Finance Bill (HC Bill 1)

had the necessary corrective action been taken before the specified time
for the purposes of section 201,

any liability of P in respect of a penalty under that section is a joint and several
liability of all of them.

(4) 5Where—

(a) an accelerated payment notice is given by virtue of a tax enquiry into
the return or claim or the appeal, and

(b) two or more persons would, by virtue of section 97 or 98 of FA 2013, be
jointly and severally liable for the understated tax relating to the
10accelerated payment specified in the notice or (as the case may be) the
disputed tax specified in the notice,

any liability of P in respect of the accelerated payment or a penalty under
section 219 is a joint and several liability of all of them.

(5) Accordingly—

(a) 15where a follower notice is given in a case where subsection (3) applies,
or

(b) an accelerated payment notice is given in a case to which subsection (4)
applies,

HMRC must also give a copy of the notice to any other person who would be
20jointly and severally liable for a penalty or payment, in relation to the notice,
by virtue of this section.

(6) Where a follower notice or accelerated payment notice is given to more than
one person, the power conferred on P by section 200 or 215 is exercisable by
each of those persons separately or by two or more of them jointly.

(7) 25In this section—

• “the accelerated payment” has the meaning given by section 216(2);

• “accelerated payment notice” has the meaning given by section 212(1);

• “the chargeable person” has the same meaning as in Part 3 of FA 2013
  (annual tax on enveloped dwellings);

• 30“follower notice” has the same meaning as in Chapter 2;

• “P”—

  (a)

  in relation to Chapter 2, has the meaning given by section
  197(1);

  (b)

  in relation to Chapter 3, has the meaning given by section 212;

• 35“the responsible partners” has the same meaning as in Part 3 of FA 2013
  (annual tax on enveloped dwellings).

Extension of Part by order

225 Extension of this Part by order

(1) The Treasury may by order amend section 193 (definition of “relevant tax”) so
40as to extend this Part to any other tax.

(2) An order under this section may include—

(a) provision in respect of that other tax corresponding to the provision
made by sections 217 and 218,

(b) consequential and supplemental provision, and

(c) 45transitional and transitory provision and savings.

(3) For the purposes of subsection (1) or (2) an order under this section may amend
this Part (other than this section) or any other enactment whenever passed or
made.

(4) The power to make orders under this section is exercisable by statutory
5instrument.

(5) An order under this section may only be made if a draft of the instrument
containing the order has been laid before and approved by a resolution of the
House of Commons.

(6) In this section “tax” includes duty.

10Consequential amendments

226 Consequential amendments

Schedule 29 contains consequential amendments.

Part 5 Promoters of tax avoidance schemes

15Introduction

227 Meaning of “relevant proposal” and “relevant arrangements”

(1) “Relevant proposal” means a proposal for arrangements which (if entered into)
would be relevant arrangements (whether the proposal relates to a particular
person or to any person who may seek to take advantage of it).

(2) 20Arrangements are “relevant arrangements” if—

(a) they enable, or might be expected to enable, any person to obtain a tax
advantage, and

(b) the main benefit, or one of the main benefits, that might be expected to
arise from the arrangements is the obtaining of that advantage.

(3) 25“Tax advantage” includes—

(a) relief or increased relief from tax,

(b) repayment or increased repayment of tax,

(c) avoidance or reduction of a charge to tax or an assessment to tax,

(d) avoidance of a possible assessment to tax,

(e) 30deferral of a payment of tax or advancement of a repayment of tax, and

(f) avoidance of an obligation to deduct or account for tax.

(4) “Arrangements” includes any agreement, scheme, arrangement or
understanding of any kind, whether or not legally enforceable, involving a
single transaction or two or more transactions.

228 35Carrying on a business “as a promoter”

(1) A person carrying on a business in the course of which the person is, or has
been, a promoter in relation to a relevant proposal or relevant arrangements
carries on that business “as a promoter”.

(2) A person is a “promoter” in relation to a relevant proposal if the person—

(a) is to any extent responsible for the design of the proposed
arrangements,

(b) makes a firm approach to another person in relation to the relevant
5proposal with a view to making the proposal available for
implementation by that person or any other person, or

(c) makes the relevant proposal available for implementation by other
persons.

(3) A person is a “promoter” in relation to relevant arrangements if the person—

(a) 10is by virtue of subsection (2)(b) or (c), a promoter in relation to a
relevant proposal which is implemented by the arrangements, or

(b) is responsible to any extent for the design, organisation or management
of the arrangements.

(4) For the purposes of this Part a person makes a firm approach to another person
15in relation to a relevant proposal if—

(a) the person communicates information about the relevant proposal to
the other person at a time when the proposed arrangements have been
substantially designed,

(b) the communication is made with a view to that other person or any
20other person entering into transactions forming part of the proposed
arrangements, and

(c) the information communicated includes an explanation of the tax
advantage that might be expected to be obtained from the proposed
arrangements.

(5) 25For the purposes of subsection (4) proposed arrangements have been
substantially designed at any time if by that time the nature of the transactions
to form them (or part of them) has been sufficiently developed for it to be
reasonable to believe that a person who wished to obtain the tax advantage
mentioned in subsection (4)(c) might enter into—

(a) 30transactions of the nature developed, or

(b) transactions not substantially different from transactions of that nature.

(6) A person is not a promoter in relation to a relevant proposal or relevant
arrangements by reason of anything done in prescribed circumstances.

(7) Regulations under subsection (6) may contain provision having retrospective
35effect.

229 Meaning of “intermediary”

For the purposes of this Part a person (“A”) is an intermediary in relation to a
relevant proposal if—

(a) A communicates information about the relevant proposal to another
40person in the course of a business,

(b) the communication is made with a view to that other person, or any
other person, entering into transactions forming part of the proposed
arrangements, and

(c) A is not a promoter in relation to the relevant proposal.

Conduct notices

230 Duty to give conduct notice

(1) Subsections (5) to (9) apply if an authorised officer becomes aware at any time
that a person (“P”) who is carrying on a business as a promoter—

(a) 5has, in the period of 3 years ending with that time, met one or more
threshold conditions, and

(b) was carrying on a business as a promoter when P met that condition.

(2) Part 1 of Schedule 30 sets out the threshold conditions and describes how they
are met.

(3) 10Part 2 of that Schedule contains provision about the meeting of threshold
conditions by bodies corporate.

(4) See also Schedule 32 (which contains provision about the meeting of threshold
conditions and other conditions by partnerships).

(5) The authorised officer must determine whether or not P’s meeting of the
15condition mentioned in subsection (1)(a) (or, as the case requires, P’s meeting
of all those conditions, taken together) should be regarded as significant in
view of the purposes of this Part.

(6) Subsection (5) does not apply if a conduct notice or a monitoring notice already
has effect in relation to P.

(7) 20If the authorised officer determines under subsection (5) that P’s meeting of the
condition or conditions in question should be regarded as significant, the
officer must give P a conduct notice, unless subsection (8) applies.

(8) This subsection applies if the authorised officer determines that, having regard
to the extent of the impact that P’s activities as a promoter are likely to have on
25the collection of tax, it is inappropriate to give P a conduct notice.

(9) The authorised officer must determine under subsection (5) that the meeting of
the condition (or all the conditions) mentioned in subsection (1)(a) should be
regarded as significant if the condition (or any of the conditions) is in any of the
following paragraphs of Schedule 30—

(a) 30paragraph 2 (deliberate tax defaulters);

(b) paragraph 3 (breach of Banking Code of Practice);

(c) paragraph 4 (dishonest tax agents);

(d) paragraph 6 (persons charged with certain offences);

(e) paragraph 7 (opinion notice of GAAR Advisory Panel).

231 35Contents of a conduct notice

(1) A conduct notice is a notice requiring the person to whom it has been given
(“the recipient”) to comply with conditions specified in the notice.

(2) Before deciding on the terms of a conduct notice, the authorised officer must
give the person to whom the notice is to be given an opportunity to comment
40on the proposed terms of the notice.

(3) A notice may include only conditions that it is reasonable to impose for any of
the following purposes—

(a) to ensure that the recipient provides adequate information to its clients
about relevant proposals, and relevant arrangements, in relation to
which the recipient is a promoter;

(b) to ensure that the recipient provides adequate information about
5relevant proposals in relation to which it is a promoter to persons who
are intermediaries in relation to those proposals;

(c) to ensure that the recipient does not fail to comply with any duty under
a specified disclosure provision;

(d) to ensure that the recipient does not discourage others from complying
10with any obligation to disclose to HMRC information of a description
specified in the notice;

(e) to ensure that the recipient does not enter into an agreement with
another person (“C”) which relates to a relevant proposal or relevant
arrangements in relation to which the recipient is a promoter, on terms
15which—

(i) impose a contractual obligation on C which falls within
paragraph 11(2) or (3) of Schedule 30 (contractual terms
restricting disclosure), or

(ii) impose on C obligations within both paragraph 11(4) and (5) of
20that Schedule (contractual terms requiring contribution to
fighting funds and restricting settlement of proceedings);

(f) to ensure that the recipient does not promote relevant proposals or
relevant arrangements which rely on, or involve a proposal to rely on,
one or more contrived or abnormal steps to produce a tax advantage;

(g) 25to ensure that the recipient does not fail to comply with any stop notice
which has effect under paragraph 12 of Schedule 30.

(4) References in subsection (3) to ensuring that adequate information is provided
about proposals or arrangements include—

(a) ensuring the adequacy of the description of the arrangements or
30proposed arrangements;

(b) ensuring that the information includes an adequate assessment of the
risk that the arrangements or proposed arrangements will fail;

(c) ensuring that the information does not falsely state, and is not likely to
create a false impression, that HMRC have (formally or informally)
35considered, approved or expressed a particular opinion in relation to
the proposal or arrangements.

(5) In subsection (3)(c) “specified disclosure provision” means a disclosure
provision that is specified in the notice; and for this purpose “disclosure
provision” means any of the following—

(a) 40section 308 of FA 2004 (disclosure of tax avoidance schemes: duties of
promoter);

(b) section 312 of FA 2004 (duty of promoter to notify client of number);

(c) sections 313ZA and 313ZB of FA 2004 (duties to provide details of
clients and certain others);

(d) 45Part 1 of Schedule 36 to FA 2008 (duties to provide information and
produce documents).

(6) In subsection (4)(b) “fail”, in relation to arrangements or proposed
arrangements, means not result in a tax advantage which the arrangements or
(as the case may be) proposed arrangements might be expected to result in.

(7) The Treasury may by regulations amend the definition of “disclosure
provision” in subsection (5).

232 Section 231: supplementary

(1) In section 231 the following expressions are to be interpreted as follows.

(2) 5“Adequate” means adequate having regard to what it might be reasonable for
a client or (as the case may be) an intermediary to expect; and “adequacy” is to
be interpreted accordingly.

(3) A person (“C”) is a “client” of a promoter, if at any time when a conduct notice
has effect, the promoter—

(a) 10makes a firm approach to C in relation to a relevant proposal with a
view to the promoter making the proposal available for
implementation by C or another person;

(b) makes a relevant proposal available for implementation by C;

(c) takes part in the organisation or management of relevant arrangements
15entered into by C.

(4) The recipient of a conduct notice “promotes” a relevant proposal if it—

(a) takes part in designing the proposal,

(b) makes a firm approach to a person in relation to the proposal with a
view to making the proposal available for implementation by that
20person or another person, or

(c) makes the proposal available for implementation by persons (other
than the recipient).

(5) The recipient of a conduct notice “promotes” relevant arrangements if it takes
part in designing, organising or managing the arrangements.

233 25Amendment or withdrawal of conduct notice

(1) This section applies where a conduct notice has been given to a person.

(2) An authorised officer may at any time amend the notice.

(3) An authorised officer—

(a) may withdraw the notice if the officer thinks it is not necessary for it to
30continue to have effect, and

(b) in considering whether or not that is necessary must take into account
the person’s record of compliance, or failure to comply, with the
conditions in the notice.

234 Duration of conduct notice

(1) 35A conduct notice has effect from the date specified in it as its commencement
date.

(2) A conduct notice ceases to have effect—

(a) at the end of the period of two years beginning with its commencement
date, or

(b) 40if an earlier date is specified in it as its termination date, at the end of
that day.

