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Finance Bill
Part 3 — Taxes and duties on importation and exportation: penalties

    20

 

                    “Community export duty” means any of the duties, charges or levies

which are export duties within the meaning of the Community

Customs Code (as at 9th April 2003, see the definition of “export duties”

in Article 4(11) of that Code);

                    “Community import duty” means any of the duties, charges or levies

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which are import duties within the meaning of the Community

Customs Code (as at 9th April 2003, see the definition of “import

duties” in Article 4(10) of that Code);

                    “contravene” includes fail to comply with;

                    “customs duty of a preferential tariff country” includes a reference to any

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charge imposed by a preferential tariff country and having an

equivalent effect to customs duty payable on the importation of goods

into the territory of that country;

                    “demand notice” means a demand notice within the meaning of section

30;

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                    “import VAT” means value added tax chargeable by virtue of section

1(1)(c) of the Value Added Tax Act 1994 (c. 23) (importation of goods

from places outside the member States);

                    “notice” means notice in writing;

                    “preferential tariff country” means a country outside the European

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Community which is, or is a member of a group of countries which is,

party to an agreement falling within Article 20(3)(d) of the Community

Customs Code (preferential tariff agreements with the Community);

                    “prescribed” means specified in, or determined in accordance with,

regulations made by the Treasury;

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                    “relevant rule”, in relation to any relevant tax or duty, has the meaning

given by subsection (8) of section 26 (as read with subsection (9) of that

section);

                    “representative”, in relation to any person, means—

                  (a)                 his personal representative,

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                  (b)                 his trustee in bankruptcy or interim or permanent trustee,

                  (c)                 any receiver or liquidator appointed in relation to that person or

any of his property,

                         or any other person acting in a representative capacity in relation to that

person.

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     (4)    References in this Part to the Community Customs Code are references to that

Code as from time to time amended, whether before or after the coming into

force of this Part.

     (5)    The Treasury may by order amend this Part for the purpose of replacing any

reference to, or to a provision of,—

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           (a)           the Community Customs Code, or

           (b)           any instrument referred to in this Part by virtue of an order under this

subsection,

            with a reference to, or (as the case may be) to a provision of, a different

instrument.

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     (6)    A statutory instrument containing an order under subsection (5) may not be

made unless a draft of the instrument has been laid before, and approved by a

resolution of, the House of Commons.

 

 

Finance Bill
Part 3 — Taxes and duties on importation and exportation: penalties

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     (7)    Except for this subsection and section 41 (which accordingly come into force on

the passing of this Act), this Part comes into force on such day as the Treasury

may by order appoint.

The penalties

 25    Penalty for evasion

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     (1)    In any case where—

           (a)           a person engages in any conduct for the purpose of evading any

relevant tax or duty, and

           (b)           his conduct involves dishonesty (whether or not such as to give rise to

any criminal liability),

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            that person is liable to a penalty of an amount equal to the amount of the tax or

duty evaded or, as the case may be, sought to be evaded.

     (2)    Subsection (1) is subject to the following provisions of this Part.

     (3)    Nothing in this section applies in relation to any customs duty of a preferential

tariff country.

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     (4)    Any reference in this section to a person’s “evading” any relevant tax or duty

includes a reference to his obtaining or securing, without his being entitled to

it,—

           (a)           any repayment, rebate or drawback of any relevant tax or duty,

           (b)           any relief or exemption from, or any allowance against, any relevant tax

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or duty, or

           (c)           any deferral or other postponement of his liability to pay any relevant

tax or duty or of the discharge by payment of any such liability,

            and also includes a reference to his evading the cancellation of any entitlement

to, or the withdrawal of, any such repayment, rebate, drawback, relief,

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exemption or allowance.

     (5)    In relation to any such evasion of any relevant tax or duty as is mentioned in

subsection (4), the reference in subsection (1) to the amount of the tax or duty

evaded or sought to be evaded is a reference to the amount of—

           (a)           the repayment, rebate or drawback,

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           (b)           the relief, exemption or allowance, or

           (c)           the payment which, or the liability to make which, is deferred or

otherwise postponed,

            as the case may be.

