Tax Collection and Management (Wales) Act 2016

CHAPTER 3 E+W PENALTIES FOR INACCURACIES

Penalties for inaccuracies in documents E+W

129 Penalty for inaccuracy in document given to WRA E+W

(1) A person is liable to a penalty where—

(a) the person gives WRA a document, 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 a liability to a devolved tax,

(b) a false or inflated statement of a loss relating to a devolved tax, F1 ...

(c) a false or inflated claim to repayment of devolved tax [F2 , or

(d) a false or inflated claim for a tax credit.]

(3) Condition 2 is that the inaccuracy was deliberate or careless on the person's part.

(4) An inaccuracy is careless on a person's part if it is due to the person's failure to take reasonable care.

(5) An inaccuracy which was neither deliberate nor careless on a person's part when the document was given is to be treated as careless if the person—

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

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

(6) Where a document contains more than one inaccuracy in respect of which conditions 1 and 2 are satisfied, the person is liable to a penalty for each such inaccuracy.

Textual Amendments

F1 Word in s. 129(2) omitted (1.4.2018) by virtue of The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 29(a)

F2 S. 129(2)(d) and word inserted (1.4.2018) by The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 29(b)

Commencement Information

I1 S. 129 in force at 1.4.2018 by S.I. 2018/33, art. 3

130 Amount of penalty for inaccuracy in document given to WRA E+W

(1) The penalty for a deliberate inaccuracy is [F3 an amount not exceeding] 100% of the potential lost revenue.

(2) The penalty for a careless inaccuracy is [F4 an amount not exceeding] 30% of the potential lost revenue.

Textual Amendments

F3 Words in s. 130(1) inserted (1.4.2018) by Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (anaw 1), s. 81(2)(3), Sch. 23 para. 48(a); S.I. 2018/34, art. 3

F4 Words in s. 130(2) inserted (1.4.2018) by Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (anaw 1), s. 81(2)(3), Sch. 23 para. 48(b); S.I. 2018/34, art. 3

Commencement Information

I2 S. 130 in force at 1.4.2018 by S.I. 2018/33, art. 3

131 Suspension of penalty for careless inaccuracy E+W

(1) WRA may suspend all or part of a penalty for a careless inaccuracy under section 129 by issuing a notice to the person liable to the penalty.

(2) The notice must specify—

(a) what part of the penalty is to be suspended,

(b) a period of suspension not exceeding 2 years, and

(c) conditions of suspension to be complied with by the person.

(3) WRA may suspend all or part of a penalty only if compliance with a condition of suspension would help the person to avoid becoming liable to further penalties under section 129 for careless inaccuracy.

(4) A condition of suspension may specify—

(a) action to be taken, and

(b) a period within which it must be taken.

(5) At the end of the period of suspension—

(a) if the person satisfies WRA that the conditions of suspension have been complied with, the suspended penalty or part is cancelled, and

(b) otherwise, the suspended penalty or part becomes payable.

(6) If, during the period of suspension of all or part of a penalty payable under section 129, the person becomes liable to another penalty under that section, the suspended penalty or part becomes payable.

Commencement Information

I3 S. 131 in force at 1.4.2018 by S.I. 2018/33, art. 3

132 Penalty for deliberate inaccuracy in document given to WRA by another person E+W

(1) A person (referred to in this section as “person A”) is liable to a penalty where—

(a) another person gives WRA a document,

(b) the document contains a relevant inaccuracy, and

(c) the inaccuracy was attributable—

(i) to person A deliberately supplying false information to the other person (whether directly or indirectly), or

(ii) to person A deliberately withholding information from the other person,

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 a devolved tax,

(b) a false or inflated statement of a loss relating to a devolved tax, F5 ...

(c) a false or inflated claim to repayment of devolved tax [F6 , or

(d) a false or inflated claim for a tax credit.]

(3) Person A is liable to a penalty under this section in respect of an inaccuracy whether or not the other person is liable to a penalty under section 129 in respect of the same inaccuracy.

(4) The penalty payable under this section is [F7 an amount not exceeding] 100% of the potential lost revenue.

Textual Amendments

F5 Word in s. 132(2) omitted (1.4.2018) by virtue of The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 30(a)

F6 S. 132(2)(d) and word inserted (1.4.2018) by The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 30(b)

F7 Words in s. 132(4) inserted (1.4.2018) by Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (anaw 1), s. 81(2)(3), Sch. 23 para. 49; S.I. 2018/34, art. 3

Commencement Information

I4 S. 132 in force at 1.4.2018 by S.I. 2018/33, art. 3

Penalty for failure to notify under-assessment etc. E+W

133 Penalty for failure to notify under-assessment or under-determination E+W

(1) A person is liable to a penalty where—

(a) a WRA assessment understates the person's liability to a devolved tax, and

(b) the person has failed to take reasonable steps to notify WRA, within the period of 30 days beginning with the day on which the notice of assessment is issued, that it is an under-assessment.

[F8 (1A) A person is also liable to a penalty where—

(a) a WRA assessment under section 55A understates the amount that the person is required to pay to WRA, and

(b) the person has failed to take reasonable steps to notify WRA, within the period of 30 days beginning with the day on which the notice of assessment is issued, that it is an under-assessment.]

(2) In deciding what steps (if any) were reasonable, WRA must consider whether the person knew, or should have known, about the under-assessment.

(3) The penalty payable under this section is [F9 an amount not exceeding] 30% of the potential lost revenue.

(4) In this section—

(a) “WRA assessment” includes a determination made by WRA under section 52, and

(b) accordingly, references in this Chapter to an under-assessment include references to an under-determination.

Textual Amendments

F8 S. 133(1A) inserted (1.4.2018) by The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 31

F9 Words in s. 133(3) inserted (1.4.2018) by Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (anaw 1), s. 81(2)(3), Sch. 23 para. 50; S.I. 2018/34, art. 3

Commencement Information

I5 S. 133 in force at 1.4.2018 by S.I. 2018/33, art. 3

Potential lost revenue E+W

134 Meaning of “potential lost revenue” E+W

In this Chapter, “potential lost revenue” has the meaning given by sections 135 to 138.

Commencement Information

I6 S. 134 in force at 1.4.2018 by S.I. 2018/33, art. 3

135 Potential lost revenue: normal rule E+W

(1) The “potential lost revenue” in respect of—

(a) an inaccuracy in a document (including an inaccuracy attributable to a supply of false information or withholding of information), or

(b) a failure to notify an under-assessment,

is the additional amount payable in respect of a devolved tax [F10 or tax credit] as a result of correcting the inaccuracy or under-assessment.

(2) The reference in subsection (1) to the additional amount payable includes a reference to—

(a) an amount payable to WRA having been erroneously paid by way of repayment of devolved tax, F11 ...

(b) an amount which would have been repayable by WRA had the inaccuracy or under-assessment not been corrected, [F12 and

(c) an amount which WRA would have been required to set off against a person’s liability to tax, or to pay to a person, had the inaccuracy or under-assessment not been corrected.]

Textual Amendments

F10 Words in s. 135(1) inserted (1.4.2018) by The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 32(2)

F11 Word in s. 135(2) omitted (1.4.2018) by virtue of The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 32(3)(a)

F12 S. 135(2)(c) and word inserted (1.4.2018) by The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 32(3)(b)

Commencement Information

I7 S. 135 in force at 1.4.2018 by S.I. 2018/33, art. 3

136 Potential lost revenue: multiple errors E+W

(1) Where a person is liable to a penalty under section 129 in respect of more than one inaccuracy, and the calculation of potential lost revenue under section 135 in respect of each inaccuracy depends on the order in which they are corrected, careless inaccuracies are to be taken to be corrected before deliberate inaccuracies.

(2) In calculating potential lost revenue where a person is liable to a penalty under section 129 in respect of one or more understatements in one or more documents relating to a tax period [F13 , transaction or claim for tax credit], account must be taken of any overstatements in any document given by the person which relate to the same tax period [F14 , transaction or claim for tax credit].

