The National Insurance Contributions (Application of Part 7 of the Finance Act 2004) (Amendment) Regulations 2008

• Citation: S.I. 2008/2678
• Sections: 24

Section 1 Citation, commencement and effect

(1) These Regulations may be cited as the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) (Amendment) Regulations 2008 and shall come into force on 1st November 2008.

(2) Regulations made under section 56B of the Taxes Management Act 1970 (Special Commissioners: procedure) before these Regulations come into force apply (with any necessary modifications) to applications under Part 2 of the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007 as amended by these Regulations as they apply to appeals (but subject to any regulations made after these Regulations come into force).

(3) A power under Part 2 of the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007 as amended by these Regulations may be exercised in relation to, or by virtue of, matters arising wholly or partly before these Regulations come into force.

Section 2 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

The National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007 are amended as follows.

Section 3 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

In regulation 1(2)(d) (citation, commencement and effect) for “promoter”, in the second place where it occurs, substitute “promoter)” and for “apply)” substitute “apply”.

Section 4 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

In regulation 2 (interpretation)—

(a) after the definition of “the Information Regulations” insert—

“notifiable arrangements” and “notifiable proposal” have the meaning given to them in section 306 of the Finance Act 2004 ;

(b) omit “and” after the definition of “promoter”,

(c) in the definition of “reference number” after the words “regulation 10” insert “and, in relation to any notifiable arrangements or proposed notifiable arrangements, means the reference number allocated under section 311”, and

(d) after the definition of “reference number” insert—

“the Special Commissioners” has the meaning given by section 4 of the Taxes Management Act 1970 .

Section 5 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

In regulation 3 (structure of the Regulations)—

(a) in the first paragraph for “13” substitute “13A”,

(b) in the second paragraph after “section 98C” insert “and section 118(2) ”, and

(c) in the third paragraph for “18” substitute “19”.

Section 6 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

In the heading to Part 2 for “Provision” substitute “Provisions”.

Section 7 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

Before regulation 4 insert the heading “Application of Part 2”.

Section 8 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

In regulation 4—

(a) in paragraph (1) for “Description” substitute “Descriptions”, and

(b) for the Table after paragraph (2) substitute—

Section 9 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

After regulation 5 (meaning of “notifiable contribution arrangements” and “notifiable contribution proposal”) insert—

Doubt as to notifiability

(5A)

(1) The Commissioners may apply to the Special Commissioners for an order that—

(a) a proposal is to be treated as a notifiable contribution proposal, or

(b) arrangements are to be treated as notifiable contribution arrangements.

(2) An application must specify —

(a) the proposal or arrangements in respect of which the order is sought, and

(b) the promoter.

(3) On an application the Special Commissioners may make the order only if satisfied that the Commissioners—

(a) have taken all reasonable steps to establish whether the proposal is a notifiable contribution proposal or the arrangements are notifiable contribution arrangements, and

(b) have reasonable grounds for suspecting that the proposal may be a notifiable contribution proposal or the arrangements may be notifiable contribution arrangements.

(4) Reasonable steps under paragraph (3)(a) may (but need not) include taking action under regulation 12A or 12B.

(5) Grounds for suspicion under paragraph (3)(b) may include—

(a) the fact that the relevant arrangements fall within a description prescribed by the Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2006 as modified by these Regulations;

(b) an attempt by the promoter to avoid or delay providing information or documents about the proposal or arrangements under or by virtue of regulation 12A or 12B;

(c) the promoter’s failure to comply with a requirement under or by virtue of regulation 12A or 12B or section 313A or 313B in relation to another proposal or other arrangements.

(6) Where an order is made under this regulation in respect of a proposal or arrangements, the period for the purposes of paragraphs (1) and (3) of regulation 7 is that prescribed by the Information Regulations .

(7) An order under this regulation in relation to a proposal or arrangements is without prejudice to the possible application of regulation 7, other than by virtue of this regulation, to the proposal or arrangements.

Section 10 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

At the end of regulation 6 (meaning of promoter) insert—

(6) In the application of this Part to a proposal which is not a notifiable contribution proposal or arrangements which are not notifiable contribution arrangements, a reference to a promoter is a reference to a person who would be a promoter under paragraphs (1) to (5) if the proposal were a notifiable contribution proposal or arrangements were notifiable contribution arrangements.

Section 11 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

(1) Regulation 7 (duties of promoter) is amended as follows.

