14.—(1) A person who fails to comply with any of the provisions of regulations 4 to 12 mentioned in paragraph (2) below shall be liable—
(a) to a penalty not exceeding £5,000, and
(b) if the failure continues after a penalty is imposed under sub-paragraph (a) above, 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 sub-paragraph (a) was imposed (but excluding any day for which a penalty under this paragraph has already been imposed).
This is subject to paragraph (6).
(2) Those provisions are—
(a) regulation 7(1) and (3) (duty of promoter in relation to notifiable contribution proposals and notifiable contribution arrangements),
(b) regulation 8(1) (duty of person dealing with promoter outside United Kingdom),
(c) regulation 9 (duty of parties to notifiable contribution arrangements not involving promoter), or
(d) regulation 11(1) (duty of promoter to notify client of reference number).
(3) A person who fails to comply with regulation 12(1) (duty of parties to notifiable contribution arrangements to notify the Commissioners of number, etc.) shall be liable to a penalty of the relevant sum.
This is subject to paragraph (6).
(4) In paragraph (3) “the relevant sum” means—
(a) in relation to a person not falling within sub-paragraph (b) or (c) below, £100 in respect of each scheme to which the failure relates,
(b) in relation to a person who has previously failed to comply with regulation 12 on one (and only one) occasion during the period of 36 months ending with the date on which the current failure to comply with that provision began, £500 in respect of each scheme to which the current failure relates (whether or not the same as the scheme to which the previous failure relates), or
(c) in relation to a person who has previously failed to comply with regulation 12 on two or more occasions during the period of 36 months ending with the date on which the current failure to comply with that provision began, £1,000 in respect of each scheme to which the current failure relates (whether or not the same as the schemes to which any of the previous failures relates).
(5) In paragraph (4) above “scheme” means any notifiable contribution arrangements.
(6) Where the notifiable contribution arrangement or notifiable contribution proposal is, or is substantially the same as, a notifiable arrangement or a notifiable proposal under Part 7 in relation to which a penalty has been imposed under section 98C of the Taxes Management Act 1970(15) in respect of a failure to comply with the provisions of Part 7, this regulation shall not apply to impose a penalty in respect of the failure to comply with the corresponding provision of these Regulations.
15.—(1) Part 10 of the Taxes Management Act 1970 so far as it relates to a penalty under section 98C of that Act shall apply in relation to a penalty under regulation 14 with the following modifications.
(2) In section 100 (determination of penalties by officer of Board) for subsection (2)(f) (penalties to which subsection (1) of the section does not apply)(16) substitute—
“(f) regulation 14(1)(a) of the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007.”.
(3) In section 100C(17) (penalty proceedings before Commissioners) for subsection (1A) substitute—
“(1A) In its application to a penalty under regulation 14(1)(a) of the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007, subsection (1) above has effect with the omission of the words “General or”.”.
16.—(1) The Tax Avoidance Schemes (Prescribed Description of Arrangements) Regulations 2006(18), apply to notifiable contribution arrangements and notifiable contribution proposals with the following modifications and any reference in those Regulations to sections 306 to 313 shall be construed as a reference to the corresponding provision of these Regulations (see regulation 4(2)).
(2) In regulation 1 (citation, commencement and effect) omit paragraphs (2) and (3).
(3) In regulation 5 (prescribed description of arrangements)—
(a) in paragraph (1) for “income tax, corporation tax and capital gains tax” substitute “national insurance contributions”, and
(b) in paragraph (2) omit sub-paragraphs (f) and (g).
(4) In Part 3—
(a) for “tax advantage” wherever it occurs substitute “advantage”; and
(b) for “a tax advantage” wherever it occurs substitute “an advantage”.
(5) In regulation 10 (Description 5: standardarised tax product), in the heading and paragraphs (1) and (3) for “tax product” substitute “national insurance contributions product”.
(6) Omit regulations 12 to 17.
17.—(1) The Tax Avoidance Schemes (Information) Regulations 2004(19)(“the Information Regulations”) apply to notifiable contribution arrangements and notifiable contribution proposals with the following modifications and any reference in those Regulations to sections 306 to 313 shall be construed as a reference to the corresponding provision of these Regulations (see regulation 4(2)).
(2) Omit regulation 1(2).
(3) In regulation 2(20)(interpretation)—
(a) omit the definitions of “the SDLT Arrangements Regulations”(21) and “corporation tax”;
(b) insert the following definition immediately before the definition of “employment”—
““contributions” means national insurance contributions;”;
(c) for the definitions of “notifiable arrangements” and “notifiable proposal” substitute—
““notifiable contribution arrangements” has the meaning given by section 132A(3) of the Social Security Administration Act 1992;
“notifiable contribution proposal” has the meaning given by section 132A(3) of the Social Security Administration Act 1992;”; and
(d) omit the definition of “the prescribed taxes”.
