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CLAUSE 15:
EXCISE DUTY (PAYMENTS IN CASE OF ERROR OR DELAY BY COMMISSIONERS)
SUMMARY
1.
This clause and Schedule provide for the payment of compensatory interest
where excise duty has been overpaid or underclaimed as a result of
Customs error or where the repayment of a claim to excise duty has
been unduly delayed. Provision is also made for the repayment of
excise duty, and the payment of compensatory interest, to persons
or businesses incorrectly refused authorisation or approval to obtain
goods relieved of excise duty. The changes will take effect from
a day to be appointed.
DETAILS OF THE CLAUSE
2.
Clause 15 gives effect to Schedule 3 of the Finance Bill.
DETAILS OF THE SCHEDULE
3.
Paragraph 1 allows the Commissioners to pay to a person an
amount equal to, or which appears to them to be equal to, the excise
duty paid by that person as a result of an incorrect refusal by the
Commissioners to authorise or issue a direction to him for specified
reliefs from excise duty. Sub-paragraph (1) provides for the paragraph
to apply only in cases where the conditions set out in sub-paragraphs
(2) and (3) or (2) and (4) are satisfied. Sub-paragraph (2) limits
the application of the paragraph to those cases where a person is
refused an authorisation, an approval, a direction or consent for
specified excise duty reliefs due to an error on the part of the Commissioners.
The specified reliefs are those in respect of spirits used for medical
or scientific purposes, spirits used for art or manufacture, spirits
contained in imported goods not for human consumption, oil delivered
for home use for certain industrial purposes and light oil for use
as a furnace fuel. Sub-paragraph (3) requires the person to have paid
the Commissioners excise duty which was not due on or after the commencement
of the provision. Sub-paragraph (4) makes similar provision for persons
who purchase their goods excise duty paid on or after the commencement
of the provision. Sub-paragraph (5) allows the Commissioners to pay
to the “person refused”, whose claim satisfies the conditions set
out in (2) and (3), an amount equal to the excise duty that was overpaid.
Sub-paragraph (6) allows the Commissioners to pay the “person refused”
whose claim satisfies the conditions of sub-paragraphs (2) and (4)
an amount that appears to them to be equal to the excise duty that
was incorrectly paid as a result of the error. Sub-paragraph (7)
defines the “person refused” as the person that is refused an authorisation,
direction, approval or consent.
4.
Paragraph 2 allows the Commissioners to pay to a person
an amount equal to the rebate due on heavy oil where that person has,
as a result of an error on the part of the Commissioners, paid excise
duty on non-rebated oil used for a permitted purpose. Sub-paragraph
(1) provides for the paragraph to apply only in cases where the conditions
set out in sub-paragraphs (2) and (3) are satisfied. Sub-paragraph
(2) makes it a condition that the person claiming rebate of excise
duty is entitled to use rebated heavy oil in particular circumstances.
Sub-paragraph (3) makes it conditional that the use of unrebated heavy
oil in those circumstances was due to an error by the Commissioners
and that the use occurred on or after the commencement day. Sub-paragraph
(4) allows the Commissioners to pay to that person an amount equal
to the rebate on heavy oil had it been delivered to home use on the
date of its use. Sub-paragraph (5) provides definitions for rebated
and unrebated heavy oil.
5.
Paragraph 3 sets out the requirements that must be met by a
claimant before payment may be made under paragraphs 1 or 2. Sub-paragraph
(a) requires the claim to be made in the form and the manner, and
containing such information, as may be required by regulations. Sub-paragraph
(b) requires the claimant to satisfy any other conditions that may
be imposed by regulations.
6.
Paragraph 4 requires the Commissioners to pay interest
to a claimant if the payment of a claim for drawback or repayment
of excise duty is not made within the allowable period. Sub-paragraph
(1) provides for the paragraph to apply only in cases where a person
is entitled to a repayment or drawback in respect of excise duty paid
to the Commissioners, that person makes a claim for repayment or drawback
on or after the commencement of this provision and the Commissioners
fail to authorise payment within the “allowable period”. Sub-paragraph
(2) requires the Commissioners to pay interest on the amount to be
repaid for the “applicable period”. Sub-paragraph (3) defines the
“allowable period”. Sub-paragraph (4) defines the “applicable period”.
Sub-paragraph (5) makes sub-paragraph (4) subject to the requirements
of paragraph 6.
7.
Paragraph 5 requires the Commissioners to pay interest where
the payment of a claim for drawback or repayment of excise duty is
set off against an assessment that is subsequently withdrawn. Sub-paragraph
(1) provides for the paragraph to apply only in cases where a person
is entitled to a repayment or drawback in respect of excise duty paid
to the Commissioners, that person makes a claim for repayment or drawback
on or after the commencement of this provision, the Commissioners
set off the amount against an assessment that is subsequently withdrawn,
and the Commissioners authorise the repayment or drawback of the excise
duty. Sub-paragraph (2) requires the Commissioners to pay interest
on the amount to be repaid for the “applicable period”. Sub-paragraphs
(3) and (4) defines the “applicable period”. Sub-paragraph (5) makes
sub-paragraphs (3) and (4) subject to the requirements of paragraph
6.