(2) In paragraph (1)—

(a) for “The promoter” substitute “A person who is a promoter in relation to a notifiable contribution proposal”, and

(b) for “any” substitute “the”.

(3) In paragraph (2)(a) for “a” substitute “the”.

(4) In paragraph (3)—

(a) for “The promoter” substitute “A person who is a promoter in relation to notifiable contribution arrangements”, and

(b) for “any notifiable” substitute “the notifiable”.

(5) For paragraph (4) substitute—

(4) Paragraph (4A) applies where a person complies with paragraph (1) in relation to a notifiable contribution proposal for arrangements and another person is —

(a) also a promoter in relation to the notifiable contribution proposal or is a promoter in relation to a notifiable contribution proposal for arrangements which are substantially the same as the proposed arrangements (whether they relate to the same or different parties), or

(b) a promoter in relation to notifiable contribution arrangements implementing the notifiable contribution proposal or notifiable contribution arrangements which are substantially the same as notifiable contribution arrangements implementing the notifiable contribution proposal (whether they relate to the same or different parties).

(4A) Any duty of the other person under paragraph (1) or (3) in relation to the notifiable contribution proposal or notifiable contribution arrangements is discharged if—

(a) the person who complied with paragraph (1) has notified the identity and address of the other person to the Commissioners or the other person holds the reference number allocated to the proposed notifiable contribution arrangements under regulation 10, and

(b) the other person holds information provided to the Commissioners in compliance with paragraph (1).

(4B) Paragraph (4C) applies where a person complies with section 308(1) in relation to a notifiable proposal and another person is —

(a) a promoter in relation to a notifiable contribution proposal for arrangements which are substantially the same as the notifiable proposal (whether they relate to the same or different parties), or

(b) a promoter in relation to notifiable contribution arrangements which are substantially the same as notifiable arrangements implementing the notifiable proposal (whether they relate to the same or different parties).

(4C) Any duty of the other person under paragraph (1) or (3) in relation to the notifiable contribution proposal or notifiable contribution arrangements is discharged if—

(a) the person who complied with section 308(1) in relation to the notifiable proposal has notified the identity and address of the other person to the Commissioners or the other person holds the reference number allocated to the proposed notifiable arrangements under section 311 , and

(b) the other person holds information provided to the Commissioners in compliance with section 308(1).

(4D) Paragraph (4E) applies where a person complies with paragraph (3) in relation to notifiable contribution arrangements and another person is —

(a) a promoter in relation to a notifiable contribution proposal for arrangements which are substantially the same as the notifiable contribution arrangements (whether they relate to the same or different parties), or

(b) also a promoter in relation to the notifiable contribution arrangements or notifiable contribution arrangements which are substantially the same (whether they relate to the same or different parties).

(4E) Any duty of the other person under paragraph (1) or (3) in relation to the notifiable contribution proposal or notifiable contribution arrangements is discharged if—

(a) the person who complied with paragraph (3) has notified the identity and address of the other person to the Commissioners or the other person holds the reference number allocated to the notifiable contribution arrangements under regulation 10, and

(b) the other person holds the information provided to the Commissioners in compliance with paragraph (3).

(4F) Paragraph (4G) applies where a person complies with section 308(3) in relation to notifiable arrangements and another person is a promoter in relation to a notifiable contribution proposal for arrangements or notifiable contribution arrangements which are substantially the same as the notifiable arrangements (whether they relate to the same or different parties).

(4G) Any duty of the other person under paragraph (1) or (3) in relation to the notifiable contribution proposal or notifiable contribution arrangements is discharged if—

(a) the person who complied with section 308(3) in relation to the notifiable arrangements has notified the identity and address of the other person to the Commissioners or the other person holds the reference number allocated to the notifiable arrangements under section 311, and

(b) the other person holds the information provided to the Commissioners in compliance with section 308(3).

Section 12 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

After regulation 7 (duties of promoter) insert—

Supplemental Information

(7A)

(1) This regulation applies where—

(a) a promoter (P) has provided information in purported compliance with paragraph (1) or (3) of regulation 7, but

(b) the Commissioners believe that P has not provided all the prescribed information.

(2) The Commissioners may apply to the Special Commissioners for an order requiring P to provide specified information about, or documents relating to, the notifiable contribution proposal or arrangements.

(3) The Special Commissioners may make an order under paragraph (2) in respect of information or documents only if satisfied that the Commissioners have reasonable grounds for suspecting that the information or documents—

(a) form part of the prescribed information, or

(b) will support or explain the prescribed information.

