Office of Public Sector Information
SCHEDULE 18 continued PART IV continued
29 (1) A company which fails to comply with a notice under paragraph 27 (notice to produce documents, etc. for purposes of enquiry) is liable—
(a) to a penalty of £50, and
(b) if the failure continues after a penalty is imposed under paragraph (a) above, to a further penalty or penalties not exceeding the amount specified in sub-paragraph (2) below for each day on which the failure continues.
(2) The amount referred to in sub-paragraph (1)(b) is—
(a) £30 if the penalty is determined by an officer of the Board under section 100 of the [1970 c. 9.] Taxes Management Act 1970, and
(b) £150 if the penalty is determined by the Commissioners under section 100C of that Act.
(3) An officer of the Board authorised by the Board for the purposes of section 100C of the [1970 c. 9.] Taxes Management Act 1970 may commence proceedings under that section for any penalty under sub-paragraph (1)(b) above.
(4) No penalty shall be imposed under this paragraph in respect of a failure at any time after the failure has been remedied.
30 (1) If after notice of enquiry has been given and before the enquiry is completed the Inland Revenue form the opinion—
(a) that the amount stated in the company’s self-assessment as the amount of tax payable is insufficient, and
(b) that unless the assessment is immediately amended there is likely to be a loss of tax to the Crown,
they may by notice to the company amend its self-assessment to make good the deficiency.
(2) In the case of an enquiry which under paragraph 25(2) is limited to matters arising from an amendment of the return, sub-paragraph (1) above only applies so far as the deficiency is attributable to the amendment.
(3) An appeal may be brought against an amendment of a company’s self-assessment by the Inland Revenue under this paragraph.
(4) Notice of appeal must be given—
(a) in writing,
(b) within 30 days after the amendment was notified to the company,
(c) to the officer of the Board by whom the notice of amendment was given.
(5) The appeal shall not be heard and determined before the completion of the enquiry.
31 (1) This paragraph applies if a company amends its company tax return at a time when an enquiry is in progress into the return.
(2) The amendment does not restrict the scope of the enquiry but may be taken into account (together with any matters arising) in the enquiry.
(3) So far as the amendment affects—
(a) the amount stated in the company’s self-assessment as the amount of tax payable, or
(b) any amount that affects or may affect—
(i) the tax payable by the company for another accounting period, or
(ii) the tax liability of another company for any accounting period,
it does not take effect until after the enquiry is completed.
This does not affect any claim by the company under section 59DA of the [1970 c. 9.] Taxes Management Act 1970 (claim for repayment in advance of liability being established).
(4) An amendment whose effect is deferred under sub-paragraph (3) takes effect as follows—
(a) if the conclusions in the closure notice state either—
(i) that the amendment was not taken into account in the enquiry, or
(ii) that no amendment of the return is required arising from the enquiry,
the amendment takes effect on the completion of the enquiry;
(b) in any other case, the amendment shall be taken into account by the company in amending its return to accord with the conclusions stated in the closure notice and takes effect accordingly as part of those amendments.
(5) For the purposes of this paragraph the period during which an enquiry is in progress is the whole of the period—
(a) beginning with the day on which the Inland Revenue give notice of enquiry into the return, and
(b) ending with the day on which the enquiry is completed.
32 (1) An enquiry is completed when the Inland Revenue by notice (a “closure notice”) inform the company they have completed their enquiry and state their conclusions.
The notice takes effect when it is issued.
(2) If the Inland Revenue conclude that the return was a return for the wrong period, the closure notice must designate the accounting period for which a return should have been made (specifying the dates on which the period begins and ends).
(3) If there is more than one accounting period ending in or at the end of the period specified in the notice requiring a return, the closure notice shall only designate the first of those accounting periods for which no return has been delivered.
Paragraph 35 provides for a return to be delivered for any other outstanding accounting period.
33 (1) The company may apply to the Commissioners for a direction that the Inland Revenue give a closure notice within a specified period.
