Finance Bill Tracking Service 2010 | Budget 2010

BN69 REVIEW OF HMRC POWERS, DETERRENTS AND SAFEGUARDS: EXCISE MODERNISATION AND COMPLIANCE CHECKS

Who is likely to be affected?

1. Businesses and individuals involved with excise duties on alcohol, tobacco, energy products, gambling duties and air passenger duty.

General description of the measure

2. This measure will update the compliance checking framework for excise duties, including:

•    modernising information and inspection powers; and

•    aligning the record-keeping rules and the time limits for assessments and claims with changes made to other taxes and duties.

3. The Government intends to legislate this measure in a Finance Bill to be introduced as soon as possible in the next Parliament.

Operative date

4. Time limits for making assessments and claims need a transitional period and are not expected to become fully operative before 1 April 2012.

5. Treasury Orders will bring the changes into effect and specify the operative date. The record-keeping changes and amendments to information and inspection powers are expected to have effect from 1 April 2011.

Current law and proposed revisions

Record-keeping

6. The current legislation in the Customs and Excise Management Act 1979 (CEMA) on excise record-keeping is now slightly out of step with the other taxes. This will be changed so that the high-level rules for record-keeping are aligned across all taxes and duties. It will not change the detailed rules on what information needs to be kept.

7. The existing information and inspection powers in CEMA will be updated, as in the table below:

Existing Power Elements of proposal that are new, aligned
or unchanged
To enter premises A new element that would permit inspection of
of revenue traders documents.
To enter premises A new power to inspect documents is included.
of those thought to
be acting as
revenue traders
To enter premises Clarification that the existing powers include the
used by a revenue power to enter premises used by a revenue
trader trader, even if those premises are owned by
another.
To make No change.
unannounced visits
Prohibition of This is current practice but is now made explicit.
inspection of wholly
private premises
Application for a The power exists but would be extended to
warrant to search search for documents required to accompany
(section 161A) the goods.
Information from This is new and would allow HM Revenue &
those who may Customs (HMRC) to seek information from other
hold relevant parties such as banks. Safeguards would be a
information formal notice requirement, pre-authorised by a
tribunal.

Time Limits

8. As time limits across other taxes and duties have been aligned in recent years, excise is now out of step. The standard time limit for making claims and assessments will be increased from three to four years. The extended 20 year time limit for deliberate underpayment of excise duty will be retained but the terminology used to describe the behaviours subject to it will be aligned with recent penalties legislation.

Further advice

9. This measure was the subject of consultations published in July and December 2009. Draft legislation was published in January 2010. A summary of responses and a final Impact Assessment have been published today on the HMRC website.

10. The proposals in the July 2009 consultation document for modernising some aspects of the excise administrative regime will be taken forward separately.

11. If you have any questions about this change, please send an email to powers.review-of-hmrc@hmrc.gsi.gov.uk or contact Maria Richards on 020 7147 3223. Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk