Income Tax PART 1 Citation and Commencement 1 These Regulations may be cited as the Income Tax (Construction Industry Scheme) (Amendment) and the Corporation Tax (Security for Payments) Regulations 2019 and come into force on 6th April 2019. PART 2 Amendment of the Income Tax (Construction Industry Scheme) Regulations 2005 2 The Income Tax (Construction Industry Scheme) Regulations 2005 are amended as follows. 3 In regulation 2 (interpretation), in the definition of “contractor”, before “has” insert “save for the purposes of Part 3A,”. 4 After regulation 17 (in-year repayments of provisional excess credit), insert— PART 3A Security for Payments to HMRC Interpretation 17A In this Part— “C” has the meaning given in regulation 17B, “contractor” for the purposes of this Part excludes the persons named in section 59(1)(b) to (k) of the Act , “HMRC” means Her Majesty’s Revenue and Customs, “PGS” has the meaning given in regulation 17F(1). Prescribed circumstances - requirement for security 17B In circumstances where an officer of Revenue and Customs considers it necessary for the protection of the revenue, that officer may require a person described in regulation 17C(1) to give security for the payment of amounts in respect of which the contractor (“C”) is, or may be, accountable to HMRC under either section 61 (deductions on account of tax from contract payments) of the Act or these Regulations. Prescribed persons from whom security can be required 17C 1 The persons from whom security may be required for the purposes of this Part are— a C, b any of the following in relation to C— i a director, ii a company secretary, iii any other similar officer, iv a scheme representative appointed under regulation 5, v a personal representative of C, or vi any person purporting to act in such a capacity, and c in a case where C is a firm, a partner of the firm. 2 An officer of Revenue and Customs may require— a a person prescribed by paragraph (1) to give security of a specified value in respect of C, and b more than one person prescribed by paragraph (1) to give security of a specified value in respect of C and, where the officer of Revenue and Customs does so require, each person shall be jointly and severally liable to give that security. Notice of requirement 17D 1 An officer of Revenue and Customs must give notice of a requirement for security to each person from whom security is required and the notice must specify— a the value of security to be given, b the manner in which security is to be given, c the date on or before which security is to be given, and d the period of time for which security is required. 2 The notice must include, or be accompanied by, an explanation of— a C’s right to make a request under paragraph 10(1) of Schedule 56 to the Finance Act 2009 (suspension of penalty during currency of agreement for deferred payment), and b the effect of regulation 17E(2) and (3). 3 In a case which falls within regulation 17C(2)(b), the notice must include, or be accompanied by, the names of every other person from whom security is required. 4 The notice may contain such other information as the officer considers necessary. 5 No person shall be treated as having been required to provide security unless HMRC has given notice in accordance with this regulation and regulation 17E(1). Date on which security is due 17E 1 The date specified under regulation 17D(1)(c) may not be earlier than the 30th day after the day on which the notice is given. 2 If, before the date specified under regulation 17D(1)(c), C makes a request under paragraph 10(1) of Schedule 56 to the Finance Act 2009 (suspension of penalty during currency of agreement for deferred payment), the requirement to give security on or before that date does not apply. 3 In a case which falls within paragraph (2), if HMRC does not agree to C’s request, security is to be given on or before the 30th day after the day on which HMRC notifies C of that decision. Application for reduction in the value of security held 17F 1 A person who has given security (“PGS”) may apply to an officer of Revenue and Customs for a reduction in the value of security held by HMRC if— a PGS’s circumstances have changed since the day the security was given because— i of hardship, or ii PGS has ceased to be a person described in regulation 17C(1), or b since the day the security was given there has been a significant change in C’s circumstances such that— i the value of the security specified under regulation 17D(1)(a) exceeds the amount necessary to protect the revenue, or ii security is no longer necessary to protect the revenue. 2 Where regulation 17C(2)(b) applies, any person who has not contributed to the value of the security given may not make an application under paragraph (1). Outcome of application for reduction in the value of security held 17G 1 An officer must inform PGS of the outcome of an application under regulation 17F(1). 2 On receipt of an application under regulation 17F(1)(a), an officer of Revenue and Customs may— a refuse the application, or b reduce the amount of security payable by that PGS, or c withdraw the notice given under 17D(1) to that PGS. 3 On receipt of an application under regulation 17F(1)(b), an officer of Revenue and Customs may— a where the officer considers that the security held remains necessary for the protection of the revenue, refuse the application, or b where the officer considers that security of a lower amount is necessary for the protection of the revenue, inform PGS of the reduced value of security required to be held, or c where the officer considers that a security is no longer necessary for the protection of the revenue, cancel the security. 4 HMRC may make such arrangements as they think fit to ensure the necessary reduction in the value of security held. Outcome of application for reduction in the value of security held: further provision 17H 1 This regulation applies— a in cases which fall within regulation 17C(2)(b), and b where PGS’s application is made under regulation 17F(1)(a). 2 As a consequence of arrangements made under regulation 17G(4), an officer of Revenue and Customs may require by further notice (“further notice”) any other person who was given notice under regulation 17D in relation to the security (“the original security”), or any other person mentioned in regulation 17C(1), to provide security in substitution for the original security. 3 Regulations 17D, 17E and 17I apply in relation to a further notice. Appeals 17I 1 A person who is given notice under regulation 17D may appeal against the notice or any requirement in it. 2 PGS may appeal against— a the rejection by an officer of Revenue and Customs of an application under regulation 17F(1), or b a smaller reduction in the value of security held than PGS had applied for. 3 Notice of an appeal under this regulation must be given— a before the end of the period of 30 days beginning with— i in the case of an appeal under paragraph (1), the day after the day on which the notice was given, and ii in the case of an appeal under paragraph (2), the day after the day on which PGS was notified of the outcome of the application, and b to the officer of Revenue and Customs by whom the notice was given or the decision on the application was made, as the case may be. 4 Notice of appeal under this regulation must state the grounds of appeal. 5 On an appeal under paragraph (1) that is notified to the tribunal, the tribunal may— a confirm the requirements in the notice, b vary the requirements in the notice, or c set aside the notice. 6 On an appeal under paragraph (2) that is notified to the tribunal, the tribunal may— a confirm the decision on the application, or b vary the decision on the application. 7 On the final determination of an appeal under this regulation— a any security to be given is due on the 30th day after the day on which the determination is made, subject to any alternative determination by a tribunal or other court, or b HMRC may make such arrangements as it sees fit to ensure the necessary reduction in the value of security held. 8 An appeal under this regulation is subject to the provisions of Part 5 of the Taxes Management Act (appeals and other proceedings) apart from— a section 46D (questions to be determined by the relevant tribunal), b section 47B (special jurisdiction relating to business expansion scheme), c section 50(6) to (9) (procedure), and d sections 54A to 57. Appeals: further provision for cases which fall within regulation 17E(2) 17J In a case which falls within regulation 17E(2), if the request mentioned in that provision is made before an appeal under regulation 17I(1), regulation 17I(3)(a)(i) applies as if the words “the day after the day on which the notice was given” were “the day after the day on which HMRC notifies C of its decision”. Offence 17K For the purposes of section 70A(4) (security for payments to HMRC) of the Act— a in relation to a requirement for security under a notice given under regulation 17D, the prescribed period is the period which starts with the day the notice is given and ends with— i the first day after the date specified under regulation 17D(1)(c), or ii in a case which falls within regulation 17E(2), the first day after the date determined under regulation 17E(3), b in relation to a requirement for security under a further notice, the prescribed period is the period which starts with the day the further notice is given and ends with— i the first day after the date specified under regulation 17D(1)(c) as it applies in relation to the further notice, or ii in a case which falls within regulation 17E(2), the first day after the date determined under regulation 17D(3) as it applies in relation to the further notice, and c in relation to a requirement for security to which regulation 17I(7)(a) applies, the prescribed period is the period which starts with the day the determination is made and ends with the first day after— i the day the tribunal or court determines to be the day that the security is to be given, or ii the day determined in accordance with that regulation, as the case may be. . PART 3 Corporation Tax Interpretation 5 In regulations 6 to 14 — “C” has the meaning given in regulation 6 , “HMRC” means Her Majesty’s Revenue and Customs, “PGS” has the meaning given in regulation 10(1) . Prescribed circumstances - requirement for security 6 In circumstances where an officer of Revenue and Customs considers it necessary for the protection of the revenue, that officer may require a person described in regulation 7(1) to give security for the payment of tax which a company (“C”) is or may become liable to pay. Prescribed persons from whom security may be required 7 1 The persons from whom security may be required are— a C, b any of the following in relation to C— i a director, ii a company secretary, iii any other similar officer, or iv any person purporting to act in such a capacity. 2 An officer of Revenue and Customs may require— a a person prescribed by paragraph (1) to give security of a specified value in respect of C, or b more than one person prescribed by paragraph (1) to give security of a specified value in respect of C and, where the officer of Revenue and Customs does so require, each person shall be jointly and severally liable to give that security. Notice of requirement 8 1 An officer of Revenue and Customs must give notice of a requirement for security to each person from whom security is required and the notice must specify— a the value of the security to be given, b the manner in which the security is to be given, c the date on or before which security is to be given, and d the period of time for which security is required. 2 In a case which falls within regulation 7(2)(b) , the notice must include, or be accompanied by, the names of every other person from whom security is required. 3 The notice may contain such other information as the officer considers necessary. 