(2) Any such application shall be heard and determined in the same way as an appeal.
(3) The Commissioners hearing the application shall give a direction unless they are satisfied that the Inland Revenue have reasonable grounds for not giving a closure notice within a specified period.
34 (1) The company has 30 days beginning with the day on which the enquiry is completed in which—
(a) to amend the return that was the subject of the enquiry—
(i) to accord with the conclusions stated in the closure notice, and
(ii) in the case of a return for the wrong period, to make it a return appropriate to the designated period, and
(b) to make any amendments of other company tax returns delivered by it which are required to give effect to the conclusions stated in the closure notice.
The time limits otherwise applicable to amendment of a company tax return do not prevent an amendment being made under paragraph (a) or (b).
(2) If after the end of that period of 30 days the Inland Revenue are not satisfied—
(a) that the return that was the subject of the enquiry—
(i) is correct and complete, and
(ii) in the case of a return for the wrong period, is a return appropriate to the designated period, and
(b) that any necessary amendments have been made to any other return delivered by the company that are required to give effect to the conclusions stated in the closure notice,
they may, within the following period of 30 days, by notice to the company make such amendments of that return or those returns as they consider necessary.
(3) An appeal may be brought against any such amendment of a company’s return.
(4) Notice of appeal must be given—
(a) in writing,
(b) within 30 days after the amendment was notified to the company,
(c) to the officer of the Board by whom the notice of amendment was given.
(5) In this paragraph “the designated period” means the period designated in the closure notice.
35 (1) Where, following an enquiry into a company tax return—
(a) it is finally determined—
(i) that the return is a return for the wrong period, and
(ii) what the period is for which the return should have been made, and
(b) the effect of the determination is that there is a further period (“the outstanding period”) for which a company tax return should have been made under the original notice requiring a return,
then, if there is no such return delivered by the company which can be amended so as to become a return for the outstanding period, the original notice shall be taken to require the company to deliver a return in respect of that period.
(2) The filing date for such a return for an outstanding period is whichever is the later of—
(a) the original filing date, and
(b) the last day of the period of 30 days beginning with the day on which the matters mentioned in sub-paragraph (1)(a) are finally determined.
36 (1) If no return is delivered in response to a notice requiring a company tax return, the Inland Revenue may determine to the best of their information and belief the amount of tax payable by the company.
(2) The power to make a determination under this paragraph becomes exercisable if no return is delivered on or before the following date—
(a) if the filing date for any return required by the notice can be ascertained, that date;
(b) if no such date can be ascertained, the later of—
(i) 18 months from the end of the period specified in the notice, or
(ii) three months from the day on which the notice was served.
(3) The accounting period or periods for which a determination may be made are—
(a) if there is only one accounting period ending in or at the end of the period specified in the notice, that period;
(b) if there is more than one accounting period ending in or at the end of the period specified in the notice, each of those periods;
(c) if the Inland Revenue have insufficient information to identify the accounting periods of the company, such period or periods ending in or at the end of the period specified in the notice as they may determine.
(4) Notice of a determination under this paragraph must be served on the company, stating the date on which the determination is issued.
(5) No determination under this paragraph may be made more than five years after the day on which the power becomes exercisable.
(6) If the company shows—
(a) that there is no accounting period of the company ending in or at the end of the period specified in the notice, or
(b) that it has delivered a return for the accounting period, or each accounting period, ending in or at the end of the period specified in the notice, or
(c) that no return is yet due for any such period,
any determination under this paragraph is of no effect.
37 (1) If a notice requiring a company tax return is served on a company and—
(a) a return is delivered for an accounting period ending in or at the end of the period specified in the notice, but
(b) there is another period so ending (the “outstanding period”) which appears to the Inland Revenue is or may be an accounting period,
the Inland Revenue may determine to the best of their information and belief the amount of corporation tax payable by the company for the outstanding period.
