Income Tax (Trading and Other Income) Act 2005 section 699

Non-entitlement to exemption

Section 699 sets out the powers under which investment plan regulations can remove an investor's income tax exemption and require repayment of tax relief that was incorrectly given.

• Investment plan regulations can strip an investor of their income tax exemption and treat them as never having been entitled to it, requiring either the investor or the plan manager to account to HMRC for the tax previously exempted
• The regulations can modify income tax legislation to ensure tax is recovered, including adapting rules on life insurance gains and life policies where exemption was wrongly given
• Instead of requiring repayment of tax, the regulations may impose a penalty of a specified amount on either the investor or the plan manager where exemption was granted without entitlement
• The regulations can also impose liabilities in cases where a regulatory breach or other specified circumstances would have excluded or limited the exemption entitlement, but these liabilities must be equivalent to those available under the other provisions and must replace the tax liabilities that would otherwise arise