Finance Act 1994 (c. 9)

(The document as of February, 2008)

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52 Liability to pay tax

(1) Tax shall be payable by the person who is the insurer in relation to the contract under which the premium is received.

(2) Subsection (1) above shall have effect subject to any regulations made under section 65 below.

Administration

53 Registration of insurers

(1) A person who--

(a) receives, as insurer, premiums in the course of a taxable business, and

(b) is not registered,

is liable to be registered.

(2) A person who--

(a) at any time forms the intention of receiving, as insurer, premiums in the course of a taxable business, and

(b) is not already receiving, as insurer, premiums in the course of another taxable business,

shall notify the Commissioners of those facts.

(3) A person who at any time--

(a) ceases to have the intention of receiving, as insurer, premiums in the course of a taxable business, and

(b) has no intention of receiving, as insurer, premiums in the course of another taxable business,

shall notify the Commissioners of those facts.

(4) Where a person is liable to be registered by virtue of subsection (1) above the Commissioners shall register him with effect from the time when he begins to receive premiums in the course of the business concerned; and it is immaterial whether or not he notifies the Commissioners under subsection (2) above.

(5) Where a person--

(a) notifies the Commissioners under subsection (3) above,

(b) satisfies them of the facts there mentioned, and

(c) satisfies them that no tax is unpaid in respect of premiums received in the course of any taxable business concerned,

the Commissioners shall cancel his registration with effect from the earliest practicable time after he ceases to receive, as insurer, premiums in the course of any taxable business.

(6) For the purposes of this section regulations may make provision--

(a) as to the time within which a notification is to be made;

(b) as to the circumstances in which premiums are to be taken to be received in the course of a taxable business;

(c) as to the form and manner in which any notification is to be made and as to the information to be contained in or provided with it;

(d) requiring a person who has made a notification to notify the Commissioners if any information contained in or provided in connection with it is or becomes inaccurate;

(e) as to the correction of entries in the register.

(7) References in this section to receiving premiums are to receiving premiums on or after 1st October 1994.

54 Accounting for tax and time for payment

Regulations may provide that a registrable person shall--

(a) account for tax by reference to such periods (accounting periods) as may be determined by or under the regulations;

(b) make, in relation to accounting periods, returns in such form as may be prescribed and at such times as may be so determined;

55 Credit

(1) Regulations may provide that where an insurer has paid tax and all or part of the premium is repaid, the insurer shall be entitled to credit of such an amount as is found in accordance with prescribed rules.

(2) Regulations may provide that where--

(a) by virtue of regulations made under section 68 below tax is charged in relation to a premium which is shown in the accounts of an insurer as due to him,

(b) that tax is paid, and

(c) it is shown to the satisfaction of the Commissioners that the premium, or part of it, will never actually be received by or on behalf of the insurer,

the insurer shall be entitled to credit of such an amount as is found in accordance with prescribed rules.

(3) Regulations may make provision as to the manner in which an insurer is to benefit from credit, and in particular may make provision--

(a) that an insurer shall be entitled to credit by reference to accounting periods;

(b) that an insurer shall be entitled to deduct an amount equal to his total credit for an accounting period from the total amount of tax due from him for the period;

(c) that if no tax is due from an insurer for an accounting period but he is entitled to credit for the period, the amount of the credit shall be paid to him by the Commissioners;

(d) that if the amount of credit to which an insurer is entitled for an accounting period exceeds the amount of tax due from him for the period, an amount equal to the excess shall be paid to him by the Commissioners;

(e) for the whole or part of any credit to be held over to be credited for a subsequent accounting period;

(f) as to the manner in which a person who has ceased to be registrable is to benefit from credit.

(4) Regulations under subsection (3)(c) or (d) above may provide that where at the end of an accounting period an amount is due to an insurer who has failed to submit returns for an earlier period as required by this Part, the Commissioners may withhold payment of the amount until he has complied with that requirement.

(5) Regulations under subsection (3)(e) above may provide for credit to be held over either on the insurer's application or in accordance with general or special directions given by the Commissioners from time to time.

(6) Regulations may provide that--

(a) no deduction or payment shall be made in respect of credit except on a claim made in such manner and at such time as may be determined by or under regulations;

(b) payment in respect of credit shall be made subject to such conditions (if any) as the Commissioners think fit to impose, including conditions as to repayment in specified circumstances;

(c) deduction in respect of credit shall be made subject to such conditions (if any) as the Commissioners think fit to impose, including conditions as to the payment to the Commissioners, in specified circumstances, of an amount representing the whole or part of the amount deducted.

(7) Regulations may require a claim by an insurer to be made in a return required by provision made under section 54 above.

(8) Regulations may provide that where--

(a) all or any of the tax payable in respect of a premium has not been paid, and

(b) the circumstances are such that a person would be entitled to credit if the tax had been paid,

prescribed adjustments shall be made as regards any amount of tax due from any person.

56 Power to assess

(1) In a case where--

(a) a person has failed to make any returns required to be made under this Part,

(b) a person has failed to keep any documents necessary to verify returns required to be made under this Part,

(d) it appears to the Commissioners that returns required to be made by a person under this Part are incomplete or incorrect,

the Commissioners may assess the amount of tax due from the person concerned to the best of their judgment and notify it to him.

(2) Where a person has for an accounting period been paid an amount to which he purports to be entitled under regulations made under section 55 above, then, to the extent that the amount ought not to have been paid or would not have been paid had the facts been known or been as they later turn out to be, the Commissioners may assess the amount as being tax due from him for that period and notify it to him accordingly.

(3) Where a person is assessed under subsections (1) and (2) above in respect of the same accounting period the assessments may be combined and notified to him as one assessment.

(4) Where the person failing to make a return, or making a return which appears to the Commissioners to be incomplete or incorrect, was required to make the return as a personal representative, trustee in bankruptcy, trustee in sequestration, receiver, liquidator or person otherwise acting in a representative capacity in relation to another person, subsection (1) above shall apply as if the reference to tax due from him included a reference to tax due from that other person.

(5) An assessment under subsection (1) or (2) above of an amount of tax due for an accounting period shall not be made after the later of the following--

(a) two years after the end of the accounting period;

(b) one year after evidence of facts, sufficient in the Commissioners' opinion to justify the making of the assessment, comes to their knowledge;

but where further such evidence comes to their knowledge after the making of an assessment under subsection (1) or (2) above another assessment may be made under the subsection concerned in addition to any earlier assessment.

(6) In a case where--

(a) as a result of a person's failure to make a return for an accounting period the Commissioners have made an assessment under subsection (1) above for that period,

(b) the tax assessed has been paid but no proper return has been made for the period to which the assessment related, and

(c) as a result of a failure to make a return for a later accounting period, being a failure by the person referred to in paragraph (a) above or a person acting in a representative capacity in relation to him, as mentioned in subsection (4) above, the Commissioners find it necessary to make another assessment under subsection (1) above,

then, if the Commissioners think fit, having regard to the failure referred to in paragraph (a) above, they may specify in the assessment referred to in paragraph (c) above an amount of tax greater than that which they would otherwise have considered to be appropriate.

(7) Where an amount has been assessed and notified to any person under subsection (1) or (2) above it shall be deemed to be an amount of tax due from him and may be recovered accordingly unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced.

(8) For the purposes of this section notification to--

(a) a personal representative, trustee in bankruptcy, trustee in sequestration, receiver or liquidator, or

(b) a person otherwise acting in a representative capacity in relation to another person,

shall be treated as notification to the person in relation to whom the person mentioned in paragraph (a) above, or the first person mentioned in paragraph (b) above, acts.

Tax representatives

57 Tax representatives

(1) Where at any time (a relevant time) a person who is an insurer--

(a) is registered, or liable to be registered, under section 53 above, and

(b) does not have any business establishment or other fixed establishment in the United Kingdom,

this section shall have effect with a view to securing that another person is the insurer's tax representative at that time.

(2) If, at the time the insurer first falls within subsection (1) above, the insurer has a representative fulfilling the requirements of section 10 of the [1982 c. 50.] Insurance Companies Act 1982--

(a) the Commissioners shall be taken to approve that person at that time as the insurer's tax representative, and

(b) that person shall be the insurer's tax representative at any relevant time falling after the time mentioned in paragraph (a) above and before the Commissioners' approval is withdrawn.

(3) If, at the time the insurer first falls within subsection (1) above, the insurer does not have a representative fulfilling the requirements of section 10 of the Insurance Companies Act 1982, the insurer shall take action as mentioned in subsection (4) below.

(4) The insurer takes action as mentioned in this subsection if--

(a) he requests the Commissioners to approve a particular person as his tax representative, and

(b) the request is made with a view to securing that a person approved by the Commissioners becomes the insurer's tax representative within the relevant period.

(5) If the Commissioners approve a person as the insurer's tax representative in a case where action has been taken as mentioned in subsection (4) above, that person shall be the insurer's tax representative at any relevant time falling after the Commissioners' approval is given and before their approval is withdrawn.

(6) Subsection (7) below applies where the Commissioners believe that the revenue would not be sufficiently protected if--

(a) a person were to become the insurer's tax representative by virtue of subsection (2) above, or

(b) a person who by virtue of any of the provisions of this section is the insurer's tax representative were to continue to be so.

(7) If the Commissioners require the insurer to take action as mentioned in subsection (4) above the insurer shall comply with that requirement.

(8) In a case where--

(a) a person is the insurer's tax representative,

(b) the insurer withdraws his agreement that that person should act as his tax representative, or that person withdraws his agreement to act as the insurer's tax representative, or the insurer and that person agree that that person should no longer be the insurer's tax representative, and

the Commissioners shall be taken to have withdrawn their approval of that person at the time they inform the insurer that they have received the notification, and that person shall cease at that time to be the insurer's tax representative.

(9) Where subsection (8) above applies the insurer shall take action as mentioned in subsection (4) above.

(10) If at any time after the insurer first falls within subsection (1) above--

(a) the insurer (otherwise than in pursuance of a duty under subsection (3), (7) or (9) above) requests the Commissioners to approve a particular person as his tax representative, and

(b) the Commissioners approve that person,

that person shall be the insurer's tax representative at any relevant time falling after the Commissioners' approval is given and before their approval is withdrawn.

(11) The Commissioners may at any time direct that a person who is an agent of the insurer and is specified in the direction shall be the insurer's tax representative; and--

(a) the direction shall be taken to signify the Commissioners' approval of that person as the insurer's tax representative;

(b) that person shall be the insurer's tax representative at any relevant time falling after the Commissioners' direction is made and before their approval is withdrawn;

(d) subsection (8) above shall not apply in the case of the person specified in the direction.

(12) Where the Commissioners approve a person under this section as the insurer's tax representative--

(a) at the time the approval is given they shall be taken to withdraw their approval of any person who was the insurer's tax representative immediately before the approval was given, and

(b) that person shall cease at that time to be the insurer's tax representative.

(13) The fact that a person ceases to be an insurer's tax representative shall not prevent his subsequent approval under this section.

(14) The Commissioners may not withdraw their approval of a person as a tax representative except by virtue of subsection (8) or (12) above.

(15) Regulations may make provision as to the time at which--

(a) the Commissioners' approval is to be treated as given in a case where action has been taken as mentioned in subsection (4) above or a request has been made as mentioned in subsection (10) above;

(b) the Commissioners are to be taken to inform the insurer under subsection (8) above;

(16) The relevant period for the purposes of subsection (4) above is--

(a) where subsection (4) above applies by virtue of subsection (3) above, the period of 30 days beginning with the day on which the insurer first falls within subsection (1) above;

(b) where subsection (4) above applies by virtue of subsection (7) above, the period of 30 days beginning with the day on which the requirement mentioned in subsection (7) above is made;

(c) where subsection (4) above applies by virtue of subsection (9) above, the period of 30 days beginning with the day on which the person mentioned in subsection (8) above ceases to be the insurer's tax representative;

but if in any case the Commissioners allow a longer period than that found under paragraphs (a) to (c) above, the relevant period is that longer period.

58 Rights and duties of tax representatives

(1) Where a person is an insurer's tax representative at any time, the tax representative--

(a) shall be entitled to act on the insurer's behalf for the purposes of legislation relating to insurance premium tax,

(b) shall secure (where appropriate by acting on the insurer's behalf) the insurer's compliance with and discharge of the obligations and liabilities to which the insurer is subject by virtue of legislation relating to insurance premium tax (including obligations and liabilities arising before the person became the insurer's tax representative), and

(c) shall be personally liable in respect of any failure to secure the insurer's compliance with or discharge of any such obligation or liability, and in respect of anything done for purposes connected with acting on the insurer's behalf,

as if the obligations and liabilities imposed on the insurer were imposed jointly and severally on the tax representative and the insurer.

(2) A tax representative shall not be liable by virtue of subsection (1) above himself to be registered under this Part, but regulations may--

(a) require the registration of the names of tax representatives against the names of the insurers in any register kept under this Part;

(b) make provision for the deletion of the names of persons who cease to be tax representatives.

(3) A tax representative shall not by virtue of subsection (1) above be guilty of any offence except in so far as--

(a) the tax representative has consented to, or connived in, the commission of the offence by the insurer,

(b) the commission of the offence by the insurer is attributable to any neglect on the part of the tax representative, or

(c) the offence consists in a contravention by the tax representative of an obligation which, by virtue of that subsection, is imposed both on the tax representative and on the insurer.

(4) Subsection (1)(b) above shall have effect subject to such provisions as may be made by regulations.

Review and appeal

59 Review of Commissioners' decisions

(1) This section applies to any decision of the Commissioners with respect to any of the following matters--

(a) the registration or cancellation of registration of any person under this Part;

(b) whether tax is chargeable in respect of a premium or how much tax is chargeable;

(c) whether a person is entitled to credit by virtue of regulations under section 55 above or how much credit a person is entitled to or the manner in which he is to benefit from credit;

(d) an assessment under section 56 above or the amount of such an assessment;

(e) any refusal of an application under section 63 below;

(f) whether a notice may be served on a person by virtue of regulations made under section 65 below;

(g) an assessment under regulations made under section 65 below or the amount of such an assessment;

(h) whether a scheme established by regulations under section 68 below applies to an insurer as regards an accounting period;

(i) the requirement of any security under paragraph 24 of Schedule 7 to this Act or its amount;

(j) any liability to a penalty under paragraphs 12 to 19 of Schedule 7 to this Act;

(k) the amount of any penalty or interest specified in an assessment under paragraph 25 of Schedule 7 to this Act;

(l) a claim for the repayment of an amount under paragraph 8 of Schedule 7 to this Act;

(m) any liability of the Commissioners to pay interest under paragraph 22 of Schedule 7 to this Act or the amount of the interest payable.

(2) Any person who is or will be affected by any decision to which this section applies may by notice in writing to the Commissioners require them to review the decision.

(3) The Commissioners shall not be required under this section to review any decision unless the notice requiring the review is given before the end of the period of 45 days beginning with the day on which written notification of the decision, or of the assessment containing the decision, was first given to the person requiring the review.

(4) For the purposes of subsection (3) above it shall be the duty of the Commissioners to give written notification of any decision to which this section applies to any person who--

(a) requests such a notification,

(b) has not previously been given written notification of that decision, and

(5) A person shall be entitled to give a notice under this section requiring a decision to be reviewed for 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 certain facts or other matters, and

(b) he does not, on the further review, require the Commissioners to consider any facts or matters which were considered on a previous review except in so far as they are relevant to any issue not previously considered.

(6) Where the Commissioners are required in accordance with this section to review any decision, it shall be their duty to do so; and on the review they may withdraw, vary or confirm the decision.

(7) In a case where--

(a) it is the duty under this section of the Commissioners to review any decision, and

(b) they do not, within the period of 45 days beginning with the day on which the review was required, give notice to the person requiring it of their determination on the review,

they shall be assumed for the purposes of this Part to have confirmed the decision.