(2) The power to make a determination under this paragraph becomes exercisable—
(a) if the filing date for the outstanding period can be ascertained and no return is delivered on or before that date;
(b) if no such date can be ascertained and no return for that period is delivered by the later of—
(i) 30 months from the end of the period specified in the notice, or
(ii) three months from the day on which the notice was served.
(3) Notice of a determination under this paragraph must be served on the company, stating the date on which the determination is issued.
(4) No determination under this paragraph may be made more than five years after the day on which the power first became exercisable.
(5) If the company shows—
(a) that the outstanding period is not an accounting period, or
(b) that it has delivered a return for that period,
any determination under this paragraph is of no effect.
38 (1) The power to make a determination under paragraph 36 or 37 includes power to determine—
(a) any of the amounts mentioned in paragraph 8(1) (calculation of amount of tax payable), and
(b) any amount forming part of the calculation of any of those amounts.
(2) Notice of a determination under either of those paragraphs may be accompanied by notice of any determination by the Inland Revenue relating to the dates on which amounts of tax become due and payable under section 59D or 59E of the [1970 c. 9.] Taxes Management Act 1970.
39 (1) A determination under paragraph 36 or 37 has effect for enforcement purposes as if it were a self-assessment by the company.
(2) In sub-paragraph (1) “for enforcement purposes” means for the purposes of—
(a) the following Parts of the [1970 c. 9.] Taxes Management Act 1970—
Part VA (payment),
Part VI (collection and recovery),
Part IX (interest on overdue tax), and
Part XI (miscellaneous and supplementary provisions);
(b) the provisions of this Schedule imposing tax-related penalties; and
(c) the provisions of the Corporation Tax Acts enabling unpaid tax assessed on a company to be assessed on other persons.
(3) For those purposes the period for which the determination is made shall be treated as an accounting period of the company, even though—
(a) in the case of a determination under paragraph 36, the Inland Revenue have insufficient information to determine the accounting periods of the company and exercise their power under sub-paragraph (3)(c) of that paragraph, or
(b) in the case of a determination under paragraph 37, the Inland Revenue have insufficient information to determine whether the outstanding period is an accounting period.
40 (1) If after a determination has been made under paragraph 36—
(a) the company delivers a company tax return for a period ending in or at the end of the period specified in the notice requiring a company tax return, and
(b) the period is, or is treated in the return as, an accounting period,
the self-assessment included in that return supersedes the determination or, if there is more than one, the determination for the period which is, or most closely approximates to, the period for which the return is made.
(2) If after a determination has been made under paragraph 37—
(a) the company delivers a further company tax return for a period ending in or at the end of the period specified in the notice requiring a company tax return, and
(b) the period is, or is treated in the return as, an accounting period,
the self-assessment included in that return supersedes the determination.
(3) Sub-paragraphs (1) and (2) do not apply to a return made—
(a) more than five years after the day on which the power to make the determination first became exercisable (see paragraph 36(2) or 37(2)), or
(b) more than twelve months after the date of the determination,
whichever is the later.
(4) Where—
(a) the Inland Revenue have begun proceedings for the recovery of any tax charged by a determination under paragraph 36 or 37, and
(b) before the proceedings are concluded the determination is superseded by a self-assessment,
the proceedings may be continued as if they were proceedings for the recovery of so much of the tax charged by the self-assessment as is due and payable and has not been paid.
41 (1) If the Inland Revenue discover as regards an accounting period of a company that—
(a) an amount which ought to have been assessed to tax has not been assessed, or
(b) an assessment to tax is or has become insufficient, or
(c) relief has been given which is or has become excessive,
they may make an assessment (a “discovery assessment”) in the amount or further amount which ought in their opinion to be charged in order to make good to the Crown the loss of tax.
(2) If the Inland Revenue discover that a company tax return delivered by a company for an accounting period incorrectly states—
(a) an amount that affects, or may affect, the tax payable by that company for another accounting period, or
(b) an amount that affects, or may affect, the tax liability of another company,
they may make a determination (a “discovery determination”) of the amount which in their opinion ought to have been stated in the return.