     (6)    Where, by reason of conduct falling within subsection (1) in the case of any

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relevant tax or duty, a person—

           (a)           is convicted of an offence,

           (b)           is given, and has not had withdrawn, a demand notice in respect of a

penalty to which he is liable under section 26, or

           (c)           is liable to a penalty imposed upon him under any other provision of

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the law relating to that relevant tax or duty,

            that conduct does not also give rise to liability to a penalty under this section

in respect of that relevant tax or duty.

 

 

Finance Bill
Part 3 — Taxes and duties on importation and exportation: penalties

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 26    Penalty for contravention of relevant rule

     (1)    If, in the case of any relevant tax or duty, a person of a prescribed description

engages in any conduct by which he contravenes—

           (a)           a prescribed relevant rule, or

           (b)           a relevant rule of a prescribed description,

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            he is liable to a penalty under this section of a prescribed amount.

     (2)    Subsection (1) is subject to the following provisions of this Part.

     (3)    The power conferred by subsection (1) to prescribe a description of person

includes power to prescribe any person (without further qualification) as such

a description.

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     (4)    Different penalties may be prescribed under subsection (1) for different cases

or different circumstances.

     (5)    Any amount prescribed under subsection (1) as the amount of a penalty must

not be more than £2,500.

     (6)    The Treasury may by order amend subsection (5) by substituting a different

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amount for the amount for the time being specified in that subsection.

     (7)    A statutory instrument containing an order under subsection (6) may not be

made unless a draft of the instrument has been laid before, and approved by a

resolution of, the House of Commons.

     (8)    In this Part “relevant rule”, in relation to any relevant tax or duty, means any

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duty, obligation, requirement or condition imposed by or under any of the

following—

           (a)           the Customs and Excise Management Act 1979 (c. 2), as it applies in

relation to the relevant tax or duty;

           (b)           any other Act, or any statutory instrument, as it applies in relation to

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the relevant tax or duty;

           (c)           in the case of customs duty, Community export duty or Community

import duty, Community customs rules;

           (d)           in the case of import VAT, Community customs rules as they apply in

relation to import VAT;

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           (e)           any directly applicable Community legislation relating to the relevant

tax or duty;

           (f)           any relevant international rules applying in relation to the relevant tax

or duty.

     (9)    In subsection (8)—

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                    “Community customs rules” means customs rules, as defined in Article 1

of the Community Customs Code;

                    “relevant international rules” means international agreements so far as

applying in relation to a relevant tax or duty and having effect as part

of the law of any part of the United Kingdom by virtue of—

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                  (a)                 any Act or statutory instrument, or

                  (b)                 any directly applicable Community legislation.

 27    Exceptions from section 26

     (1)    A person is not liable to a penalty under section 26 if he satisfies—

           (a)           the Commissioners, or

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Finance Bill
Part 3 — Taxes and duties on importation and exportation: penalties

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           (b)           on appeal, an appeal tribunal,

            that there is a reasonable excuse for his conduct.

     (2)    For the purposes of subsection (1) none of the following is a reasonable

excuse—

           (a)           an insufficiency of funds available to any person for paying any

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relevant tax or duty or any penalty due;

           (b)           that reliance was placed by any person on another to perform any task;

           (c)           that the contravention is attributable, in whole or in part, to the conduct

of a person on whom reliance to perform any task was so placed.

     (3)    Where, by reason of conduct falling within subsection (1) of section 26 in the

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case of any relevant tax or duty, a person—

           (a)           is prosecuted for an offence,

           (b)           is given, and has not had withdrawn, a demand notice in respect of a

penalty to which he is liable under section 25, or

           (c)           is liable to a penalty imposed upon him under any other provision of

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the law relating to that relevant tax or duty,

            that conduct does not also give rise to liability to a penalty under section 26 in

respect of that relevant tax or duty.

