Finance (No. 2) Bill (HC Bill 190)

section 203(1) does not apply, but HMRC may reduce the total amount of the
penalties determined in accordance with sub-paragraph (2)(a) to reflect the
quality of that co-operation.

(5) Nothing in sub-paragraph (4) permits HMRC to reduce the total amount of
5the penalties to less than 4% of the value of the denied advantage (as
determined in accordance with sub-paragraph (2)(c)).

(6) For the purposes of section 205, a penalty imposed on a relevant partner by
virtue of paragraph 4(2) is to be treated as if it were determined by reference
to such additional amount of tax as is due and payable by the relevant
10partner as a result of the counteraction of the denied advantage.

(7) The right of appeal under section 207 extends to—

(a) a decision that penalties are payable by the relevant partners by
virtue of this paragraph, and

(b) a decision as to the total amount of those penalties payable by those
15partners,

but not to a decision as to the appropriate share of, or the amount of a
penalty payable by, a relevant partner.

(8) Section 207(7) applies to an appeal by virtue of sub-paragraph (7)(a), and
section 207(8) to an appeal by virtue of sub-paragraph (7)(b).

(9) 20An appeal by virtue of sub-paragraph (7) may be brought only by the
representative partner or, if that partner is no longer available, the person
who is for the time being the successor of that partner.

(10) The Treasury may by order made by statutory instrument vary the rates for
the time being specified in sub-paragraphs (2)(a) and (5).

(11) 25Any statutory instrument containing an order under sub-paragraph (10) is
subject to annulment in pursuance of a resolution of the House of Commons.

Section 221

SCHEDULE 28 Accelerated payments and partnerships

Interpretation

1 (1) 30This paragraph applies for the purposes of this Schedule.

(2) “Partnership return” means a return in pursuance of a notice under section
12AA(2) or (3) of TMA 1970.

(3) “The representative partner”, in relation to a partnership return, means the
person who was required by a notice served under or for the purposes of
35section 12AA(2) or (3) of TMA 1970 to deliver the return.

(4) “Relevant partner”, in relation to a partnership return, means a person who
was a partner in the partnership to which the return relates at any time
during the period in respect of which the return was required.

(5) References to a “successor”, in relation to the representative partner, are to
40be construed in accordance with section 12AA(11) of TMA 1970.

Restriction on circumstances when accelerated payment notices can be given

2 (1) This paragraph applies where—

(a) a tax enquiry is in progress in relation to a partnership return, or

(b) an appeal has been made in relation to an amendment of such a
5return or against a conclusion stated by a closure notice in relation to
a tax enquiry into such a return.

(2) No accelerated payment notice may be given to the representative partner of
the partnership, or a successor of that partner, by reason of that enquiry or
appeal.

(3) 10But this Schedule makes provision for partner payment notices and
accelerated partner payments in such cases.

Circumstances in which partner payment notices may be given

3 (1) Where a partnership return has been made in respect of a partnership,
HMRC may give a notice (a “partner payment notice”) to each relevant
15partner of the partnership if Conditions A to C are met.

(2) Condition A is that—

(a) a tax enquiry is in progress in relation to the partnership return, or

(b) an appeal has been made in relation to an amendment of the return
or against a conclusion stated by a closure notice in relation to a tax
20enquiry into the return.

(3)
Condition B is that the return or, as the case may be, appeal is made on the
basis that a particular tax advantage (“the asserted advantage”) results from
particular tax arrangements (“the chosen arrangements”).

(4) Paragraph 3(3) of Schedule 27 applies for the purposes of sub-paragraph (3)
25as it applies for the purposes of Condition B in section 197(3).

(5) Condition C is that one or more of the following requirements are met—

(a) HMRC has given (or, at the same time as giving the partner payment
notice, gives) the representative partner, or a successor of that
partner, a follower notice under Chapter 2—

(i) 30in relation to the same return or, as the case may be, appeal,
and

(ii) by reason of the same tax advantage resulting from the same
tax arrangements,

(b) the chosen arrangements are DOTAS arrangements (within the
35meaning of section 212(5) and (6));

(c) the relevant partner in question has been given a GAAR
counteraction notice in respect of any tax advantage resulting from
the asserted advantage or part of it (or is given such a notice at the
same time as the partner payment notice) in a case where the stated
40opinion of at least two of the members of the sub-panel of the GAAR
Advisory Panel which considered the matter under paragraph 10 of
Schedule 43 to FA 2013 was as set out in paragraph 11(3)(b) of that
Schedule (entering into tax arrangements not reasonable course of
action etc).

(6) 45“GAAR counteraction notice” has the meaning given by section 212(7).

Content of partner payment notices

4 (1) The partner payment notice given to a relevant partner must—

(a) specify the paragraph or paragraphs of paragraph 3(5) by virtue of
which the notice is given,

(b) 5specify the payment required to be made under paragraph 6, and

(c) explain the effect of paragraphs 5 and 6, and of the amendments
made by sections 217 and 218 (so far as relating to the relevant tax in
relation to which the partner payment notice is given).

(2) The payment required to be made under paragraph 6 is an amount equal to
10the amount which a designated HMRC officer determines, to the best of the
officer’s information and belief, as the understated partner tax.

(3) “The understated partner tax” means the additional amount that would
become due and payable by the relevant partner in respect of tax if—

(a) in the case of a notice given by virtue of paragraph 3(5)(a) (case
15where a partnership follower notice is given)—

(i) it were assumed that the explanation given in the follower
notice in question under section 199(b) is correct, and

(ii) what the officer may determine to the best of the officer’s
information and belief as the denied advantage is
20counteracted to the extent that it is reflected in a return or
claim of the relevant partner;

(b) in the case of a notice given by virtue of paragraph 3(5)(b) (cases
where the DOTAS arrangements are met), such adjustments were
made as are required to counteract so much of what the designated
25HMRC officer so determines as the denied advantage as is reflected
in a return or claim of the relevant partner;

(c) in the case of a notice given by virtue of paragraph 3(5)(c) (cases
involving counteraction under the general anti-abuse rule), such of
the adjustments set out in the GAAR counteraction notice are made
30as have effect to counteract so much of the denied advantage as is
reflected in a return or claim of the relevant partner.

(4) “The denied advantage”—

(a) in the case of the notice given by virtue of paragraph 3(5)(a), has the
meaning given by paragraph 4(3) of Schedule 27,

(b) 35in the case of a notice given by virtue of paragraph 3(5)(b), means so
much of the asserted advantage as is not a tax advantage which
results from the chosen arrangements or otherwise, and

(c) in the case of a notice given by virtue of paragraph 3(5)(c), means so
much of the asserted advantage as would be counteracted by making
40the adjustments set out in the GAAR counteraction notice.

(5) If a notice is given by reason of two or all of the requirements of paragraph
3(5) being met, the payment specified under sub-paragraph (1)(b) is to be
determined as if the notice were given by virtue of such one of them as is
stated in the notice as being used for this purpose.

45Representations about a partner payment notice

5 (1) This paragraph applies where a partner payment notice has been given to a
relevant partner under paragraph 3 (and not withdrawn).

(2) The relevant partner has 90 days beginning with the day that notice is given
to send written representations to HMRC—

(a) objecting to the notice on the grounds that Condition A, B or C in that
paragraph was not met, or

(b) 5objecting to the amount specified in the notice under paragraph
4(1)(b).

(3) HMRC must consider any representations made in accordance with sub-
paragraph (2).

(4) Having considered the representations, HMRC must—

(a) 10if representations were made under sub-paragraph (2)(a), determine
whether—

(i) to confirm the partner payment notice (with or without
amendment), or

(ii) to withdraw the partner payment notice, and

(b) 15if representations were made under sub-paragraph (2)(b) (and the
notice is not withdrawn under paragraph (a)), determine whether a
different amount ought to have been specified as the understated
partner tax, and then—

(i) confirm the amount specified in the notice, or

(ii) 20amend the notice to specify a different amount,

and notify P accordingly.

Effect of partner payment notice

6 (1) This paragraph applies where a partner payment notice has been given to a
relevant partner (and not withdrawn).

(2) 25The relevant partner must make a payment (“the accelerated partner
payment”) to HMRC of the amount specified in the notice in accordance
with paragraph 4(1)(b).

(3) The accelerated partner payment is to be treated as a payment on account of
the understated partner tax (see paragraph 4).

(4) 30The accelerated partner payment must be made before the end of the
payment period.

(5) “The payment period” means—

(a) if the relevant partner made no representations under paragraph 5,
the period of 90 days beginning with the day on which the partner
35payment notice is given;

(b) if the relevant partner made such representations, whichever of the
following ends later—

(i) the 90 day period mentioned in paragraph (a);

(ii) the period of 30 days beginning with the day on which the
40relevant partner is notified under paragraph 5 of HMRC’s
determination.

(6) If the relevant partner pays any part of the understated partner tax before
the accelerated partner payment in respect of it, the accelerated partner
payment is treated to that extent as having been paid at the same time.

(7) 45Subsections (8) and (9) of section 216 apply in relation to a payment under
this paragraph as they apply to a payment under that section.

Penalty for failure to comply with partner payment notice

7 Section 219 (penalty for failure to make accelerated payment on time)
applies to accelerated partner payments as if—

(a) references in that section to the accelerated payment were to the
5accelerated partner payment,

(b) references to P were to the relevant partner, and

(c) “the payment period” had the meaning given by paragraph 6(5).

Withdrawal, suspension or modification of partner payment notices

8 (1) Section 220 (withdrawal, modification or suspension of accelerated payment
10notice) applies in relation to a relevant partner, a partner payment notice,
Condition C in paragraph 3 and an accelerated partner payment as it applies
in relation to P, an accelerated payment notice, Condition C in section 212
and an accelerated payment.

(2) Accordingly, for this purpose—

(a) 15section 220(6)(b) and (7)(a) has effect as if the references to section
213(6) were to paragraph 4(5) of this Schedule, and

(b) the provisions listed in section 220(9) are to be read as including
paragraph 6(5) of this Schedule.

Section 226

SCHEDULE 29 20Part 4: consequential amendments

Taxes Management Act 1970

1 In section 9B of TMA 1970 (amendment of return by relevant person during
enquiry), in subsection (1), after “taxpayer)” insert “, or in accordance with
Chapter 2 of Part 4 of the Finance Act 2014 (amendment of return after
25follower notice),”.

2 In section 103ZA of that Act (disapplication of sections 100 to 103 (penalty
provisions) in the case of certain penalties)—

(a) omit “or” at the end of paragraph (f), and

(b) at the end of paragraph (g) insert “, or

“(h) 30Part 4 of the Finance Act 2014 (follower notices and
accelerated payments).”

Finance Act 2007

3 In paragraph 12 of Schedule 24 to FA 2007 (penalties for errors: interaction
with other penalties), after sub-paragraph (2) insert—

“(2A) 35In sub-paragraph (2) “any other penalty” does not include a
penalty under Part 4 of FA 2014 (penalty where corrective action
not taken after follower notice etc).”

Finance Act 2008

4 In paragraph 15 of Schedule 41 to FA 2008 (penalties: failure to notify:

interaction with other penalties), after sub-paragraph (1) insert—

“(1A) In sub-paragraph (2) “any other penalty” does not include a
penalty under Part 4 of FA 2014 (penalty where corrective action
not taken after follower notice etc).”

Finance Act 2009

5 5In paragraph 17 of Schedule 55 to FA 2009 (penalty for failure to make
returns etc: interaction with other penalties), after sub-paragraph (2)(b)
insert “, or

“(c) a penalty under Part 4 of FA 2014 (penalty where corrective
action not taken after follower notice etc).”

Section 230

10SCHEDULE 30 The threshold conditions

Part 1 Meeting the threshold conditions: general

Meaning of “threshold condition”

1 15Each of the conditions described in paragraphs 2 to 12 is a “threshold
condition”.

Deliberate tax defaulters

2 A person meets this condition if the Commissioners publish information
about the person in reliance on section 94 of FA 2009 (publishing details of
20deliberate tax defaulters).

Breach of the Banking Code of Practice

3 A person meets this condition if the person is named in a report under
section 278 as a result of the Commissioners determining that the person
breached the Code of Practice on Taxation for Banks by reason of promoting
25arrangements which the person cannot have reasonably believed achieved a
tax result which was intended by Parliament.

Dishonest tax agents

4 A person meets this condition if the person is given a conduct notice under
paragraph 4 of Schedule 38 to FA 2012 (tax agents: dishonest conduct) and
30either—

(a) the time period during which a notice of appeal may be given in
relation to the notice has expired, or

(b) an appeal against the notice has been made and the tribunal has
confirmed the determination referred to in sub-paragraph (1) of
35paragraph 4 of that Schedule.

Non-compliance with Part 7 of FA 2004

5 (1) A person meets this condition if the person fails to comply with any of the
following provisions of Part 7 of FA 2004 (disclosure of tax avoidance
schemes)—

(a) 5section 308(1) and (3) (duty of promoter in relation to notifiable
proposals and notifiable arrangements);

(b) section 309(1) (duty of person dealing with promoter outside the
United Kingdom);

(c) section 310 (duty of parties to notifiable arrangements not involving
10promoter);

(d) section 313ZA (duty of promoter to provide details of clients).

(2) For the purposes of sub-paragraph (1), failure to comply includes cases
(despite section 118(2) of TMA 1970) where a person had a reasonable excuse
for not doing the thing required to be done.

15Criminal offences

6 (1) A person meets this condition if the person is charged with a relevant
offence.

(2) The fact that a person has been charged with an offence is disregarded for
the purposes of this paragraph if—

(a) 20the person has been acquitted of the offence, or

(b) the charge has been dismissed or the proceedings have been
discontinued.

(3) An acquittal is not taken into account for the purposes of sub-paragraph (2)
if an appeal has been brought against the acquittal and has not yet been
25disposed of.

(4) “Relevant offence” means any of the following—

(a) an offence at common law of cheating in relation to the public
revenue;

(b) in Scotland, an offence at common law of—

(i) 30fraud;

(ii) uttering;

(c) an offence under section 17(1) of the Theft Act 1968 or section 17 of
the Theft Act (Northern Ireland) 1969 (c. 16 (N.I.)) (false accounting);

(d) an offence under section 106A of TMA 1970 (fraudulent evasion of
35income tax);

(e) an offence under section 107 of TMA 1970 (false statements:
Scotland);

(f) an offence under any of the following provisions of CEMA 1979—

(i) section 50(2) (improper importation of goods with intent to
40defraud or evade duty);

(ii) section 167 (untrue declarations etc);

(iii) section 168 (counterfeiting documents etc);

(iv) section 170 (fraudulent evasion of duty);

(v) section 170B (taking steps for the fraudulent evasion of duty);

(g) 45an offence under any of the following provisions of VATA 1994—

(i) section 72(1) (being knowingly concerned in the evasion of
VAT);

(ii) section 72(3) (false statement etc);

(iii) section 72(8) (conduct involving commission of other offence
5under section 72);

(h) an offence under section 1 of the Fraud Act 2006 (fraud);

(i) an offence under any of the following provisions of CRCA 2005—

(i) section 30 (impersonating a Commissioner or officer of
Revenue and Customs);

(ii) 10section 31 (obstruction of officer of Revenue and Customs
etc);

(iii) section 32 (assault of officer of Revenue and Customs);

(j) an offence under regulation 45(1) of the Money Laundering
Regulations 2007 (S.I. 2007/2157);

(k) 15an offence under section 49(1) of the Criminal Justice and Licensing
(Scotland) Act 2010 (asp 13) (possession of articles for use in fraud).

Opinion notice of GAAR Advisory Panel

7 A person meets this condition if—

(a) arrangements in relation to which the person is a promoter have
20been referred to the GAAR Advisory Panel under Schedule 43 to FA
2013,

(b) one or more opinion notices are given in relation to the arrangements
under paragraph 11(3)(b) of that Schedule (opinion of sub-panel of
GAAR Advisory Panel that arrangements are not reasonable), and

(c) 25the notice, or the notices taken together, either—

(i) state the joint opinion of all the members of the sub-panel
arranged under paragraph 10 of that Schedule, or

(ii) state the opinion of two or more members of that sub-panel.

Disciplinary action by a professional body

8 (1) 30A person meets this condition if a professional body—

(a) determines that the person is guilty of misconduct of a kind
prescribed for the purposes of this paragraph, and

(b) takes in relation to that misconduct action of a kind so prescribed,
and

(c) 35imposes on the person a penalty of a kind so prescribed.

(2) Misconduct may only be prescribed for the purposes of sub-paragraph (1)(a)
if it is misconduct other than misconduct in matters (such as the payment of
fees) that relate solely or mainly to the person’s relationship with the
professional body.