4 No person shall be treated as having been required to provide security unless HMRC has given notice in accordance with this regulation and regulation 9 . Date on which security is due 9 The date specified under regulation 8(1)(c) may not be earlier than the 30th day after the day on which the notice is given. Application for reduction in the value of security held 10 1 A person who has given security (“PGS”) may apply to an officer of Revenue and Customs for a reduction in the value of security held by HMRC if— a PGS’ circumstances have changed since the day the security was given because— i of hardship, or ii PGS has ceased to be a person described in regulation 7(1) , or b since the day the security was given there has been a significant change in C’s circumstances such that— i the value of the security specified under regulation 8(1)(a) exceeds the amount necessary to protect the revenue, or ii security is no longer necessary to protect the revenue. 2 Where regulation 7(2)(b) applies, any person who has not contributed to the value of the security given may not make an application under paragraph (1). Outcome of application for reduction in the value of security held 11 1 An officer must inform PGS of the outcome of an application under regulation 10(1) . 2 On receipt of an application under regulation 10(1)(a), an officer of Revenue and Customs may— a refuse the application, or b reduce the amount of security payable by that PGS, or c withdraw the notice given under regulation 7(1) to that PGS. 3 On receipt of an application under regulation 10(1) (b), an officer of Revenue and Customs may— a where the officer considers that the security held remains necessary for the protection of the revenue, refuse the application, or b where the officer considers that security of a lower amount is necessary for the protection of the revenue, inform PGS of the reduced value of security required to be held, or c where the officer considers that a security is no longer necessary for the protection of the revenue, cancel the security. 4 HMRC may make such arrangements as they think fit to ensure the necessary reduction in the value of security held. Outcome of application for reduction in the value of security held: further provision 12 1 This regulation applies— a in cases which fall within regulation 7(2)(b) , and b where PGS’ application is made under regulation 10(1)(a) . 2 As a consequence of arrangements made under regulation 11(4) , an officer of Revenue and Customs may require by further notice (“further notice”) any other person who was given notice under regulation 8(1) in relation to the security (“the original security”), or any other person mentioned in regulation 7(1) , to provide security in substitution for the original security. 3 Regulations 8 , 9 and 13 apply in relation to a further notice. Appeals 13 1 A person who is given notice under regulation 8(1) may appeal against the notice or any requirement in it. 2 PGS may appeal against— a the rejection by an officer of Revenue and Customs of an application under regulation 10(1) , or b a smaller reduction in the value of security held than PGS had applied for. 3 Notice of appeal under this regulation must be given— a before the end of the period of 30 days beginning with— i in the case of an appeal under paragraph (1), the day after the day on which the notice was given, and ii in the case of an appeal under paragraph (2), the day after the day on which PGS was notified of the outcome of the application, and b to the officer of Revenue and Customs by whom the notice was given or the decision on the application was made, as the case may be. 4 Notice of an appeal under this regulation must state the grounds of appeal. 5 On an appeal under paragraph (1) that is notified to the tribunal, the tribunal may— a confirm the requirements in the notice, b vary the requirements in the notice, or c set aside the notice. 6 On an appeal under paragraph (2) that is notified to the tribunal, the tribunal may— a confirm the decision on the application, or b vary the decision on the application. 7 On the final determination of an appeal under this regulation— a any security to be given is due on or before the 30th day after the day on which the determination is made, subject to any alternative determination by a tribunal or court, or b HMRC may make such arrangements as it sees fit to ensure the necessary reduction in the value of security held. 8 An appeal under this regulation is subject to the provisions of Part 5 of the Taxes Management Act 1970 (appeals and other proceedings) apart from— a section 46D (questions to be determined by the relevant tribunal), b section 47B (special jurisdiction relating to business expansion scheme), c section 50(6) to (9) (procedure), and d sections 54A to 57. Offence 14 For the purposes of paragraph 88A(4) of Schedule 18 to the Finance Act 1998 (security for payments)— a in relation to a requirement for security under a notice given under regulation 8(1) , the prescribed period is the period which starts with the day the notice is given and ends with the first day after the date specified in regulation 8(1)(c) , b in relation to a requirement for security under a further notice, the prescribed period is the period which starts with the day the further notice is given and ends with the first day after the date specified in regulation 8(1)(c) as it applies to the further notice, and c in relation to a requirement for security to which regulation 13(7)(a) applies, the prescribed period is the period which starts with the day the determination is made and ends with the first day after— i the day the tribunal or court determines to be the day that the security is to be given, or ii the day determined in accordance with that regulation, as the case may be. Ruth Stanier Justin Holliday Two of the Commissioners for Her Majesty’s Revenue and Customs 27th February 2019