Finance Bill (HC Bill 1)

(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
5discontinued.

(7) In this paragraph—

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

• 10“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
15the 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
20persons.

(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
25each 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
30by those arrangements;

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

(i) the follower notice has not been withdrawn, and

(ii) if representations objecting to the follower notice were made
under section 200 (representations about a follower notice),
35HMRC have confirmed the follower notice.

(4) A stop notice must—

(a) specify the arrangements which are the subject of the follower notice
mentioned in sub-paragraph (3)(a),

(b) specify the judicial ruling identified in that follower notice,

(c) 40specify a relevant proposal in relation to which the condition in sub-
paragraph (3)(b) is met, and

(d) explain the effect of the stop notice.

(5) An authorised officer may determine that a stop notice given to a person is
to cease to have effect.

(6) 45If an authorised officer makes a determination under sub-paragraph (5) the
officer must give the person written notice of the determination.

(7) The notice must specify the date from which it takes effect, which may be
earlier than the date on which the notice is given.

(8) In this paragraph—

• “the notice period” means the period of 30 days beginning with the day
  5on which a stop notice is given;

• “judicial ruling” means a ruling of a court or tribunal.

Part 2 Meeting the threshold conditions: bodies corporate

13 (1) Sub-paragraph (2) applies where—

(a) 10a relevant threshold condition is met by a person (“P”) at a time (“the
earlier time”) when P has control of a body corporate,

(b) a determination under section 230 is made at a later time in relation
to the body corporate, and

(c) P has control of the body corporate at the time of the determination.

(2) 15The body corporate is regarded as having met the threshold condition at the
earlier time.

(3) “Relevant threshold condition” means a threshold condition specified in any
of the following paragraphs of Schedule 30—

(a) paragraph 2 (deliberate tax defaulters);

(b) 20paragraph 4 (dishonest tax agents);

(c) paragraph 6 (criminal offences);

(d) paragraph 7 (opinion notice of GAAR advisory panel);

(e) paragraph 8 (disciplinary action by professional body);

(f) paragraph 9 (disciplinary action by regulatory authority);

(g) 25paragraph 10 (failure to comply with information notice).

(4) For the purposes of this paragraph a person (“P”) has control of a body
corporate (“B”) if P has power to secure—

(a) by means of the holding of shares or the possession of voting power
in relation to B or any other body corporate, or

(b) 30as a result of any powers conferred by the articles of association or
other document regulating B or any other body corporate,

that the affairs of B are conducted in accordance with P’s wishes.

Part 3 Power to amend

14 (1) 35The Treasury may by regulations amend this Schedule.

(2) An amendment made by virtue of sub-paragraph (1) may, in particular—

(a) vary or remove any of the conditions set out in paragraphs 2 to 12;

(b) add new conditions.

(3) Regulations under sub-paragraph (1) may include any amendment of this
40Part of this Act that is appropriate in consequence of an amendment made
by virtue of sub-paragraph (1).

Section 267

SCHEDULE 31 Promoters of tax avoidance schemes: penalties

Introduction

1 In this Schedule a reference to an “information duty” is to a duty arising
5under any of the following provisions to provide information or produce a
document—

(a) section 248 (duty to provide information or produce document);

(b) section 250 (ongoing duty to provide information);

(c) section 251 (duty of person dealing with non-resident promoter);

(d) 10section 252 (monitored promoter: duty to provide information about
clients);

(e) section 253 (intermediaries: duty to provide information about
clients);

(f) section 254 (duty to provide information about clients following
15enquiry);

(g) section 255 (information required for monitoring compliance with
conduct notice);

(h) section 256 (information about monitored promoter’s address).

Penalties for failure to comply

2 (1) 20A person who fails to comply with a duty imposed by or under this Part
mentioned in column 1 of the Table is liable to a penalty not exceeding the
amount shown in relation to that provision in column 2 of the Table.

(2) In relation to a failure to comply with section 242(1), 244, 245, 252 or 253 the
maximum penalty specified in column 2 of the Table is a maximum penalty
which may be imposed in respect of each person to whom the failure relates.