8.
Paragraph 6 sets out the periods to be excluded when
calculating the applicable period for the purposes of paragraphs 4
and 5. Sub-paragraph (1) provides for any period of delay that is
beyond the control of the Commissioners to be ignored when deciding
the “applicable period”. Sub-paragraph (2) requires the Commissioners
to take particular account of two factors. Any failure by any person
to provide information requested by them to determine the claimant’s
entitlement to repayment and the making of a claim to anything to
which the claimant is not entitled.
9.
Paragraph 7 requires the Commissioners to pay interest
if, due to an error on their part, a person pays to them an amount
of excise duty to which he is entitled to repayment. Sub-paragraph
(1) sets out the requirements that must be met before the provision
applies. That is to say, the payment of excise duty must be due to
an error on the part of the Commissioners. The person who paid the
excise duty is entitled to repayment of the amount paid. The entitled
person makes a claim for the repayment and the repayment is authorised
by the Commissioners on or after the commencement day. The claim
for interest is made within three years of the Commissioners authorising
that repayment. Sub-paragraph (2) requires the Commissioners to pay
interest on the amount concerned for the “applicable period”. Sub-paragraph
(3) defines the “applicable period”. Sub-paragraph (4) makes sub-paragraph
(3) subject to the requirements of paragraph 11.
10.
Paragraph 8 requires the Commissioners to pay interest
if, due to an error on their part, a person who is entitled to repayment,
remission, rebate or drawback of excise duty fails to claim that excise
duty, or any part of that excise duty, when he could have done so.
Sub-paragraph (1) sets out the requirements that must be met before
the provision applies. That is to say, a person pays to the Commissioners
an amount of excise duty. He is entitled to repayment, remission,
rebate or drawback of that excise duty. Due to an error on the part
of the Commissioners he fails to claim that excise duty at the time
he could have done so. He subsequently makes a claim for repayment.
The claim is authorised by the Commissioners on or after the commencement
of this provision and the person concerned makes a claim for interest
within three years of the date of that authorisation. Sub-paragraph
(2) requires the Commissioners to pay interest on the amount concerned
for the “applicable period”. Sub-paragraph (3) defines the “applicable
period”. Sub-paragraph (4) makes sub-paragraph (3) subject to the
requirements of paragraph 11.
11.
Paragraph 9 provides for the payment of interest where
the authorisation of a repayment, remission, rebate or drawback is
delayed due to an error on the part of the Commissioners. Sub-paragraph
(1) sets out the requirements which must be met before the provision
applies. That is to say, a person pays to the Commissioners an amount
of excise duty. He is entitled to repayment, remission, rebate or
drawback of that excise duty. He makes a claim which the Commissioners
authorise but due to an error on the part of the Commissioners that
authorisation is delayed. The authorisation is made on or after the
commencement of this provision and the person concerned makes a claim
for interest within three years of the date of that authorisation.
Finally the provisions of this paragraph are not applicable if the
person concerned qualifies for payment of interest under the provisions
of paragraphs 4 or 5. Sub-paragraph (2) requires the Commissioners
to pay interest on the amount concerned for the “applicable period”.
Sub-paragraph (3) defines the “applicable period”. Sub-paragraph
(4) makes sub-paragraph (3) subject to the requirements of paragraph
11.
12.
Paragraph 10 provides for the payment of interest where
a payment of an amount equal to the excise duty or rebate is made
under Part 1 of this Schedule. Sub-paragraph (1) sets out
the requirements which must be met before the provision applies.
That is to say, a person must have made a claim for payment that was
authorised by the Commissioners under paragraphs 1 or 2 of this Schedule
and must make his claim for interest within three years of the Commissioners
authorising that payment. Sub-paragraph (2) requires the Commissioners
to pay interest on the amount concerned for the “applicable period”.
Sub-paragraph (3) defines the “applicable period”. Sub-paragraph
(4) makes sub-paragraph (3) subject to the requirements of paragraph
11.
13.
Paragraph 11 sets out the periods to be excluded when
calculating the applicable period for the purposes of paragraphs 7
to 10. Sub-paragraph (1) provides for any period of delay that is
beyond the control of the Commissioners to be ignored when deciding
the “applicable period”. Sub-paragraph (2) expands on sub-paragraph
(1) by requiring them to exclude any unreasonable delay by the person
in making his claim for repayment, remission, rebate, drawback or
payment. Any failure by that person to provide information requested
by the Commissioners to determine entitlement to the repayment, remission,
rebate, drawback or payment. The making of a claim to anything to
which the claimant is not entitled. Sub-paragraph (3) requires the
Commissioners to calculate the exclusion period in respect of the
failure of a person to provide the information requested in sub-paragraph
(2) in accordance with the period set out in sub-paragraph (4). Sub-paragraph
(4) sets the start and end dates for the purposes of sub-paragraph
(3).