(4) A requirement by virtue of paragraph (2) shall be treated as part of P’s duty under paragraph (1) or (3) of regulation 7.

(5) In so far as P’s duty under paragraph (1) or (3) of regulation 7 arises out of a requirement by virtue of paragraph (2) above, the period for the purposes of those paragraphs of regulation 7 and the date after which it begins is prescribed by the Information Regulations.

(6) In so far as P’s duty under paragraph (1) or (3) of regulation 7 arises out of a requirement by virtue of paragraph (2) above, the prescribed period may be extended by the Commissioners by direction.

Section 13 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

Regulation 10(1) (arrangements to be given a reference number) is amended as follows—

(a) after “complies” insert “or purports to comply”,

(b) omit “may within 30 days”,

(c) in paragraph (a), before “allocate” insert “may within 30 days”, and

(d) for sub-paragraph (b) substitute—

(b) if they do so, must notify that number to the person and (where the person is one who has complied or purported to comply with paragraph (1) or (3) of regulation 7) to any other person—

(i) who is a promoter in relation to the notifiable contribution proposal (or arrangements implementing the notifiable contribution proposal) or the notifiable contribution arrangements (or proposal implemented by the notifiable contribution arrangements), and

(ii) whose identity and address has been notified to the Commissioners by the person,

Section 14 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

For regulation 11 (duty of promoter to notify client of number) substitute—

Duty of promoter to notify client of number

(11)

(1) This regulation applies where a person who is a promoter in relation to notifiable contribution arrangements is providing (or has provided) services to any person (“the client”) in connection with the notifiable contribution arrangements.

(2) The promoter must, within 30 days after the relevant date, provide the client with the prescribed information relating to any reference number (or, if more than one, any one reference number) that has been notified to the promoter (whether by the Commissioners or any other person) in relation to—

(a) the notifiable contribution arrangements, or

(b) any arrangements , including notifiable arrangements, which are substantially the same as the notifiable contribution arrangements (whether involving the same or different parties).

(3) In paragraph (2) “the relevant date” means the later of—

(a) the date on which the promoter becomes aware of any transaction which forms part of the notifiable contribution arrangements, and

(b) the date on which the reference number is notified to the promoter.

(4) But where the conditions in paragraph (5) are met the duty imposed on the promoter under paragraph (2) to provide the client with information in relation to notifiable contribution arrangements is discharged.

(5) Those conditions are that—

(a) the promoter is also a promoter in relation to a notifiable contribution proposal and provides services to the client in connection with them both,

(b) the notifiable contribution proposal and the notifiable contribution arrangements are substantially the same, and

(c) the promoter has provided to the client, in a form and manner specified by the Commissioners, prescribed information relating to the reference number that has been notified to the promoter in relation to the proposed notifiable contribution arrangements.

(6) The Commissioners may give notice that, in relation to notifiable contribution arrangements specified in the notice, promoters are not under the duty under paragraph (2) after the date specified in the notice.

Duty of client to notify parties of number

(11A)

(1) This regulation applies where a person (a “client”) to whom a person who is a promoter in relation to notifiable contribution arrangements or a notifiable contribution proposal is providing (or has provided) services in connection with the notifiable contribution arrangements or notifiable contribution proposal receives prescribed information relating to the reference number allocated to—

(a) the notifiable contribution arrangements,

(b) the notifiable contribution proposal, or

(c) proposed notifiable arrangements, or notifiable arrangements, which are substantially the same as the notifiable contribution proposal or notifiable contribution arrangements.

(2) The client must, within the prescribed period , provide prescribed information relating to the reference number to any other person—

(a) who the client might reasonably be expected to know is or is likely to be a party to the arrangements or proposed arrangements, and

(b) who might reasonably be expected to gain an advantage by reason of the arrangements or proposed arrangements.

(3) The Commissioners may give notice that, in relation to notifiable contribution arrangements or a notifiable contribution proposal specified in the notice, persons are not under the duty under paragraph (2) after the date specified in the notice.

(4) The duty under paragraph (2) does not apply in prescribed circumstances.

Section 15 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

(1) Regulation 12 (duty of parties to notifiable contribution arrangements to notify the Commissioners of number, etc.) is amended as follows.

(2) In paragraph (1)(a) for “under regulation 10 by the Commissioners or under regulation 11 by the promoter” substitute “, whether the reference number was allocated under regulation 10 or section 311”.

