Legislation – Finance Act 2026

“Liability for things done in the knowledge of deliberate failures to comply

62APayments made in the knowledge of deliberate failures to comply

(1)

This section applies to a person who—

(a)

has made a payment under a construction contract, and

(b)

before making a payment, knew or should have known that a connected party had deliberately failed, or would deliberately fail, to comply with a requirement to—

(i)

deduct a sum under section 61,

(ii)

pay a sum to the Commissioners under section 62, or

(iii)

deduct or pay an amount to His Majesty’s Revenue and Customs under PAYE regulations.

(2)

If this section applies, an officer of Revenue and Customs may determine that the person is liable to pay to the Commissioners an amount equal to 20% of the payment referred to in subsection (1).

(3)

In this section, a “connected party” is

(a)

another party to the construction contract referred to in subsection (1)(a), or

(b)

a party to another construction contract relating to the same construction operations as the construction contract referred to in subsection (1)(a).

62BReturns made in the knowledge of deliberate failures to comply

(1)

This section applies to a person who—

(a)

makes a return which treats a sum as deducted and paid on account of the person’s liabilities under section 62(2) or (3), and

(b)

before doing so, knew or should have known that the sum—

(i)

had not been deducted, or

(ii)

had deliberately not been, or would deliberately not be, paid on account of the person’s liabilities.

(2)

If this section applies, an officer of Revenue and Customs may determine that the person is liable to pay to the Commissioners an amount equal to the sum which the return treats as paid on account of the person’s liabilities.

62CRegulations

The Commissioners may make regulations with respect to the determination, collection and recovery of amounts described in sections 62A(2) and 62B(2).”.

“72APenalties: deliberate failures to comply

(1)

A person is liable to a penalty not exceeding 30% of any amount that they are determined to be liable to pay under section 62A (payments made in the knowledge of deliberate failures to comply) or 62B (returns made in the knowledge of deliberate failures to comply).

(2)

A penalty under this section may not be determined more than three years after the date on which the determination under section 62A or 62B becomes final.

(3)

For the purposes of subsection (2) and section 72B(3), a determination becomes final at the time when the period for any appeal or further appeal relating to the determination expires or, if later, when any appeal or final appeal relating to the penalty is finally determined.

(4)

Section 103(4) TMA 1970 (time limits) does not apply to a penalty under this section.

72BPenalties under section 72A: officers’ liability

(1)

Where—

(a)

a company is liable to a penalty under section 72A, and

(b)

the actions of the company which give rise to that liability were attributable to an officer of the company,

the officer is liable to pay such portion of the penalty (which may be equal to or less than 100%) as the Commissioners may specify in a notice given to the officer (a “decision notice”).

(2)

Before giving the officer a decision notice, the Commissioners must—

(a)

inform the officer that they are considering doing so, and

(b)

afford the officer the opportunity to make representations about whether a decision notice should be given or the portion that should be specified.

(3)

A decision notice—

(a)

may not be given before the amount of the penalty due from the company has been determined (but it may be given immediately after that has happened), and

(b)

may not be given more than three years after the date on which the determination mentioned in section 72A(1) becomes final.

(4)

Where the Commissioners have specified a portion of the penalty in a decision notice given to the officer—

(a)

the officer must pay the specified portion before the end of the period of 30 days beginning with the day on which the notice is given,

(b)

the specified portion shall be recoverable as if it were tax due from the officer, and

(c)

a further decision notice may be given in respect of a portion of any additional penalty for which the company is determined to be liable.

(5)

The Commissioners may not recover more than 100% of the penalty through issuing decision notices in relation to two or more persons.

(6)

A person is not liable to pay an amount by virtue of this section if the actions of the company concerned are attributable to the person by reference to conduct for which the person has been convicted of an offence.

In this subsection “conduct” includes omissions.

(7)

In this section and section 72C—

“company” means a body corporate or unincorporated association;

“officer” means—

(a)

in relation to a body corporate other than one whose affairs are managed by its members—

1. (i)

   a director, manager, secretary or other similar officer of the body, or a person purporting to act in such a capacity, or

2. (ii)

   a shadow director within the meaning of section 251 of the Companies Act 2006;

(b)

in relation to a limited liability partnership or other body corporate whose affairs are managed by its members—

1. (i)

   a member who exercises management functions with respect to it, or purports to do so, or

2. (ii)

   in the case of a limited liability partnership, a shadow member;

(c)

in relation to an unincorporated association, a person who exercises functions of management with respect to it, or purports to do so;

“shadow member” means a person in accordance with whose directions or instructions the members of a limited liability partnership are accustomed to act, save that a person is not a shadow member by reason only of the fact that the members act on advice given by that person in a professional capacity.

72CAppeals in relation to a decision notice under section 72B

(1)

An officer may appeal—

(a)

the decision to give a decision notice under section 72B, including on the grounds that the company is not liable to the penalty under section 72A to which the decision notice relates;

(b)

the amount of the specified portion.

(2)

Notice of an appeal must—

(a)

state the ground of appeal, and

(b)

be given in writing to HMRC before the end of the period of 30 days beginning with the day on which the decision notice was given to the officer.

(3)

The provisions of Part 5 of TMA 1970 relating to appeals have effect in relation to appeals under this section as they have effect in relation to an appeal against an assessment to income tax.”

“(4)

In this Chapter “the Commissioners” means the Commissioners for His Majesty’s Revenue and Customs.”.

“Determination of amounts payable as a result of things done in the knowledge of deliberate failures to comply and appeal against determination13A.

(1)

This regulation applies if a determination is made under section 62A(2) (payments made in the knowledge of deliberate failures to comply) or 62B(2) (returns made in the knowledge of deliberate failures to comply) of the Act.

(2)

An officer of Revenue and Customs must serve notice of the determination on the person to whom it relates.

(3)

The determination may cover one or more amounts the person is liable to pay under section 62A(2) or 62B(2) of the Act.

(4)

The determination is subject to Parts 4, 5, 5A and 6 of TMA (assessment, appeals, collection and recovery) as if—

(a)

the determination were an assessment, and

(b)

the amount determined were income tax charged on the person,

and those Parts of that Act apply accordingly with any necessary modifications, except that the amount determined is due and payable 14 days after the determination is made.”