(8) The Commissioners shall not by virtue of any requirement under this section to review a decision have any power, apart from their power in pursuance of paragraph 13 of Schedule 7 to this Act, to mitigate the amount of any penalty imposed under this Part.

60 Appeals

(1) Subject to the following provisions of this section, an appeal shall lie to an appeal tribunal with respect to any of the following decisions--

(a) any decision by the Commissioners on a review under section 59 above (including a deemed confirmation under subsection (7) of that section);

(b) any decision by the Commissioners on such review of a decision referred to in section 59(1) above as the Commissioners have agreed to undertake in consequence of a request made after the end of the period mentioned in section 59(3) above.

(2) Without prejudice to paragraph 13 of Schedule 7 to this Act, nothing in subsection (1) above shall be taken to confer on a tribunal any power to vary an amount assessed by way of penalty or interest except in so far as it is necessary to reduce it to the amount which is appropriate under paragraphs 12 to 21 of that Schedule.

(3) Where an appeal is made under this section by a person who is required to make returns by virtue of regulations under section 54 above, the appeal shall not be entertained unless the appellant--

(a) has made all the returns which he is required to make by virtue of those regulations, and

(b) has paid the amounts shown in those returns as payable by him;

but the restriction in paragraph (b) above shall not apply in the case of an appeal against a decision with respect to the matter mentioned in section 59(1)(i) above.

(4) Where the appeal is against a decision with respect to any of the matters mentioned in paragraphs (b) and (d) of section 59(1) above it shall not be entertained unless--

(a) the amount which the Commissioners have determined to be payable as tax has been paid or deposited with them, or

(b) on being satisfied that the appellant would otherwise suffer hardship the Commissioners agree or the tribunal decides that it should be entertained notwithstanding that that amount has not been so paid or deposited.

(5) Where on an appeal against a decision with respect to any of the matters mentioned in section 59(1)(d) above--

(a) it is found that the amount specified in the assessment is less than it ought to have been, and

(b) the tribunal gives a direction specifying the correct amount,

the assessment shall have effect as an assessment of the amount specified in the direction and that amount shall be deemed to have been notified to the appellant.

(6) Where on an appeal under this section it is found that the whole or part of any amount paid or deposited in pursuance of subsection (4) above is not due, so much of that amount as is found not to be due shall be repaid with interest at such rate as the tribunal may determine.

(7) Where on an appeal under this section it is found that the whole or part of any amount due to the appellant by virtue of regulations under section 55(3)(c) or (d) or (f) above has not been paid, so much of that amount as is found not to have been paid shall be paid with interest at such rate as the tribunal may determine.

(8) Where an appeal under this section has been entertained notwithstanding that an amount determined by the Commissioners to be payable as tax has not been paid or deposited and it is found on the appeal that that amount is due the tribunal may, if it thinks fit, direct that that amount shall be paid with interest at such rate as may be specified in the direction.

(9) On an appeal against an assessment to a penalty under paragraph 12 of Schedule 7 to this Act, the burden of proof as to the matters specified in paragraphs (a) and (b) of sub-paragraph (1) of paragraph 12 shall lie upon the Commissioners.

(10) Sections 25 and 29 of the [1985 c. 54.] Finance Act 1985 (settling of appeals by agreement and enforcement of certain decisions of tribunal) shall have effect as if--

(a) the references to section 40 of the [1983 c. 55.] Value Added Tax Act 1983 included references to this section, and

(b) the references to value added tax included references to insurance premium tax.

61 Review and appeal: commencement

Sections 59 and 60 above shall come into force on such day as may be appointed by order.

Miscellaneous

62 Partnership, bankruptcy, transfer of business, etc

(1) Regulations may make provision for determining by what persons anything required by this Part to be done by an insurer is to be done where the business concerned is carried on in partnership or by another unincorporated body.

(2) The registration under this Part of an unincorporated body other than a partnership may be in the name of the body concerned; and in determining whether premiums are received by such a body no account shall be taken of any change in its members.

(3) Regulations may make provision for determining by what person anything required by this Part to be done by an insurer is to be done in a case where insurance business is carried on by persons who are underwriting members of Lloyd's and are members of a syndicate of such underwriting members.

