Finance Bill (HC Bill 1)

(a) the total amount of the penalties under section 201(2) for which the
relevant partners are liable is 20% of the value of the denied
advantage,

(b) the amount of the penalty for which each relevant partner is liable is
5that partner’s appropriate share of that total amount, and

(c) the value of the denied advantage for the purposes of calculating the
total amount of the penalties is—

(i) in the case of a notice given under section 197(2)(a), the net
amount of the amendments required to be made to the
10partnership return to counteract the denied advantage, and

(ii) in the case of a notice given under section 197(2)(b), the net
amount of the amendments that have been made to the
partnership return to counteract the denied advantage,

(and, accordingly, Schedule 26 does not apply).

(3) 15For the purposes of sub-paragraph (2), a relevant partner’s appropriate
share is—

(a) the same share as the share in which any profits or loss for the period
to which the return relates would be apportioned to that partner in
accordance with the firm’s profit-sharing arrangements, or

(b) 20if HMRC do not have sufficient information from P to establish that
share, such share as is determined for the purposes of this paragraph
by an officer of HMRC.

(4) Where—

(a) the relevant partners are liable to pay a penalty under section 201(2)
25(as modified by this paragraph),

(b) the penalties have not yet been assessed, and

(c) P has co-operated with HMRC,

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
30quality of that co-operation.

(5) Nothing in sub-paragraph (4) permits HMRC to reduce the total amount of
the 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
35virtue 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
partner 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
40virtue of this paragraph, and

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

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

(8) 45Section 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) An 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
5the time being specified in sub-paragraphs (2)(a) and (5).

(11) Any 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

10Interpretation

1 (1) This 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
15person who was required by a notice served under or for the purposes of
section 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) 20References to a “successor”, in relation to the representative partner, are to
be 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) 25an appeal has been made in relation to an amendment of such a
return 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
30appeal.

(3) But 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,
35HMRC may give a notice (a “partner payment notice”) to each relevant
partner 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
enquiry into the return.

(3)
Condition B is that the return or, as the case may be, appeal is made on the
5basis 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)
as 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) 10HMRC 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) in relation to the same return or, as the case may be, appeal,
and

(ii) 15by reason of the same tax advantage resulting from the same
tax arrangements,

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

(c) the relevant partner in question has been given a GAAR
20counteraction 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
opinion of at least two of the members of the sub-panel of the GAAR
Advisory Panel which considered the matter under paragraph 10 of
25Schedule 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) “GAAR counteraction notice” has the meaning given by section 212(7).

Content of partner payment notices

4 (1) 30 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) specify the payment required to be made under paragraph 6, and

(c) explain the effect of paragraphs 5 and 6, and of the amendments
35made 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
the amount which a designated HMRC officer determines, to the best of the
officer’s information and belief, as the understated partner tax.

(3) 40“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
where a partnership follower notice is given)—

(i) it were assumed that the explanation given in the follower
45notice 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

counteracted 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
5made as are required to counteract so much of what the designated
HMRC 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
10the adjustments set out in the GAAR counteraction notice are made
as 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
15meaning given by paragraph 4(3) of Schedule 27,

(b) in 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
20much of the asserted advantage as would be counteracted by making
the 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
25stated in the notice as being used for this purpose.

Representations 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
30to 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) objecting to the amount specified in the notice under paragraph
4(1)(b).

(3) 35HMRC must consider any representations made in accordance with sub-
paragraph (2).

(4) Having considered the representations, HMRC must—

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

(i) 40to confirm the partner payment notice (with or without
amendment), or

(ii) to withdraw the partner payment notice, and

(b) if representations were made under sub-paragraph (2)(b) (and the
notice is not withdrawn under paragraph (a)), determine whether a
45different amount ought to have been specified as the understated
partner tax, and then—

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

(ii) amend 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) 5The 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) 10The 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
15payment 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
20relevant 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) 25Subsections (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) 30references in that section to the accelerated payment were to the
accelerated 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) 35Section 220 (withdrawal, modification or suspension of accelerated payment
notice) 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) 40Accordingly, for this purpose—

(a) section 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 Part 4: consequential amendments

5Taxes 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
follower notice),”.

2 10In 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) Part 4 of the Finance Act 2014 (follower notices and
15accelerated 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) In sub-paragraph (2) “any other penalty” does not include a
20penalty 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) 25In sub-paragraph (1) “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 In paragraph 17 of Schedule 55 to FA 2009 (penalty for failure to make
30returns 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

SCHEDULE 30 Promoters of tax avoidance schemes: threshold conditions

Part 1 Meeting the threshold conditions: general

5Meaning of “threshold condition”

1 Each 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
10about the person in reliance on section 94 of FA 2009 (publishing details of
deliberate 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
15breached the Code of Practice on Taxation for Banks by reason of promoting
arrangements 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
20paragraph 4 of Schedule 38 to FA 2012 (tax agents: dishonest conduct) and
either—

(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
25confirmed the determination referred to in sub-paragraph (1) of
paragraph 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
30schemes)—

(a) section 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) 35section 310 (duty of parties to notifiable arrangements not involving
promoter);

(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
40for not doing the thing required to be done.

Criminal 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
5the purposes of this paragraph if—

(a) the 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)
10if an appeal has been brought against the acquittal and has not yet been
disposed of.

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

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

(b) 15in Scotland, an offence at common law of—

(i) fraud;

(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) 20an offence under section 106A of TMA 1970 (fraudulent evasion of
income 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) 25section 50(2) (improper importation of goods with intent to
defraud or evade duty);

(ii) section 167 (untrue declarations etc);

(iii) section 168 (counterfeiting documents etc);

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

(v) 30section 170B (taking steps for the fraudulent evasion of duty);

(g) an 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) 35section 72(8) (conduct involving commission of other offence
under 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
40Revenue and Customs);

(ii) section 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
45Regulations 2007 (S.I. 2007/2157S.I. 2007/2157);

(k) an offence under section 49(1) of the Criminal Justice and Licensing
(Scotland) Act 2010 (asp 13)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
been referred to the GAAR Advisory Panel under Schedule 43 to FA
52013,

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

(i) 10state 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) A person meets this condition if a professional body—

(a) 15determines 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) imposes on the person a penalty of a kind so prescribed.

(2) 20Misconduct 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) A “professional body” means—

(a) 25the 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) the General Council of the Bar of Northern Ireland;

(f) 30the 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) 35the 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
40sanction 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) prescribed.

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

(a) the Financial Conduct Authority;

(b) 5the Financial Services Authority;

(c) any 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) 10A person meets this condition if the person fails to comply with an
information 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
15expires (without the person having complied with it).

Restrictive 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) 20impose a contractual obligation on C which falls within sub-
paragraph (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
25restricts the disclosure by C to HMRC of information relating to the
proposals 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
30proposals 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
35in 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
40is 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,
45or