(3) Insert at the end—

(3) The Commissioners may give notice that, in relation to notifiable contribution arrangements specified in the notice, persons are not under the duty under paragraph (1) after the date specified in the notice.

Section 16 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

After regulation 12 insert—

Pre-disclosure enquiry

(12A)

(1) Where the Commissioners suspect that a person (P) is the promoter of a proposal which may be a notifiable contribution proposal or arrangements which may be notifiable contribution arrangements, they may by written notice require P to state—

(a) whether in P’s opinion the proposal or arrangements are notifiable by P, and

(b) if not, the reasons for P’s opinion.

(2) A notice must specify the proposal or arrangements to which it relates.

(3) For the purpose of paragraph (1)(b)—

(a) it is not sufficient to refer to the fact that a lawyer or other professional has given an opinion,

(b) the reasons must show, by reference to this Part and the Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2006 as modified by these Regulations why P thinks the proposal or arrangements are not notifiable by P, and

(c) in particular, if P asserts that the arrangements do not fall within any description prescribed by the Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2006 as modified by these Regulations, the reasons must provide sufficient information to enable the Commissioners to confirm the assertion.

(4) P must comply with a requirement under or by virtue of paragraph (1) within—

(a) the prescribed period, or

(b) such longer period as the Commissioners may direct.

Reasons for non-disclosure: supporting information

(12B)

(1) Where the Commissioners receive from a person (P) a statement of reasons why a proposal or arrangements are not notifiable by P, the Commissioners may apply to the Special Commissioners for an order requiring P to provide specified information or documents in support of the reasons.

(2) P must comply with a requirement under or by virtue of paragraph (1) within—

(a) the prescribed period, or

(b) such longer period as the Commissioners may direct .

(3) The power under paragraph (1)—

(a) may be exercised more than once, and

(b) applies whether or not the statement of reasons was received under regulation 12A(1)(b).

Order to disclose

(12C)

(1) The Commissioners may apply to the Special Commissioners for an order that—

(a) a proposal is a notifiable contribution proposal, or

(b) arrangements are notifiable contribution arrangements.

(2) An application must specify—

(a) the proposal or arrangements in respect of which the order is sought, and

(b) the promoter.

(3) On an application the Special Commissioners may make the order only if satisfied that regulation 5 applies to the relevant arrangements and that they are within a description prescribed by the Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2006 as modified by these Regulations.

Section 17 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

For regulation 13 (information to be provided in form and manner specified by Commissioners) substitute—

Information to be provided in form and manner specified by Commissioners

(13)

(1) The Commissioners may specify the form and manner in which information required to be provided by any of the information provisions must be provided if the provision is to be complied with.

(2) The “information provisions” are regulations 7(1) and (3), 8(1), 9, 11(2), 11A(2) and 12(1) and the Information Regulations.

Special Commissioners: procedure

(13A) Sections 56B to 56D of the Taxes Management Act 1970 (procedure) shall apply (with any necessary modifications) to applications under this Part as to appeals.

Section 18 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

In the title to Part 3 after “section 98C” insert “and section 118(2)”.

Section 19 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

(1) Regulation 14 (notification under Part 2) is amended as follows.

(2) In paragraph (1) for “regulations 4 to 12” substitute “Part 2”.

(3) In paragraph (2)—

(a) omit “or” at the end of sub-paragraph (c),

(b) in sub-paragraph (d) for “regulation 11(1)” substitute “regulation 11(2)”, and

(c) after sub-paragraph (d) insert—

(e) regulation 11A(2) (duty of client to notify parties of reference number), and

(f) regulations 12A and 12B (duty of promoter to respond to inquiry).

(4) After paragraph (2) insert—

(2A) Where a failure to comply with a provision mentioned in paragraph (2) concerns a proposal or arrangements in respect of which an order has been made under regulation 5A (doubt as to notifiability), the amount specified in paragraph (1)(b) shall be increased to the sum prescribed by the Tax Avoidance Schemes (Penalty) Regulations 2007 as modified by these Regulations.

(2B) Where a failure to comply with a provision mentioned in paragraph (2) concerns a proposal or arrangements in respect of which an order has been made under regulation 12C (order to disclose), the amount specified in paragraph (1)(b) shall be increased to the sum prescribed by the Tax Avoidance Schemes (Penalty) Regulations 2007 as modified by these Regulations in relation to the days falling after the prescribed period.