(3) In subsection (2)—

(a) “understatement” means an inaccuracy that meets condition 1 in section 129, and

(b) “overstatement” means an inaccuracy that does not meet that condition.

(4) For the purposes of subsection (2) overstatements are to be set against understatements in the following order—

(a) understatements in respect of which the person is not liable to a penalty,

(b) careless understatements, and

(c) deliberate understatements.

(5) In calculating, for the purposes of a penalty under section 129, potential lost revenue in respect of a document given by or on behalf of a person, no account is to be taken of the fact that a potential loss of revenue from a person is or may be balanced by a potential overpayment by another person (except to the extent that an enactment requires a person's liability to a devolved tax to be adjusted by reference to another person's liability to a devolved tax).

Textual Amendments

F13 Words in s. 136(2) substituted (1.4.2018) by virtue of The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 33(a)

F14 Words in s. 136(2) substituted (1.4.2018) by virtue of The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 33(b)

Commencement Information

I8 S. 136 in force at 1.4.2018 by S.I. 2018/33, art. 3

137 Potential lost revenue: losses E+W

(1) Where an inaccuracy has the result that a loss is wrongly recorded for the purposes of a devolved tax and the loss has been wholly used to reduce the amount payable in respect of that tax, the potential lost revenue is calculated in accordance with section 135.

(2) Where an inaccuracy has the result that a loss is wrongly recorded for the purposes of a devolved tax and the loss has not been wholly used to reduce the amount payable in respect of that tax, the potential lost revenue is—

(a) the potential lost revenue calculated in accordance with section 135 in respect of any part of the loss that has been used to reduce the amount payable in respect of that tax, plus

(b) 10% of any part that has not.

(3) Subsections (1) and (2) apply both—

(a) to a case where no loss would have been recorded but for the inaccuracy, and

(b) to a case where a loss of a different amount would have been recorded (but in that case subsections (1) and (2) apply only to the difference between the amount recorded and the true amount).

(4) The potential lost revenue in respect of a loss is nil where, because of the nature of the loss or the circumstances of the person chargeable to the devolved tax, there is no reasonable prospect of the loss being used to support a claim to reduce any person's liability to that tax.

Commencement Information

I9 S. 137 in force at 1.4.2018 by S.I. 2018/33, art. 3

138 Potential lost revenue: delayed tax E+W

(1) Where an inaccuracy resulted in an amount of devolved tax being declared later than it should have been (“the delayed tax”), the potential lost revenue is—

(a) 5% of the delayed tax for each year of the delay;

(b) a percentage of the delayed tax, for each period of delay of less than a year, equating to 5% per year.

(2) This section does not apply to a case to which section 137 applies.

Commencement Information

I10 S. 138 in force at 1.4.2018 by S.I. 2018/33, art. 3

Penalties under Chapter 3: general E+W

139 Reduction in penalty under Chapter 3 for disclosure E+W

(1) WRA may reduce a penalty payable under this Chapter where a person makes a qualifying disclosure.

(2) A “qualifying disclosure” means disclosure of—

(a) an inaccuracy which is relevant to a person's liability to a devolved tax,

(b) a supply of false information, or withholding of information, which is relevant to a person's liability to a devolved tax, F15 ...

(c) a failure to disclose an under-assessment in respect of a devolved tax,

[F16 (d) an inaccuracy which is relevant to a person’s entitlement to a tax credit or liability to pay an amount in respect of a tax credit,

(e) a supply of false information, or withholding of information, which is relevant to a person’s entitlement to a tax credit or liability to pay an amount in respect of a tax credit, or

(f) a failure to disclose an under-assessment in respect of a person’s liability to pay an amount in respect of a tax credit.]