(3) 40A “professional body” means—

(a) the Institute of Chartered Accountants in England and Wales;

(b) the Institute of Chartered Accountants of Scotland;

(c) the General Council of the Bar;

(d) the Faculty of Advocates;

(e) 45the General Council of the Bar of Northern Ireland;

(f) the Law Society;

(g) the Law Society of Scotland;

(h) the Law Society for Northern Ireland;

(i) the Association of Accounting Technicians;

(j) the Association of Chartered Certified Accountants;

(k) 5the Association of Taxation Technicians;

(l) any other prescribed body with functions relating to the regulation
of a trade or profession.

Disciplinary action by a regulatory authority

9 (1) A person meets this condition if a regulatory authority imposes a relevant
10sanction on the person.

(2) A “relevant sanction” is a sanction which is—

(a) imposed in relation to misconduct other than misconduct in matters
(such as the payment of fees) that relate solely or mainly to the
person’s relationship with the regulatory authority, and

(b) 15prescribed.

(3) The following are regulatory authorities for the purposes of this
paragraph—

(a) the Financial Conduct Authority;

(b) the Financial Services Authority;

(c) 20any other authority that may be prescribed.

(4) Only authorities that have functions relating to the regulation of financial
institutions may be prescribed under sub-paragraph (3)(c).

Exercise of information powers

10 (1) A person meets this condition if the person fails to comply with an
25information notice given under any of paragraphs 1, 2, 5 and 5A of Schedule
36 to FA 2008.

(2) For the purposes of section 230, the failure to comply is taken to occur when
the period within which the person is required to comply with the notice
expires (without the person having complied with it).

30Restrictive contractual terms

11 (1) A person (“P”) meets this condition if P enters into an agreement with
another person (“C”) which relates to a relevant proposal or relevant
arrangements in relation to which P is a promoter, on terms which—

(a) impose a contractual obligation on C which falls within sub-
35paragraph (2) or (3), or

(b) impose on C both obligations within sub-paragraph (4) and
obligations within sub-paragraph (5).

(2) A contractual obligation falls within this sub-paragraph if it prevents or
restricts the disclosure by C to HMRC of information relating to the
40proposals or arrangements, whether or not by referring to a wider class of
persons.

(3) A contractual obligation falls within this sub-paragraph if it requires C to
impose on any tax adviser to whom C discloses information relating to the

proposals or arrangements a contractual obligation which prevents or
restricts the disclosure of that information to HMRC by the adviser.

(4) A contractual obligation falls within this sub-paragraph if it requires C to—

(a) meet (in whole or in part) the costs of, or contribute to a fund to be
used to meet the costs of, any proceedings relating to arrangements
5in relation to which P is a promoter (whether or not implemented by
C), or

(b) take out an insurance policy which insures against the risk of having
to meet the costs connected with proceedings relating to
arrangements which C has implemented and in relation to which P
10is a promoter.

(5) A contractual obligation falls within this paragraph if it requires C to obtain
the consent of P before—

(a) entering into any agreement with HMRC regarding arrangements
which C has implemented and in relation to which P is a promoter,
15or

(b) withdrawing or discontinuing any appeal against any decision
regarding such arrangements.

(6) In sub-paragraph (5)(b), the reference to withdrawing or discontinuing an
appeal includes any action or inaction which results in an appeal being
20discontinued.

(7) In this paragraph—

• “proceedings” includes any sort of proceedings for resolving disputes
  (and not just proceedings in court), whether commenced or
  contemplated;

• 25“tax adviser” means a person appointed to give advice about the tax
  affairs of another person (whether appointed directly by that person
  or by another tax adviser of that person).

Continuing to promote certain arrangements

12 (1) A person (“P”) meets this condition if P has been given a stop notice and after
30the end of the notice period P—

(a) makes a firm approach to another person (“C”) in relation to an
affected proposal with a view to making the affected proposal
available for implementation by C or another person, or

(b) makes an affected proposal available for implementation by other
35persons.

(2) “Affected proposal” means a relevant proposal that is in substance the same
as the relevant proposal specified in the stop notice in accordance with sub-
paragraph (4)(c).

(3) An authorised officer may give a person (“P”) a notice (a “stop notice”) if
40each of these conditions is met—

(a) a person has been given a follower notice under section 197
(circumstances in which a follower notice may be given) in relation
to particular relevant arrangements;

(b) P is a promoter in relation to a relevant proposal that is implemented
45by those arrangements;

(c) 90 days have elapsed since the follower notice was given and—