be) chargeable soft drinks in respect of which a payment of soft drinks industry levy is due and payable and has not been paid.^F68

Reductions for disclosure^F69F70F71

(1)Paragraph 13 provides for reductions in penalties—^F72

(a)under paragraph 1 where P discloses a relevant failure that involves a domestic matter, and^F72

(b)under paragraphs 2 to 4 where P discloses a relevant act or failure.^F72

(1A)Paragraph 13A provides for reductions in penalties under paragraph 1 where P discloses a relevant failure that involves an offshore matter or an offshore transfer.^F72

(1B)Sub-paragraph (2) applies where P discloses—^F72

(a)a relevant failure that involves a domestic matter,^F72

(b)a non-deliberate relevant failure that involves an offshore matter, or^F72

(c)a relevant act or failure giving rise to a penalty under any of paragraphs 2 to 4.^F72

(2)P discloses the relevant act or failure by—^F73

(a)telling HMRC about it,

(b)giving HMRC reasonable help in quantifying the tax unpaid by reason of it, and

(c)allowing HMRC access to records for the purpose of checking how much tax is so unpaid.

(2A)Sub-paragraph (2B) applies where P discloses—^F74

(a)a deliberate relevant failure (whether concealed or not) that involves an offshore matter, or^F74

(b)a relevant failure that involves an offshore transfer.^F74

(2B)P discloses the failure by—^F74

(a)telling HMRC about it,^F74

(b)giving HMRC reasonable help in quantifying the tax unpaid by reason of it,^F74

(c)allowing HMRC access to records for the purpose of checking how much tax is so unpaid, and^F74

(d)providing HMRC with additional information.^F74

(2C)The Treasury must make regulations setting out what is meant by “additional information” for the purposes of sub-paragraph (2B)(d).^F74

(2D)Regulations under sub-paragraph (2C) are to be made by statutory instrument.^F74

(2E)An instrument containing regulations under sub-paragraph (2C) is subject to annulment in pursuance of a resolution of the House of Commons.^F74

(3)Disclosure of a relevant act or failure—

(a)is “unprompted” if made at a time when the person making it has no reason to believe that HMRC have discovered or are about to discover the relevant act or failure, and

(b)otherwise, is “prompted”.

(4)In relation to disclosure “quality” includes timing, nature and extent.

(5)Paragraph 6A(4) to (5) applies to determine whether a failure involves an offshore matter, an offshore transfer or a domestic matter for the purposes of this paragraph.^F75

(6)In this paragraph “relevant failure” means a failure to comply with a relevant obligation.^F75

(1)If a person who would otherwise be liable to a penalty of a percentage shown in column 1 of the Table (a “standard percentage”) has made a disclosure, HMRC must reduce the standard percentage to one that reflects the quality of the disclosure.^F69

(2)But the standard percentage may not be reduced to a percentage that is below the minimum shown for it—^F69

(a)for a prompted disclosure, in column 2 of the Table, and^F69

(b)for an unprompted disclosure, in column 3 of the Table.^F69

(3)Where the Table shows a different minimum for case A and case B—^F69

(a)the case A minimum applies if—^F69

(i)the penalty is one under paragraph 1, and^F69

(ii)HMRC become aware of the failure less than 12 months after the time when the tax first becomes unpaid by reason of the failure, and^F69

(b)otherwise, the case B minimum applies.^F69

(1)If a person who would otherwise be liable to a penalty of a percentage shown in column 1 of the Table (a “standard percentage”) has made a disclosure, HMRC must reduce the standard percentage to one that reflects the quality of the disclosure.^F71

(2)But the standard percentage may not be reduced to a percentage that is below the minimum shown for it—^F71

(a)for a prompted disclosure, in column 2 of the Table, and^F71

(b)for an unprompted disclosure, in column 3 of the Table.^F71

(3)Where the Table shows a different minimum for case A and case B—^F71

(a)the case A minimum applies if HMRC becomes aware of the failure less than 12 months after the time when the tax first becomes unpaid by reason of the failure;^F71

(b)otherwise, the case B minimum applies.^F71

Special reduction

(1)If HMRC think it right because of special circumstances, they may reduce a penalty under any of paragraphs 1 to 4.

(2)In sub-paragraph (1) “special circumstances” does not include—

(a)ability to pay, or

(b)the fact that a potential loss of revenue from one taxpayer is balanced by a potential over-payment by another.

(3)In sub-paragraph (1) the reference to reducing a penalty includes a reference to—

(a)staying a penalty, and

(b)agreeing a compromise in relation to proceedings for a penalty.

Interaction with other penalties and late payment surcharges

(1)The amount of a penalty for which P is liable under any of paragraphs 1 to 4 shall be reduced by the amount of any other penalty incurred by P, or any surcharge for late payment of tax imposed on P, if the amount of the penalty or surcharge is determined by reference to the same tax liability.