14.
Paragraph 12 sets out the claim requirements for the
payment of interest under paragraphs 7 to 10. Sub-paragraph (1) requires
the claim to be made in the form and the manner, and containing such
information, as may be prescribed by regulations. Sub-paragraph (2)
prohibits a claimant from making a claim for interest under more than
one “relevant paragraph”. Sub-paragraph (3) defines the “relevant
paragraphs” as 7 to 10.
15.
Paragraph 13 provides that the rate of interest payable,
when calculating interest under Part II of this Schedule, will be
that applicable under Section 197 of the of the Finance Act 1996.
16.
Paragraph 14 provides for the repayment of excise duty
or cash security and the payment of interest on the amount repaid,
where a person pays or gives cash security for the whole or any part
of an assessment in relation to an appeal to a VAT and Duties Tribunal,
and the tribunal finds that the whole or any part of the amount paid
or secured is not due. Sub-paragraph (1) sets out the requirements
which must be met before the provision applies. That is to say, any
person who appeals to a VAT and Duties Tribunal against an assessment,
pays or gives cash security for the whole or any part of the assessment
and the Tribunal finds that any part of the amount paid or secured
is not due. Sub-paragraph (2) requires the Commissioners to repay
to that person the amount of excise duty paid or cash security given
that was found not to be due. Sub-paragraph (3) defines the period
for interest. Sub-paragraph (4) allows the Tribunal to determine
the rate of interest to be paid. Where the Tribunal does not set
a rate, the rate to be applied will be that applicable under Section
197 of the of the Finance Act 1996. Sub-paragraph (5) defines “cash
security” .
17.
Paragraph 15 inserts a new subsection to section 137A of
the Customs and Excise Management Act 1979 that disapplies the provisions
of that section in cases where the Commissioners are entitled to pay
an amount under Part I or repay an amount under Part III of this Schedule.
18.
Paragraph 16 amends section 16(9) of the Finance Act
1994 to provide that where a claimant appeals a decision made under
this Schedule to a VAT and Duties Tribunal, the tribunal will have
the full powers afforded them by section 16(5). These include the
power to quash or vary a decision, and to substitute their own decision
for any decision quashed on appeal.
19.
Paragraph 17 amends Schedule 5 of the Finance Act
1994 to provide a claimant with the right to require the Commissioners
to review a decision made under this Schedule. The claimant may appeal
against any reviewed decision to the VAT and Duties Tribunal.
20.
Paragraph 18 amends section 197(2) of the Finance Act 1996
to provide that the rate of interest to be paid under Parts II and
III of this Schedule shall be set in accordance with section 197 of
Finance Act 1996.
21.
Paragraph 19 amends Schedule 5 of the Finance Act 1997 to
provide the Commissioners with the power to recover excess payments
made under this Schedule, by means of assessment. It allows them
to charge interest on the amount assessed, to make supplementary assessments,
and grants any person assessed the right of review and appeal.
22.
Paragraph 20 removes the now redundant references to paragraphs
9 and 10, in relation to interest on Air Passenger Duty, from Schedule
6 of the Finance Act 1994.
23.
Paragraph 21 enables the Commissioners to bring the provisions
of this Schedule into effect by order.
24.
Paragraph 22 sub-paragraph (1) provides the Commissioners
with the power to make an order or regulations under this Schedule
by statutory instrument. Sub-paragraph (2) provides for that order
or those regulations, to make different provisions for different purposes
or to make incidental, supplemental, saving or transitional provisions.
Sub-paragraph (3) makes the order or regulations subject to annulment
in pursuance of a resolution of either House of Parliament.
25.
Paragraph 23 defines references to the “Commissioners”
in this Schedule as being to the Commissioners of Customs and Excise
BACKGROUND
26.
Section 137A of the Customs and Excise Management Act 1979 requires
Customs to repay excise duty not due to them. This section does not,
however, provide for the repayment of excise duty to persons incorrectly
refused authorisation or approval to obtain goods relieved of excise
duty. This measure allows Customs to repay excise duty in those circumstances.
27.
The measure also brings excise duties into line with other duties
and taxes administered by Customs, by providing a statutory requirement
to pay compensatory interest where excise duty has been overpaid or
underclaimed as a result of Customs’ error or where payment of a claim
to excise duty has been unduly delayed.
28.
The measure takes effect from a date to be announced, following Royal
Assent (see paragraph 23 above).
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