     (4)    A person is not liable to a penalty under section 26 in respect of any conduct,

so far as relating to import VAT, if in respect of that conduct—

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           (a)           he is liable to a penalty under any of sections 62 to 69A of the Value

Added Tax Act 1994 (c. 23) (penalty for contravention of statutory

requirements as to VAT), or

           (b)           he would be so liable but for section 62(4), 63(11), 64(6), 67(9), 69(9) or

69A(7) of that Act (conduct resulting in conviction, different penalty

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etc).

 28    Liability of directors etc where body corporate liable to penalty for evasion

     (1)    Where it appears to the Commissioners—

           (a)           that a body corporate is liable to a penalty under section 25, and

           (b)           that the conduct giving rise to the penalty is, in whole or in part,

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attributable to the dishonesty of a person who is, or at the material time

was, a director or managing officer of the body corporate (a “relevant

officer”),

            the Commissioners may give a notice under this section to the body corporate

(or its representative) and to the relevant officer (or his representative).

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     (2)    A notice under this section must state—

           (a)           the amount of the penalty referred to in subsection (1)(a) (the “basic

penalty”), and

           (b)           that the Commissioners propose, in accordance with this section, to

recover from the relevant officer such portion (which may be the

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whole) of the basic penalty as is specified in the notice.

     (3)    If a notice is given under this section, this Part shall apply in relation to the

relevant officer as if he were personally liable under section 25 to a penalty

which corresponds to that portion of the basic penalty specified in the notice.

     (4)    If a notice is given under this section—

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Finance Bill
Part 3 — Taxes and duties on importation and exportation: penalties

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           (a)           the amount which may be recovered from the body corporate under

this Part is limited to so much (if any) of the basic penalty as is not

recoverable from the relevant officer by virtue of subsection (3), and

           (b)           the body corporate is to be treated as discharged from liability for so

much of the basic penalty as is so recoverable from the relevant officer.

5

     (5)    In this section “managing officer”, in relation to a body corporate, means—

           (a)           a manager, secretary or other similar officer of the body corporate, or

           (b)           a person purporting to act in any such capacity or as a director.

     (6)    Where the affairs of a body corporate are managed by its members, this section

applies in relation to the conduct of a member in connection with his functions

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of management as if he were a director of the body corporate.

Reduction of amount of penalty

 29    Reduction of penalty under section 25 or 26

     (1)    Where a person is liable to a penalty under section 25 or 26

           (a)           the Commissioners (whether originally or on review) or, on appeal, an

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appeal tribunal may reduce the penalty to such amount (including nil)

as they think proper; and

           (b)           the Commissioners on a review, or an appeal tribunal on an appeal,

relating to a penalty reduced by the Commissioners under this

subsection may cancel the whole or any part of the reduction

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previously made by the Commissioners.

     (2)    In exercising their powers under subsection (1), neither the Commissioners nor

an appeal tribunal are entitled to take into account any of the matters specified

in subsection (3).

     (3)    Those matters are—

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           (a)           the insufficiency of the funds available to any person for paying any

relevant tax or duty or the amount of the penalty,

           (b)           the fact that there has, in the case in question or in that case taken with

any other cases, been no or no significant loss of any relevant tax or

duty,

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           (c)           the fact that the person liable to the penalty, or a person acting on his

behalf, has acted in good faith.

Demand notices

 30    Demands for penalties

     (1)    Where a person is liable to a penalty under this Part, the Commissioners may

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give to that person or his representative a notice in writing (a “demand notice”)

demanding payment of the amount due by way of penalty.

     (2)    An amount demanded as due from a person or his representative in

accordance with subsection (1) is recoverable as if it were an amount due from

the person or, as the case may be, the representative as an amount of customs

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duty.

            This subsection is subject to—

           (a)           any appeal under section 36 (appeals to tribunal); and

 

 

Finance Bill
Part 3 — Taxes and duties on importation and exportation: penalties

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           (b)           subsection (3).

     (3)    An amount so demanded is not recoverable if or to the extent that—

           (a)           the demand has subsequently been withdrawn; or

           (b)           the amount has been reduced under section 29.

 31    Time limits for demands for penalties

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     (1)    A demand notice may not be given—

           (a)           in the case of a penalty under section 25, more than 20 years after the

conduct giving rise to the liability to the penalty ceased, or

           (b)           in the case of a penalty under section 26, more than 3 years after the

conduct giving rise to the liability to the penalty ceased.