(3) A conduct notice ceases to have effect if withdrawn by an authorised officer
under section 233.

(4) A conduct notice ceases to have effect in relation to a person when a
monitoring notice takes effect in relation to that person.

5Monitoring notices: procedure and publication

235 Monitoring notices: duty to apply to tribunal

(1) If—

(a) a conduct notice has effect in relation to a person who is carrying on a
business as a promoter, and

(b) 10an authorised officer determines that the person has failed to comply
with one or more conditions in the notice,

the authorised officer must apply to the tribunal for approval to give the
person a monitoring notice.

(2) An application under subsection (1) must include a draft of the monitoring
15notice.

(3) Subsection (1) does not apply if—

(a) the condition (or all the conditions) mentioned in subsection (1)(b) were
imposed under subsection (3)(a), (b) or (c) of section 231, and

(b) the authorised officer considers that the failure to comply with the
20condition (or all the conditions, taken together) is such a minor matter
that it should be disregarded for the purposes of this section.

(4) Where an authorised officer makes an application to the tribunal under
subsection (1), the officer must at the same time give notice to the person to
whom the application relates.

(5) 25The notice under subsection (4) must state which condition (or conditions) the
authorised officer has determined under subsection (1)(b) that the person has
failed to comply with and the reasons for that determination.

236 Monitoring notices: tribunal approval

(1) On an application under section 235, the tribunal may approve the giving of a
30monitoring notice only if—

(a) the tribunal is satisfied that, in the circumstances, the authorised officer
would be justified in giving the monitoring notice, and

(b) the person to whom the monitoring notice is to be given (“the affected
person”) has been given a reasonable opportunity to make
35representations to the tribunal.

(2) The tribunal may amend the draft notice included with the application under
section 235.

(3) If the representations that the affected person makes to the tribunal include a
statement that in the affected person’s view it was not reasonable to include the
40condition mentioned in section 235(1)(b) in the conduct notice, the tribunal
must refuse to approve the giving of the monitoring notice if it is satisfied that
it was not reasonable to include that condition (but see subsection (4)).

(4) If the representations made to the tribunal include the statement described in
subsection (3) and the determination under section 235(1)(b) is a determination
that there has been a failure to comply with more than one condition in the
conduct notice—

(a) 5subsection (3) does not apply, but

(b) in deciding whether or not to approve the giving of the monitoring
notice, the tribunal is to assume, in the case of any condition that the
tribunal considers it was not reasonable to include in the conduct
notice, that there has been no failure to comply with that condition.

237 10Monitoring notices: content and issuing

(1) Where the tribunal has approved the giving of a monitoring notice, the
authorised officer must give the notice to the person to whom it relates.

(2) A monitoring notice given under subsection (1) or paragraph 9 or 10 of
Schedule 32 must—

(a) 15explain the effect of the monitoring notice and specify the date from
which it takes effect;

(b) inform the recipient of the right to request the withdrawal of the
monitoring notice under section 238.

(3) In addition, a monitoring notice must—

(a) 20if given under subsection (1), state which condition (or conditions) it
has been determined the person has failed to comply with and the
reasons for that determination;

(b) if given under paragraph 9 or 10 of Schedule 32, state the date of the
original monitoring notice and name the partnership to which that
25notice was given.

(4) The date specified under subsection (2)(a) must not be earlier than the date on
which the monitoring notice is given.

(5) In this Part, a person in relation to whom a monitoring notice has effect is called
a “monitored promoter”.

238 30Withdrawal of monitoring notice

(1) A person in relation to whom a monitoring notice has effect may, at any time
after the end of the period of 12 months beginning with the end of the appeal
period, request that the notice should cease to have effect.

(2) The “appeal period” means—

(a) 35the period during which an appeal could be brought against the
approval by the tribunal of the giving of the monitoring notice, or

(b) where an appeal mentioned in paragraph (a) has been brought, the
period during which that appeal has not been finally determined,
withdrawn or otherwise disposed of.

(3) 40A request under this section is to be made in writing to an authorised officer.

(4) Where a request is made under this section, an authorised officer must within
30 days beginning with the day on which the request is received determine
either—

(a) that the monitoring notice is to cease to have effect, or

(b) that the request is to be refused.