(3) In relation to a failure to comply with section 246, the “relevant amount” is—

(a) 30£5,000, unless paragraph (b) or (c) applies;

(b) £7,500, where a person has previously failed to comply with section
246 on one (and only one) occasion during the period of 36 months
ending with the date on which the current failure occurred;

(c) £10,000, where a person has previously failed to comply with section
35246 on two or more occasions during the period mentioned in
paragraph (b).

(4) The amount of a penalty imposed under sub-paragraph (1) is to be arrived
at after taking account of all relevant considerations, including the
desirability of setting it at a level which appears appropriate for deterring
40the person, or other persons, from similar failures to comply on future
occasions having regard (in particular)—

(a) in the case of a penalty imposed for a failure to comply with section
248 or 250, to the amount of fees received, or likely to have been

received, by the person in connection with the monitored proposal,
arrangements implementing the monitored proposal or monitored
arrangements to which the information or document required as a
result of section 248 or 250 relates;

(b) 5in the case of a penalty imposed in relation to a failure to comply
with section 251(3) or (4), to the amount of any tax advantage gained,
or sought to be gained, by the person in relation to the monitored
arrangements or the arrangements implementing the monitored
proposal.

10Daily default penalties for failure to comply

3 (1) If the failure to comply with an information duty continues after a penalty is
imposed under paragraph 2(1), the person is liable to a further penalty or
penalties not exceeding the relevant sum for each day on which the failure
continues after the day on which the penalty under paragraph 2(1) was
15imposed.

(2) In sub-paragraph (1) “the relevant sum” means—

(a) £10,000, in a case where the maximum penalty which could have
been imposed for the failure was £1,000,000;

(b) £600, in cases not falling within paragraph (a).

20Penalties for inaccurate information and documents

4 (1) If—

(a) in complying with an information duty, a person provides
inaccurate information or produces a document that contains an
inaccuracy, and

(b) 25condition A, B or C is met,

the person is liable to a penalty not exceeding the relevant sum.

(2) Condition A is that the inaccuracy is careless or deliberate.

(3) An inaccuracy is careless if it is due to a failure by the person to take
reasonable care.

(4) 30For the purpose of determining whether or not a person who is a monitored
promoter took reasonable care, reliance on legal advice is to be disregarded
if either—

(a) the advice was not based on a full and accurate description of the
facts, or

(b) 35the conclusions in the advice that the person relied on were
unreasonable.

(5) For the purpose of determining whether or not a person who complies with
a duty under section 251 took reasonable care, reliance on legal advice is to
be disregarded if the advice was given or procured by the monitored
40promoter mentioned in subsection (1) of that section.

(6) Condition B is that the person knows of the inaccuracy at the time the
information is provided or the document produced but does not inform
HMRC at that time.

(7) Condition C is that the person—

(a) 45discovers the inaccuracy some time later, and

(b) fails to take reasonable steps to inform HMRC.

(8) The “relevant sum” means—

(a) £1,000,000, where the information is provided or document
produced in compliance with a duty under section 248, 250 or 251;

(b) 5£10,000, where the information is provided in compliance with a
duty under section 254;

(c) £5,000, where the information is provided or document produced in
compliance with a duty under section 252, 253, 255 or 256.

(9) If the information or document contains more than one inaccuracy, one
10penalty is payable under this paragraph whatever the number of
inaccuracies.

Power to change amount of penalties

5 (1) If it appears to the Treasury that there has been a change in the value of
money since the last relevant date, they may by regulations substitute for the
15sums for the time being specified in paragraph 2, 3 or 4 such other sums as
appear to them to be justified by the change.

(2) Regulations under sub-paragraph (1) may include any amendment of
paragraph 10(b) that is appropriate in consequence of an amendment made
by virtue of sub-paragraph (1).

(3) 20The “relevant date”, in relation to a specified sum, means—

(a) the date on which this Act is passed, and

(b) each date on which the power conferred by sub-paragraph (1) has
been exercised in relation to that sum.

Concealing, destroying etc documents following imposition of a duty to provide information

6 (1) 25A person must not conceal, destroy or otherwise dispose of, or arrange for
the concealment, destruction or disposal of, a document which is subject to
a duty under section 248, 250 or 255.

(2) Sub-paragraph (1) does not apply if the person acts after the document has
been produced to an officer of Revenue and Customs in accordance with the
30duty, unless the officer has notified the person in writing that the document
must continue to be available for inspection (and has not withdrawn the
notification).