(4) In regulation 3 (prescribed information in respect of notifiable proposals and arrangements) wherever the words appear—
(a) for “any of the prescribed taxes” substitute “the contributions”;
(b) for “notifiable arrangements” substitute “notifiable contribution arrangements”;
(c) for “notifiable proposal” substitute “notifiable contribution proposal”;
(d) for “tax advantage” substitute “advantage”; and
(e) omit “or the SDLT Arrangement Regulations”(22)
(5) In regulation 4 (time for providing information under section 308, 309 or 310)—
(a) in paragraphs (4), (5) and (5A) for “notifiable arrangements” substitute “notifiable contribution arrangements”;
(b) in paragraph (5) for “paragraphs (5ZA) and (5A) substitute “paragraph (5A)”; and
(c) omit paragraphs (5ZA), (7) and (8).
(6) Omit regulation 5 (statutory clearances).
(7) For regulation 8 (prescribed information under section 313: timing and manner of delivery) substitute—
8.—(1) For the purposes of regulation 12 of the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007 (duty of parties to notifiable contribution arrangements to notify the Commissioners of number, etc.)—
(a) the prescribed information is—
(i) the reference number allocated by the Commissioners under regulation 12 to the notifiable contribution arrangements or notifiable contribution proposals;
(ii) the earnings period in which the person making the notification expects an advantage to be obtained;
(iii) the employer’s name, address and Unique Taxpayer Reference (UTR); and
(b) the prescribed time at which a person who is a party to notifiable contribution arrangements must provide the Commissioners with information under that regulation is any time before the date specified in paragraph 22(1) of Schedule 4 to the Social Security (Contributions) Regulations 2001(23).
(2) In the case of a person who is the employer of an employee, by reason of whose employment an advantage is expected to arise to any person in respect of national insurance contributions as a result of notifiable contribution arrangements, the prescribed information shall be notified to the Commissioners on a return in such form as they may specify by the time prescribed in paragraph (1)(b).”.
(8) In regulation 10 (electronic delivery of information)—
(a) in paragraph (2)—
(i) for sub-paragraph (a) substitute—
“(a) it is authorised by virtue of Part 7A of the Social Security (Contributions) Regulations 2001(24); and ”;
(ii) in paragraph (b) for “section” substitute “Part”; and
(b) in paragraph (3)(a) for “regulations under section 132 of the Finance Act 1999” substitute “Part 7A of the Social Security (Contributions Regulations) 1991”.
18.—(1) The Tax Avoidance Schemes (Promoters and Prescribed Circumstances) Regulations 2004(25) apply to notifiable contribution arrangements and notifiable contribution proposals as they apply to income tax with the following modifications and any reference in those Regulations to sections 306 to 313 shall be construed as a reference to the corresponding provision of these Regulations (see regulation 4(2)).
(2) In regulation 1 (citation, commencement and interpretation) for paragraph (2) substitute—
“(2) In these Regulations—
“notifiable contribution arrangements” and “notifiable contribution proposal” have the meanings given by section 132A(3) of the Social Security Administration Act 1992.”.
(3) In regulation 4 (persons not to be treated as promoters under section 307(1)(a)(i) or (b)(i))—
(a) for “tax advice” wherever it occurs substitute “contribution advice”; and
(b) for “tax advantage” wherever it occurs substitute “advantage”.
(4) In regulation 6 (legal professional privilege) for “section 314” substitute “section 132A(6) of the Social Security Administration Act 1992”.
Dave Watts
Frank Roy
Two of the Lords Commissioners of Her Majesty’s Treasury
12th March 2007
Section 98C was inserted by sections 315(1) and 319 of the Finance Act 2004. Back [15]
Section 100 was substituted by section 167 of the Finance Act 1989 (c.26) and paragraph (2)(f) was inserted by sections 315(2) and 319 of the Finance Act 2004. Back [16]
Section 100C was inserted by section 167 of the Finance Act 1989 (c.26) and subsection (1A) of that section was inserted by sections 315(3) and 319 of the Finance Act 2004(c. 12). Back [17]
S.I. 2006/1543. Back [18]
S.I. 2004/1864. These Regulations were amended by S.I. 2004/2613, 2005/1869, 2006/1544. Back [19]
Regulation 2 was itself amended by regulations 2 and 3 of S.I. 2005/1869. Back [20]
This definition was inserted by regulation 3 of S.I. 2005/1869. Back [21]
These references were inserted by regulation 4 of S.I. 2005/1869. Back [22]
S.I. 2001/1004. Paragraph 22 has been amended: the relevant amendment is that made by regulation 32(12)(a) of S.I. 2004/770. Back [23]
Part 7A was inserted by regulations 2 and 23 of the Social Security (Contributions, Categorisation of Earners and Intermediaries)(Amendment) Regulations 2004 (S.I. 2004/770). Back [24]
S.I. 2004/1865 as amended by regulation 2 of S.I. 2004/2613. Back [25]
Amended by correction slip on 01 March 2007