(3) A person makes a qualifying disclosure by—

(a) telling WRA about it,

(b) giving WRA reasonable help in quantifying—

(i) the inaccuracy,

(ii) the inaccuracy attributable to the supply of false information or withholding of information, or

(iii) the under-assessment, and

(c) allowing WRA access to records for the purpose of ensuring that—

(i) the inaccuracy,

(ii) the inaccuracy attributable to the supply of false information or withholding of information, or

(iii) the under-assessment,

is fully corrected.

(4) In reducing a penalty under this section, WRA may take account of—

(a) whether the disclosure was prompted or unprompted, and

(b) the quality of the disclosure.

(5) Disclosure of relevant information—

(a) is “unprompted” if made at a time when the person making the disclosure has no reason to believe that WRA has discovered or is about to discover the inaccuracy, the supply of false information or withholding of information, or the under-assessment, and

(b) otherwise, is “prompted”.

(6) “Quality”, in relation to disclosure, includes timing, nature and extent.

Textual Amendments

F15 Word in s. 139(2) omitted (1.4.2018) by virtue of The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 34(a)

F16 S. 139(2)(d)-(f) inserted (1.4.2018) by The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 34(b)

Commencement Information

I11 S. 139 in force at 1.4.2018 by S.I. 2018/33, art. 3

140 Special reduction in penalty under Chapter 3 E+W

(1) WRA may reduce a penalty under this Chapter if it thinks it right to do so because of special circumstances.

(2) In subsection (1), “special circumstances” does not include—

(a) ability to pay, or

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

(3) In subsection (1), the reference to reducing a penalty includes a reference to—

(a) remitting a penalty entirely,

(b) suspending a penalty, and

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

(4) In this section, references to a penalty include references to any interest in relation to a penalty.

Commencement Information

I12 S. 140 in force at 1.4.2018 by S.I. 2018/33, art. 3

141 Assessment of penalties under Chapter 3 E+W

(1) Where a person becomes liable to a penalty under this Chapter, WRA must—

(a) assess the penalty,

(b) issue a notice to the person of the penalty assessed, and

(c) state in the notice the period [F17 , transaction or claim for tax credit] in relation to which the penalty has been assessed.

(2) An assessment of a penalty under this Chapter may be combined with an assessment to devolved tax.

(3) An assessment of a penalty under section 129 or 132 must be made before the end of the period of 12 months beginning with—

(a) the end of the appeal period for the decision correcting the inaccuracy, or

(b) if there is no assessment to the tax concerned as a result of that decision, the day on which the inaccuracy is corrected.

(4) An assessment of a penalty under section 133 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 which corrected the understatement, or

(b) if there is no assessment correcting the understatement, the day on which the understatement is corrected.

(5) In subsections (3) and (4), “appeal period” means F18 ...—

(a) if no appeal is made, the period during which an appeal could be made, and

(b) if an appeal is made, the period ending with its final determination or withdrawal.

(6) Subject to subsections (3) and (4), a supplementary assessment may be made in respect of a penalty under this Chapter if an earlier assessment operated by reference to an underestimate of the potential lost revenue.

Textual Amendments

F17 Words in s. 141(1)(c) substituted (1.4.2018) by The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 35

F18 Words in s. 141(5) omitted (1.4.2018) by virtue of Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (anaw 1), s. 81(2)(3), Sch. 23 para. 51; S.I. 2018/34, art. 3

Commencement Information

I13 S. 141 in force at 1.4.2018 by S.I. 2018/33, art. 3

Interpretation E+W

142 Interpretation of Chapter 3 E+W

In this Chapter—

(a) a reference to giving a document to WRA includes—

(i) a reference to communicating information to WRA in any form and by any method (whether by post, fax, email, telephone or otherwise), and

(ii) a reference to making a statement or declaration in a document;

(b) a reference to making a tax return or doing anything in relation to a tax return includes a reference to amending a tax return or doing anything in relation to an amended tax return;

(c) a reference to a loss includes a reference to a charge, expense, deficit and any other amount which may be available for, or relied on to claim, a deduction or relief;

(d) a reference to action includes a reference to omission.

Commencement Information

I14 S. 142 in force at 1.4.2018 by S.I. 2018/33, art. 3