42 (1) The power to make—
(a) a discovery assessment for an accounting period for which the company has delivered a company tax return, or
(b) a discovery determination,
is only exercisable in the circumstances specified in paragraph 43 or 44 and subject to paragraph 45 below.
(2) Those restrictions do not apply to an assessment or determination which only gives effect to a discovery determination duly made with respect to an amount stated in another company’s company tax return.
(3) Any objection to a discovery assessment or determination on the ground that those paragraphs have not been complied with can only be made on an appeal against the assessment or determination.
43 A discovery assessment for an accounting period for which the company has delivered a company tax return, or a discovery determination, may be made if the situation mentioned in paragraph 41(1) or (2) is attributable to fraudulent or negligent conduct on the part of—
(a) the company, or
(b) a person acting on behalf of the company, or
(c) a person who was a partner of the company at the relevant time.
44 (1) A discovery assessment for an accounting period for which the company has delivered a company tax return, or a discovery determination, may be made if at the time when the Inland Revenue—
(a) ceased to be entitled to give a notice of enquiry into the return, or
(b) completed their enquiries into the return,
they could not have been reasonably expected, on the basis of the information made available to them before that time, to be aware of the situation mentioned in paragraph 41(1) or (2).
(2) For this purpose information is regarded as made available to the Inland Revenue if—
(a) it is contained in a relevant return by the company or in documents accompanying any such return, or
(b) it is contained in a relevant claim made by the company or in any accounts, statements or documents accompanying any such claim, or
(c) it is contained in any documents, accounts or information produced or provided by the company to the Inland Revenue for the purposes of an enquiry into any such return or claim, or
(d) it is information the existence of which, and the relevance of which as regards the situation mentioned in paragraph 41(1) or (2)—
(i) could reasonably be expected to be inferred by the Inland Revenue from information falling within paragraphs (a) to (c) above, or
(ii) are notified in writing to the Inland Revenue by the company or a person acting on its behalf.
(3) In sub-paragraph (2)—
“relevant return” means the company’s company tax return for the period in question or either of the two immediately preceding accounting periods, and
“relevant claim” means a claim made by or on behalf of the company as regards the period in question.
45 No discovery assessment for an accounting period for which the company has delivered a company tax return, or discovery determination, may be made if—
(a) the situation mentioned in paragraph 41(1) or (2) is attributable to a mistake in the return as to the basis on which the company’s liability ought to have been computed, and
(b) the return was in fact made on the basis or in accordance with the practice generally prevailing at the time when it was made.
46 (1) Subject to any provision of the Taxes Acts allowing a longer period in any particular class of case no assessment may be made more than six years after the end of the accounting period to which it relates.
(2) In a case involving fraud or negligence on the part of—
(a) the company, or
(b) a person acting on behalf of the company, or
(c) a person who was a partner of the company at the relevant time,
an assessment may be made up to 21 years after the end of the accounting period to which it relates.
(3) Any objection to the making of an assessment on the ground that the time limit for making it has expired can only be made on an appeal against the assessment.
47 (1) Notice of an assessment to tax on a company must be served on the company stating—
(a) the date on which the notice is issued, and
(b) the time within which any appeal against the assessment may be made.
(2) After that notice has been served on the company, the assessment may not be altered except in accordance with the express provisions of the Taxes Acts.
48 (1) An appeal may be brought against any assessment to tax on a company which is not a self-assessment.
(2) Notice of appeal must be given—
(a) in writing,
(b) within 30 days after notice of the assessment was issued,
(c) to the officer of the Board by whom the notice of the assessment was given.
49 The provisions of paragraphs 46 to 48 (assessments: general provisions as to time limits, procedure and appeals) apply to a discovery determination as they apply to an assessment.
50 (1) A company which believes it has been assessed to tax more than once for the same cause and for the same accounting period may make a claim for relief—
(a) by notice in writing,
(b) given to the Board.