(3) Sub-paragraph (1) does not apply, in a case to which section 261(1) applies,
if the person acts after the expiry of the period of 6 months beginning with
35the day on which a copy of the document was produced in accordance with
that section unless, before the expiry of that period, an officer of Revenue
and Customs makes a request for the original document under section
261(2)(b).

(4) A person who conceals, destroys or otherwise disposes of, or arranges for
40the concealment, destruction or disposal of, a document in breach of sub-
paragraph (1), is taken to have failed to comply with the duty to produce the
document under the provision concerned (but see sub-paragraph (5)).

(5) If a person conceals, destroys or otherwise disposes of, or arranges for the
concealment, destruction or disposal of, a document which is subject to a

duty under more than one of the provisions mentioned in sub-paragraph (1)
then—

(a) in a case where a duty under section 248 applies, the person will be
taken to have failed to comply only with that provision, or

(b) 5in a case where a duty under section 248 does not apply, the person
will be taken to have failed to comply only with section 250.

Concealing, destroying etc documents following informal notification

7 (1) A person must not conceal, destroy or otherwise dispose of, or arrange for
the concealment, destruction or disposal of, a document if an officer of
10Revenue and Customs has informed the person in writing that the person is,
or is likely, to be given a notice under 248, 250 or 255 the effect of which will,
or is likely to, require the production of the document.

(2) Sub-paragraph (1) does not apply if the person acts—

(a) at least 6 months after the person was, or was last, informed as
15described in sub-paragraph (1), or

(b) after the person becomes subject to a duty under 248, 250 or 255
which requires the document to be produced.

(3) A person who conceals, destroys or otherwise disposes of, or arranges for
the concealment, destruction or disposal of, a document in breach of sub-
20paragraph (1), is taken to have failed to comply with the duty to produce the
document under the provision concerned (but see sub-paragraph (4)).

(4) If a person conceals, destroys or otherwise disposes of, or arranges for the
concealment, destruction or disposal of, a document which is subject to a
duty under more than one of the provisions mentioned in sub-paragraph (1)
25then—

(a) in a case where a duty under section 248 applies, the person will be
taken to have failed to comply only with that provision, or

(b) in a case where a duty under section 248 does not apply, the person
will be taken to have failed to comply only with section 250.

30Failure to comply with time limit

8 A failure to do anything required to be done within a limited period of time
does not give rise to liability to a penalty under this Schedule if the person
did it within such further time, if any, as an officer of Revenue and Customs
or the tribunal may have allowed.

35Reasonable excuse

9 (1) Liability to a penalty under this Schedule does not arise if there is a
reasonable excuse for the failure.

(2) For the purposes of this paragraph—

(a) an insufficiency of funds is not a reasonable excuse unless
40attributable to events outside the person’s control,

(b) if the person relies on any other person to do anything, that is not a
reasonable excuse unless the first person took reasonable care to
avoid the failure,

(c) if the person had a reasonable excuse for the failure but the excuse
45has ceased, the person is to be treated as having continued to have

the excuse if the failure is remedied without unreasonable delay after
the excuse ceased,

(d) reliance on legal advice is to be taken automatically not to constitute
a reasonable excuse where the person is a monitored promoter if
5either—

(i) the advice was not based on a full and accurate description of
the facts, or

(ii) the conclusions in the advice that the person relied on were
unreasonable, and

(e) 10reliance on legal advice is to be taken automatically not to constitute
a reasonable excuse in the case of a penalty for failure to comply with
section 251, if the advice was given or procured by the monitored
promoter mentioned in subsection (1) of that section.

Assessment of penalty and appeals

10 15Part 10 of TMA 1970 (penalties, etc) has effect as if—

(a) the reference in section 100(1) to the Taxes Acts were read as a
reference to the Taxes Acts and this Schedule,

(b) in subsection (2) of section 100, there were inserted a reference to a
penalty under this Schedule, other than a penalty under paragraph 3
20of this Schedule in respect of which the relevant sum is £600.

Interest on penalties

11 (1) A penalty under this Schedule is to carry interest at the rate applicable under
section 178 of FA 1989 from the date it is determined until payment.