(5) The matters to be taken into account by an authorised officer in making a
determination under subsection (4) include—

(a) whether or not the person subject to the monitoring notice has, since the
5time when the notice took effect, engaged in behaviour of a sort that
conditions included in a conduct notice in accordance with section
231(3) could be used to regulate;

(b) whether or not it appears likely that the person will in the future engage
in such behaviour;

(c) 10the person’s record of compliance, or failure to comply, with
obligations imposed on it under this Part, since the time when the
monitoring notice took effect.

(6) An authorised officer—

(a) may withdraw a monitoring notice if the officer thinks it is not
15necessary for it to continue to have effect, and

(b) in considering whether or not that is necessary, the officer must take
into account the matters in paragraphs (a) to (c) of subsection (5).

(7) If the authorised officer makes a determination under subsection (4)(a), or
decides to withdraw a monitoring notice under subsection (6), the officer must
20also determine that the person is, or is not, to be given a follow-on conduct
notice.

(8) “Follow-on conduct notice” means a conduct notice taking effect immediately
after the monitoring notice ceases to have effect.

(9) Where the monitoring notice mentioned in subsection (1) is a replacement
25monitoring notice—

(a) in subsection (1) the reference to the end of the appeal period is to be
read as a reference to whichever is the later of the end of the appeal
period for the original monitoring notice and the date the replacement
monitoring notice takes effect, and

(b) 30in subsection (5)(a) and (c) the time referred to is to be read as the time
when the original monitoring notice (see paragraph 11(2) of Schedule
32) took effect.

239 Notification of determination under section 238

(1) Where an authorised officer makes a determination under section 238(4), that
35officer, or an officer of Revenue and Customs with that officer’s approval, must
notify the person who made the request of the determination.

(2) If the determination is that the monitoring notice is to cease to have effect, the
notice must—

(a) specify the date from which the monitoring notice is to cease to have
40effect, and

(b) inform the person of the determination made under section 238(7).

(3) If the determination is that the request is to be refused, the notice must inform
the person who made the request—

(a) of the reasons for the refusal, and

(b) 45of the right to appeal under section 240.

240 Appeal against refusal to withdraw monitoring notice

(1) A person may appeal against a refusal by an authorised officer of a request that
a monitoring notice should cease to have effect.

(2) Notice of appeal must be given—

(a) 5in writing to the officer who gave the notice of the refusal under section
238, and

(b) within the period of 30 days beginning with the day on which notice of
the refusal was given.

(3) The notice of appeal must state the grounds of appeal.

(4) 10On an appeal that is notified to the tribunal, the tribunal may—

(a) confirm the refusal, or

(b) direct that the monitoring notice is to cease to have effect.

(5) Subject to this section, the provisions of Part 5 of TMA 1970 relating to appeals
have effect in relation to an appeal under this section.

241 15Publication by HMRC

(1) An authorised officer may publish the fact that a person is a monitored
promoter.

(2) Publication under subsection (1) may also include the following information
about the monitored promoter—

(a) 20its name;

(b) its business address or registered office;

(c) the nature of the business mentioned in section 235(1)(a);

(d) any other information that the authorised officer considers it
appropriate to publish in order to make clear the monitored promoter’s
25identity.

(3) The reference in subsection (2)(a) to the monitored promoter’s name includes
any name under which it carries on a business as a promoter and any previous
name or pseudonym.

(4) Publication under subsection (1) may also include a statement of which of the
30conditions in a conduct notice it has been determined that the person (or, in the
case of a replacement monitoring notice, the person to whom the original
monitoring notice was given) has failed to comply with.

(5) Publication may not take place before the end of the appeal period (or, in the
case of a replacement monitoring notice, the appeal period for the original
35monitoring notice).

(6) The “appeal period”, in relation to a monitoring notice, means—

(a) the period during which an appeal could be brought against the
approval by the tribunal of the giving of the notice, or

(b) where an appeal mentioned in paragraph (a) has been brought, the
40period during which that appeal has not been finally determined,
withdrawn or otherwise disposed of.

(7) Publication under this section is to be in such manner as the authorised officer
thinks fit; but see subsection (8).