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     (2)    A demand notice may not be given more than 2 years after there has come to

the knowledge of the Commissioners evidence of facts sufficient in the opinion

of the Commissioners to justify the giving of the demand notice.

     (3)    A demand notice—

           (a)           may be given in respect of a penalty to which a person was liable under

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section 25 or 26 immediately before his death, but

           (b)           in the case of a penalty to which the deceased was so liable under

section 25, may not be given more than 3 years after his death.

 32    No prosecution after demand notice for penalty under section 26

Where a demand notice is given demanding payment of an amount due by

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way of penalty under section 26 in respect of any conduct of a person, no

proceedings may be brought against that person for any offence constituted by

that conduct (whether or not the demand notice is subsequently withdrawn).

Reviews

 33    Right to review of certain decisions

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     (1)    If, in the case of any relevant tax or duty, the Commissioners give a person or

his representative a notice informing him—

           (a)           that they have decided that the person has engaged in conduct by

which he contravenes a relevant rule, and

           (b)           that the person is, in consequence, liable to a penalty under section 26,

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but

           (c)           that they do not propose to give a demand notice in respect of the

penalty,

            the person or his representative may give a notice to the Commissioners

requiring them to review the decision mentioned in paragraph (a).

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     (2)    Where the Commissioners give a demand notice to a person or his

representative, the person or his representative may by notice require the

Commissioners to review—

           (a)           their decision that the person is liable to a penalty under section 25 or

26, or

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           (b)           their decision as to the amount of the liability.

 

 

Finance Bill
Part 3 — Taxes and duties on importation and exportation: penalties

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     (3)    Where the Commissioners give a notice under section 28 to a body corporate

and to a relevant officer—

           (a)           subsection (2) does not apply to any demand notice given in respect of

the liability of either of them to a penalty under this Part in respect of

the conduct in question, but

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           (b)           subsections (4) and (5) have effect instead in relation to any such

demand notice.

     (4)    Where the Commissioners give a demand notice to the relevant officer or his

representative for a penalty which corresponds to the portion of the basic

penalty specified in the notice under section 28, the relevant officer or his

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representative may by notice require the Commissioners to review—

           (a)           their decision that the conduct of the body corporate referred to in

section 28(1)(b) is, in whole or in part, attributable to the relevant

officer’s dishonesty, or

           (b)           their decision as to the portion of the basic penalty which the

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Commissioners are seeking to recover from the relevant officer or his

representative.

     (5)    Where the Commissioners give a demand notice to the body corporate or its

representative for so much of the basic penalty as is not recoverable from the

relevant officer by virtue of section 28(3), the body corporate or its

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representative may by notice require the Commissioners to review—

           (a)           their decision that the body corporate is liable to a penalty under

section 25, or

           (b)           their decision as to amount of the basic penalty as if it were the amount

specified in the demand notice.

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     (6)    A person may not under this section require a review of a decision under

section 35 (decision on review).

 34    Time limit and right to further review

     (1)    The Commissioners are not required under section 33 to review any decision

unless the notice requiring the review is given before the end of the permitted

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period.

     (2)    For the purposes of this section the “permitted period” is the period of 45 days

beginning with the day on which the relevant notice is given.

     (3)    For the purposes of subsection (2) the “relevant notice” is—

           (a)           in the case of a review by virtue of subsection (1) of section 33, the notice

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mentioned in that subsection; or

           (b)           in any other case, the demand notice in question.

     (4)    Nothing in subsection (1) prevents the Commissioners from agreeing on

request to review a decision in a case where the notice required by that

subsection is not given within the permitted period.

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     (5)    A person may give notice under section 33 requiring a decision to be reviewed

a second or subsequent time only if—

           (a)           the grounds on which he requires the further review are that the

Commissioners did not, on any previous review, have the opportunity

to consider any particular facts or matters; and

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           (b)           he does not, on the further review, require the Commissioners to

consider any facts or matters which were considered on a previous

 

 

 
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