(1A)In sub-paragraph (1) “any other penalty” does not include a penalty under Part 4 of FA 2014 (penalty where corrective action not taken after follower notice etc) or Schedule 22 to FA 2016 (asset-based penalty).^F76F77

(2)If P is liable to a penalty under section 9 of FA 1994 in respect of a failure to comply with a relevant obligation, the amount of any penalty payable under paragraph 1 in respect of the failure is to be reduced by the amount of the penalty under that section.

(2A)If P has incurred a penalty under regulations under section 8JA(1) of TPDA 1979 (tracing and security regulations) in respect of conduct for which P is liable to a penalty under paragraph 4(1), the amount of the penalty under paragraph 4(1) is to be reduced by the amount of the penalty under those regulations.^F78

(3)Where penalties are imposed under paragraph 3(1) and (2) in respect of the same act or use, the aggregate of the amounts of the penalties must not exceed 100% of the potential lost revenue.

Assessment

(1)Where P becomes liable for a penalty under any of paragraphs 1 to 4 HMRC shall—

(a)assess the penalty,

(b)notify P, and

(c)state in the notice the period in respect of which the penalty is assessed.

(2)A penalty under any of paragraphs 1 to 4 must be paid before the end of the period of 30 days beginning with the day on which notification of the penalty is issued.

(3)An assessment—

(a)shall be treated for procedural purposes in the same way as an assessment to tax (except in respect of a matter expressly provided for by this Act),

(b)may be enforced as if it were an assessment to tax, and

(c)may be combined with an assessment to tax.

(4)An assessment of a penalty under any of paragraphs 1 to 4 must be made before the end of the period of 12 months beginning with—

(a)the end of the appeal period for the assessment of tax unpaid by reason of the relevant act or failure in respect of which the penalty is imposed, or

(b)if there is no such assessment, the date on which the amount of tax unpaid by reason of the relevant act or failure is ascertained.

(5)In sub-paragraph (4)(a) “appeal period” means the period during which—

(a)an appeal could be brought, or

(b)an appeal that has been brought has not been determined or withdrawn.

(6)Subject to sub-paragraph (4), a supplementary assessment may be made in respect of a penalty if an earlier assessment operated by reference to an underestimate of potential lost revenue.

(7)The references in this paragraph to “an assessment to tax” are, in relation to a penalty under paragraph 2, a demand for recovery.

Appeal^F79

(1)P may appeal against a decision of HMRC that a penalty is payable by P.

(2)P may appeal against a decision of HMRC as to the amount of a penalty payable by P.

(1)An appeal shall be treated in the same way as an appeal against an assessment to the tax concerned (including by the application of any provision about bringing the appeal by notice to HMRC, about HMRC review of the decision or about determination of the appeal by the First-tier Tribunal or the Upper Tribunal).^F79

(2)Sub-paragraph (1) does not apply—^F79F80

(a)so as to require P to pay a penalty before an appeal against the assessment of the penalty is determined, or^F79F80

(b)in respect of any other matter expressly provided for by this Act.^F79F80

(1)On an appeal under paragraph 17(1) the tribunal may affirm or cancel HMRC's decision.^F81

(2)On an appeal under paragraph 17(2) the tribunal may—^F81

(a)affirm HMRC's decision, or

(b)substitute for HMRC's decision another decision that HMRC had power to make.

(3)If the tribunal substitutes its decision for HMRC's, the tribunal may rely on paragraph 14—^F81F82

(a)to the same extent as HMRC (which may mean applying the same percentage reduction as HMRC to a different starting point), or

(b)to a different extent, but only if the tribunal thinks that HMRC's decision in respect of the application of paragraph 14 was flawed.^F82

(4)In sub-paragraph (3)(b) “flawed” means flawed when considered in the light of the principles applicable in proceedings for judicial review.

(5)In this paragraph, “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 18(1)).^F83

Reasonable excuse

(1)Liability to a penalty under any of paragraphs 1, 2, 3(1) and 4 does not arise in relation to an act or failure which is not deliberate if P satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that there is a reasonable excuse for the act or failure.^F84

(2)For the purposes of sub-paragraph (1)—

(a)an insufficiency of funds is not a reasonable excuse unless attributable to events outside P's control,

(b)where P relies on any other person to do anything, that is not a reasonable excuse unless P took reasonable care to avoid the relevant act or failure, and

(c)where P had a reasonable excuse for the relevant act or failure but the excuse has ceased, P is to be treated as having continued to have the excuse if the relevant act or failure is remedied without unreasonable delay after the excuse ceased.