(4) Regulations may--

(a) make provision for the registration for the purposes of this Part of a syndicate of underwriting members of Lloyd's;

(b) provide that for purposes prescribed by the regulations no account shall be taken of any change in the members of such a syndicate;

and regulations under paragraph (a) above may modify section 53 above.

(5) As regards any case where a person carries on a business of an insurer who has died or become bankrupt or incapacitated or been sequestrated, or of an insurer which is in liquidation or receivership or in relation to which an administration order is in force, regulations may--

(a) require the person to inform the Commissioners of the fact that he is carrying on the business and of the event that has led to his carrying it on;

(b) make provision allowing the person to be treated for a limited time as if he were the insurer;

(6) Regulations may make provision for securing continuity in the application of this Part in cases where a business carried on by a person is transferred to another person as a going concern.

(7) Regulations under subsection (6) above may in particular provide--

(a) for liabilities and duties under this Part of the transferor to become, to such extent as may be provided by the regulations, liabilities and duties of the transferee;

(b) for any right of either of them to repayment or credit in respect of tax to be satisfied by making a repayment or allowing a credit to the other;

but the regulations may provide that no such provision as is mentioned in paragraph (a) or (b) of this subsection shall have effect in relation to any transferor and transferee unless an application in that behalf has been made by them under the regulations.

63 Groups of companies

(1) Where under the following provisions of this section any bodies corporate are treated as members of a group, for the purposes of this Part--

(a) any taxable business carried on by a member of the group shall be treated as carried on by the representative member,

(b) the representative member shall be taken to be the insurer in relation to any taxable insurance contract as regards which a member of the group is the actual insurer,

(c) any receipt by a member of the group of a premium under a taxable insurance contract shall be taken to be a receipt by the representative member, and

(d) all members of the group shall be jointly and severally liable for any tax due from the representative member.

(2) Two or more bodies corporate are eligible to be treated as members of a group if each of them falls within subsection (3) below and--

(a) one of them controls each of the others,

(b) one person (whether a body corporate or an individual) controls all of them, or

(3) A body falls within this subsection if it is resident in the United Kingdom or it has an established place of business in the United Kingdom.

(4) Where an application to that effect is made to the Commissioners with respect to two or more bodies corporate eligible to be treated as members of a group, then--

(a) from the beginning of an accounting period they shall be so treated, and

(b) one of them shall be the representative member,

unless the Commissioners refuse the application; and the Commissioners shall not refuse the application unless it appears to them necessary to do so for the protection of the revenue.

(5) Where any bodies corporate are treated as members of a group and an application to that effect is made to the Commissioners, then, from the beginning of an accounting period--

(a) a further body eligible to be so treated shall be included among the bodies so treated,

(b) a body corporate shall be excluded from the bodies so treated,

(d) the bodies corporate shall no longer be treated as members of a group,

unless the application is to the effect mentioned in paragraph (a) or (c) above and the Commissioners refuse the application.

(6) The Commissioners may refuse an application under subsection (5)(a) or (c) above only if it appears to them necessary to do so for the protection of the revenue.

(7) Where a body corporate is treated as a member of a group as being controlled by any person and it appears to the Commissioners that it has ceased to be so controlled, they shall, by notice given to that person, terminate that treatment from such date as may be specified in the notice.

(8) An application under this section with respect to any bodies corporate must be made by one of those bodies or by the person controlling them and must be made not less than 90 days before the date from which it is to take effect, or at such later time as the Commissioners may allow.

(9) For the purposes of this section a body corporate shall be taken to control another body corporate if it is empowered by statute to control that body's activities or if it is that body's holding company within the meaning of section 736 of the [1985 c. 6.] Companies Act 1985; and an individual or individuals shall be taken to control a body corporate if he or they, were he or they a company, would be that body's holding company within the meaning of that section.

64 Information, powers, penalties, etc

Schedule 7 to this Act (which contains provisions relating to information, powers, penalties and other matters) shall have effect.

65 Liability of insured in certain cases

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