(2) In section 178 of FA 1989 (setting of rates of interest), in subsection (2) at the
25end of paragraph (t) insert “, and

(u) paragraph 11 of Schedule 31 to the Finance Act 2014.”

Double jeopardy

12 A person is not liable to a penalty under this Schedule in respect of anything
in respect of which the person has been convicted of an offence.

30Overlapping penalties

13 A person is not liable to a penalty under—

(a) Schedule 24 to the FA 2007 (penalties for errors),

(b) Part 7 of FA 2004, or

(c) any other provision which is prescribed,

35by reason of any failure to include in any return or account a reference
number required by section 246.

Section 274

SCHEDULE 32 Promoters of tax avoidance schemes: partnerships

Part 1 Partnerships as persons

5“Person” includes a partnership

1 (1) Persons carrying on a business in partnership—

(a) are regarded as a person for the purposes of this Part of this Act;

(b) are referred to in this Part as a “partnership”.

(2) But sub-paragraph (1) does not apply to a body of persons forming a legal
10person that is distinct from themselves.

(3) In the references in this Part to carrying on a business in partnership,
“partnership” has the same meaning as in the Partnership Act 1890.

Continuity of partnerships

2 A partnership is regarded for the purposes of this Part of this Act as
15continuing to be the same partnership (and the same person) regardless of a
change in membership, provided that a person who was a member before
the change remains a member after the change.

Meeting of conditions

3 (1) Accordingly, for the purposes of this Part of this Act a partnership is taken—

(a) 20to have done any act that bound the members, and

(b) to have failed to comply with any obligation of the firm which the
members failed to comply with;

but see sub-paragraph (3).

(2) In sub-paragraph (1), “the members” means those who were the members of
25the partnership or (in the case of a limited partnership) the general partners
of the partnership at the time when the act was done or the failure to comply
occurred.

(3) Where a member of a partnership (“M”) has done, or failed to do, an act at
any time (“the earlier time”), the partnership is not treated at any later time
30as having done, or failed to do, that act unless—

(a) M, or

(b) another person who was a member of the partnership at the earlier
time,

is a member of the partnership at the later time.

(4) 35In this paragraph “firm” has the same meaning as in the Partnership Act
1890.

Threshold conditions: actions of partners in a personal capacity

4 (1) Sub-paragraph (2) applies where—

(a) a relevant threshold condition is met by a person (“P”) at a time (“the
earlier time”) when P is a controlling member, or managing partner,
of a partnership,

(b) a determination under section 230 is made at a later time in relation
5to the partnership, and

(c) P is a controlling member, or managing partner, of the partnership at
the time of the determination.

(2) The partnership is regarded as having met the threshold condition at the
earlier time (regardless of whether or not the partnership was bound by the
10act or omission as a result of which P met the threshold condition).

(3) “Relevant threshold condition” means a threshold condition specified in any
of the following paragraphs of Schedule 30—

(a) paragraph 2 (deliberate tax defaulters);

(b) paragraph 4 (dishonest tax agents);

(c) 15paragraph 6 (criminal offences);

(d) paragraph 7 (opinion notice of GAAR advisory panel);

(e) paragraph 8 (disciplinary action by a professional body);

(f) paragraph 9 (disciplinary action by a regulatory authority);

(g) paragraph 10 (failure to comply with information notice).

20Part 2 Conduct notices and monitoring notices

Conduct notices

5 (1) A conduct notice that is given to a partnership must state that it is a
partnership conduct notice.

(2) 25In accordance with paragraphs 1 and 2, where the person to whom a conduct
notice is given is a partnership, section 231 authorises the imposition of
conditions relating to—

(a) the persons who are members of the partnership when the conduct
notice is given, and

(b) 30any person who becomes a member of the partnership after the
conduct notice is given.

Monitoring notices

6 A monitoring notice that is given to a partnership must state that it is a
partnership monitoring notice.

35Person continuing to carry on partnership business as a sole trader

7 (1) This paragraph applies where—

(a) a person or persons have ceased to be members of a partnership,

(b) immediately before the cessation, a conduct notice or monitoring
notice had effect in relation to the partnership, and

(c) 40immediately after the cessation, a person who was a member of the
partnership immediately before the cessation is carrying on the
business of the partnership, but not in partnership.