Agency

(1)In paragraph 1 the reference to a failure by P includes a failure by a person who acts on P's behalf; but P is not liable to a penalty in respect of any failure by P's agent where P satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that P took reasonable care to avoid the failure.^F85

(2)In paragraph 2 the reference to the making by P of an unauthorised issue of an invoice showing VAT includes the making of such an unauthorised issue by a person who acts on P's behalf; but P is not liable to a penalty in respect of any action by P's agent where P satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that P took reasonable care to avoid it.^F85

(3)In paragraph 3(1) the reference to the doing by P of an act which enables HMRC to assess an amount as duty due from P under a relevant excise provision includes the doing of such an act by a person who acts on P's behalf; but P is not liable to a penalty in respect of any action by P's agent where P satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that P took reasonable care to avoid it.^F85

(4)In paragraph 4(1) the reference to P acquiring possession of, or being concerned in dealing with, goods the payment of duty on which is outstanding and has not been deferred includes a person who acts on P's behalf doing so; but P is not liable to a penalty in respect of any action by P's agent where P satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that P took reasonable care to avoid it.^F86F85

(5)In paragraph 4(1A) the reference to P acquiring possession of, or being concerned in dealing with, chargeable soft drinks in respect of which a payment of soft drinks industry levy is payable but has not been paid includes a person who acts on P's behalf in doing so; but P is not liable to a penalty in respect of any action by P's agent where P satisfies HMRC or (on appeal) the First-tier Tribunal that P took reasonable care to avoid it.^F87

Companies: officers' liability

(1)Where a penalty under any of paragraphs 1, 2, 3(1) and 4 is payable by a company for a deliberate act or failure which was attributable to an officer of the company, the officer is liable to pay such portion of the penalty (which may be 100%) as HMRC may specify by written notice to the officer.

(2)Sub-paragraph (1) does not allow HMRC to recover more than 100% of a penalty.

(3)In the application of sub-paragraph (1) to a body corporate other than a limited liability partnership “officer” means—^F88

(a)a director (including a shadow director within the meaning of section 251 of the Companies Act 2006 (c. 46)), ...^F89

(aa)a manager, and^F90

(b)a secretary.

(3A)In the application of sub-paragraph (1) to a limited liability partnership, “officer” means a member.^F91

(4)In the application of sub-paragraph (1) in any other case “officer” means—

(a)a director,

(b)a manager,

(c)a secretary, and

(d)any other person managing or purporting to manage any of the company's affairs.

(5)Where HMRC have specified a portion of a penalty in a notice given to an officer under sub-paragraph (1)—

(a)paragraph 14 applies to the specified portion as to a penalty,

(b)the officer must pay the specified portion before the end of the period of 30 days beginning with the day on which the notice is given,

(c)paragraph 16(3) to (5) and (7) apply as if the notice were an assessment of a penalty,

(d)a further notice may be given in respect of a portion of any additional amount assessed in a supplementary assessment in respect of the penalty under paragraph 16(6),

(e)paragraphs 17 to 19 apply as if HMRC had decided that a penalty of the amount of the specified portion is payable by the officer, and

(f)paragraph 23 applies as if the officer were liable to a penalty.

(6)In this paragraph “company” means any body corporate or unincorporated association, but does not include a partnership, a local authority or a local authority association.^F92

Double jeopardy

(23)P is not liable to a penalty under any of paragraphs 1 to 4 in respect of a failure or action in respect of which P has been convicted of an offence.

Interpretation

(1)This paragraph applies for the construction of this Schedule

(2)“HMRC” means Her Majesty's Revenue and Customs.

(3)“Tax”, without more, includes duty.

(4)An expression used in relation to value added tax has the same meaning as in VATA 1994.

Consequential repeals

(25)In consequence of this Schedule the following provisions are omitted—

(a)in TMA 1970—

(i)section 7(8), and

(ii)in the table in section 98, in the second column, the entry relating to section 55 of FA 2004,

(b)section 170A of CEMA 1979,

(c)in ALDA 1979—

(i)in section 47(5), “which shall be calculated by reference to the amount of duty charged on the beer produced”,

(ii)in section 54(5), “which shall be calculated by reference to the amount of duty charged on the wine produced”,

(iii)in section 55(6), “which shall be calculated by reference to the amount of duty charged on the made-wine produced”, and

(iv)in section 62(4), “which shall be calculated by reference to the amount of duty charged on the cider made”,

(d)in HODA 1979—

(i)section 13AD(4)(a) and (b), and

(ii)section 14F(4)(a) and (b),

(e)in FA 1994—

(i)section 33(6),

(ii)paragraph 13 of Schedule 4, and

(iii)paragraph 14 of Schedule 7,

(f)section 67 of VATA 1994,

(g)section 32 of FA 1995,

(h)in FA 1996—

(i)section 37, and

(ii)paragraph 21(1), (2) and (4) of Schedule 5,

(i)section 27(11) of FA 1997,

(j)paragraph 2(3) and (4) of Schedule 18 to FA 1998,

(k)in FA 2000—

(i)section 136(2), and

(ii)paragraph 55(2) to (6) of Schedule 6, and

(l)paragraph 1(2) to (6) of Schedule 4 to FA 2001.