(2C) The making of an order under regulation 12C does not of itself mean that, for the purposes of regulation 14A, a person either did or did not have a reasonable excuse for non-compliance before the order was made.

(2D) Where an order is made under regulation 12C then for the purposes of regulation 14A—

(a) the person identified in the order as the promoter of the proposal or arrangements cannot, in respect of any time after the end of the period mentioned in paragraph (2B), rely on doubt as to notifiability as an excuse for failure to comply with regulation 7, and

(b) any delay in compliance with that regulation after the end of that period is unreasonable unless attributable to something other than doubt as to notifiability.

(5) In paragraph (3) after “etc.)” insert “or the Information Regulations”.

(6) In paragraph (4) after “regulation 12”, in both places it occurs, insert “or the Information Regulations”.

(7) In paragraph (5) after “notifiable contribution arrangements” insert “which fall within any description prescribed by the Tax Avoidance (Prescribed Descriptions of Arrangements) Regulations 2006 as modified by these Regulations”

Section 20 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

After regulation 14 insert—

Interpretation

(14A) For the purposes of this Part—

(a) a person shall be deemed not to have failed to do anything required to be done within a limited time if it was done within such further time, if any, as the Commissioners may have allowed; and

(b) where a person had a reasonable excuse for not doing anything required to be done—

(i) that person shall be deemed not to have failed to do it unless the excuse ceased, and

(ii) after the excuse ceased, that person shall be deemed not to have failed to do it if it was done without unreasonable delay after the excuse had ceased.

Section 21 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

(1) In regulation 16 (modification of the Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2006)—

(a) in paragraph (1) and in the heading to the regulation for “Description” substitute “Descriptions”,

(b) in paragraph (1) for “313” substitute “313B and section 314A ”, and

(c) in paragraph (3) for “description” substitute “descriptions”.

Section 22 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

(1) Regulation 17 (the Tax Avoidance Schemes (Information) Regulations 2004 ) is amended as follows.

(2) In paragraph (1)—

(a) for “313” substitute “313B and section 314A”; and

(b) at the end of paragraph (1) insert “and any reference in those Regulations to section 98C of the Taxes Management Act 1970 shall be construed as a reference to regulation 14.”.

(3) In paragraph (5)—

(a) after “308,” insert “308A,”, and

(b) before paragraph (a) insert—

(za) in paragraph (3B) for “notifiable proposal or arrangements” substitute “notifiable contribution proposal or notifiable contribution arrangements”;

(4) After paragraph (6) insert—

(6A) In regulation 7A (time for providing information under 312A) for “notifiable arrangements”, wherever those words appear, substitute “notifiable contribution arrangements”.

(6B) In regulation 7B (exemption from duty under section 312A) —

(a) for “tax advantage in respect of income tax or capital gains tax” substitute “advantage”, and

(b) for “notifiable arrangements”, wherever those words appear, substitute “notifiable contribution arrangements

(5) In paragraph (7)—

(a) in paragraph (1) of the substituted regulation 8—

(i) in sub-paragraph (a)(i) for “12” substitute “10”, and

(ii) in sub-paragraph (b) at the beginning insert “unless paragraph (1A) applies,”,

(b) after paragraph (1) insert—

(1A) Where—

(a) the advantage which is expected to arise from the notifiable contribution arrangements relates to Class 1A contributions only, and

(b) the transactions which comprise the notifiable contribution arrangements do not give rise to an advantage in relation to tax,

the prescribed time is any time before the date specified in regulation 80(1) of the Social Security (Contributions) Regulations 2001 .

In this paragraph the term “an advantage in relation to tax” shall be construed in accordance with section 318(1).

(c) in paragraph (2) of the substituted regulation 8 after “paragraph (1)(b)” insert “or (1A)”.

Section 23 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

In regulation 18(1) (the Tax Avoidance Schemes (Promoters and Prescribed Circumstances) Regulations 2004 ) for “313” substitute “313B and section 314A”.

Section 24 Amendments to the National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007

After regulation 18 insert—

The Tax Avoidance Schemes (Penalty) Regulations 2007

(19) The Tax Avoidance Schemes (Penalty) Regulations 2007 apply to notifiable contribution arrangements and notifiable contribution proposals as they apply to income tax and any reference in those Regulations to sections 306 to 313B and section 314A shall be construed as a reference to the corresponding provision of these Regulations (see regulation 4(2)) and any reference in those Regulations to section 98C of the Taxes Management Act 1970 shall be construed as a reference to regulation 14.