(2) If on a claim being made the Board are satisfied that the company has been assessed to tax more than once for the same cause and for the same accounting period, they shall amend the assessment or assessments concerned, or give relief by way of discharge or repayment of tax or otherwise, so as to eliminate the double charge.
(3) An appeal against the Board’s decision on a claim for relief under this paragraph may be brought to the Commissioners having jurisdiction to hear an appeal relating to the assessment, or the later of the assessments, to which the claim relates.
51 (1) A company which believes it has paid tax under an assessment which was excessive by reason of some mistake in a return may make a claim for relief—
(a) by notice in writing,
(b) given to the Board,
(c) not more than six years after the end of the accounting period to which the return relates.
(2) On receiving the claim the Board shall enquire into the matter and give by way of repayment such relief in respect of the mistake as is reasonable and just.
(3) No relief shall be given under this paragraph—
(a) in respect of a mistake as to the basis on which the liability of the claimant ought to have been computed when the return was in fact made on the basis or in accordance with the practice generally prevailing at the time when it was made, or
(b) in respect of a mistake in a claim or election which is included in the return.
(4) In determining a claim under this paragraph the Board shall have regard to all the relevant circumstances of the case.
They shall, in particular, consider whether the granting of relief would result in amounts being excluded from charge to tax.
For that purpose they may take into consideration the liability of the claimant company, and assessments made on it, for accounting periods other than that to which the claim relates.
(5) On an appeal against the Board’s decision on the claim, the Special Commissioners shall hear and determine the claim in accordance with the same principles as apply to the determination by the Board of claims under this paragraph.
(6) Neither the company nor the Board may appeal under section 56A of the [1970 c. 9.] Taxes Management Act 1970 against the determination of the Special Commissioners, except on a point of law arising in connection with the computation of—
(a) the profits of the company for the purposes of corporation tax,
(b) any amount assessable under section 419(1) of the Taxes Act 1988 (tax on loan or advance made by close company to a participator), or
(c) any amount chargeable under section 747(4)(a) of that Act (tax on profits of controlled foreign company).
52 (1) The provisions of paragraphs 41 to 48 relating to discovery assessments apply to an amount to which this paragraph applies as if it were unpaid tax, unless—
(a) it is assessable under those provisions apart from this paragraph, or
(b) it is recoverable under section 826(8A) of the Taxes Act 1988 (interest overpaid which is recoverable in same way as interest charged).
(2) This paragraph applies to an amount paid to a company by way of—
(a) repayment of tax (or income tax) or payment of a tax credit,
(b) repayment supplement under section 825 of the Taxes Act 1988, or
(c) interest paid under section 826 of that Act,
to the extent that it ought not to have been paid.
(3) For the purposes of this paragraph—
(a) an amount is regarded as paid if it is allowed by way of set-off, and
(b) an amount is regarded as a repayment if it was intended as repayment but exceeds the amount paid by the company.
(4) An assessment made by virtue of this paragraph shall be made under Case VI of Schedule D.
(5) An assessment to recover—
(a) an amount of tax repaid to a company in respect of an accounting period, or interest on any such repayment, or
(b) an amount of income tax repaid to a company in respect of a payment received by the company in an accounting period, or interest on any such repayment,
shall be treated as an assessment to tax for the accounting period referred to in paragraph (a) or (b).
(6) The sum assessed shall carry interest at the prescribed rate for the purposes of section 87A of the [1970 c. 9.] Taxes Management Act 1970 (interest on overdue corporation tax, etc.) from the date when the payment being recovered was made until payment.
53 (1) An assessment made by virtue of paragraph 52 is not out of time under paragraph 46(1) (general six year time limit for assessments) if it is made—
(a) before the end of the accounting period following that in which the amount assessed was paid, or
(b) if later, before the end of the period of three months beginning with the day on which the Inland Revenue complete an enquiry into a relevant company tax return by the company concerned.
(2) Sub-paragraph (1) above is without prejudice to paragraph 46(2) (time limit for assessment in case of fraud or negligence).
Finance Act 1998 (C. 36)