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Finance (No. 2) BillPage 320

tax of that partner (and hence in the payment
required to be made under paragraph 6).

(4B) “Surrenderable loss” means a loss or other amount within
section 99(1) of CTA 2010 (or part of such a loss or other
5amount)., and

(d) in sub-paragraph (5), for “the payment specified under sub-
paragraph (1)(b)” substitute “any payment specified under sub-
paragraph (1)(b) or amount specified under sub-paragraph (1)(d)”.

(3) In paragraph 5 (representations about a partner payment notice)—

(a) 10in sub-paragraph (2) omit the “or” at the end of paragraph (a), and
after paragraph (b) insert , or

(c) objecting to the amount specified in the notice under
paragraph 4(1)(d).,

(b) in sub-paragraph (4), omit the “and” at the end of paragraph (a),

(c) 15in paragraph (b) of that sub-paragraph, after “different amount”
insert “(or no amount)”,

(d) in that paragraph, omit the “or” at the end of sub-paragraph (i) and
after sub-paragraph (ii) insert , or

(none)(iii) remove from the notice the provision made
20under paragraph 4(1)(b),, and

(e) after that paragraph insert , and

(c) if representations were made under sub-paragraph
(2)(c) (and the notice is not withdrawn under
paragraph (a)), determine whether a different
25amount (or no amount) ought to have been
specified under paragraph 4(1)(d), and then—

(i) confirm the amount specified in the notice,

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

(iii) 30remove from the notice the provision made
under paragraph 4(1)(d),.

(4) In paragraph 6 (effect of partner payment notice)—

(a) for sub-paragraph (1) substitute—

(1) This paragraph applies where—

(a) 35a partner payment notice has been given to a
relevant partner (and not withdrawn), and

(b) an amount is stated in the notice in accordance with
paragraph 4(1)(b)., and

(5) After paragraph 6 insert—

6A (1) This paragraph applies where—

(a) an accelerated payment notice is given (and not
withdrawn), and

(b) 45an amount is specified in the notice in accordance with
paragraph 4(1)(d).

Finance (No. 2) BillPage 321

(2) The relevant partner may not at any time when the notice has
effect consent to any claim for group relief in respect of the amount
so specified.

(3) Subject to sub-paragraph (2), paragraph 75 (other than sub-
5paragraphs (7) and (8)) of Schedule 18 to FA 1998 (reduction in
amount available for surrender) has effect at any time when the
notice has effect as if that specified amount ceased to be an amount
available for surrender at the time the notice was given to the
relevant partner.

(4) 10For the purposes of sub-paragraph (3), paragraph 75 of that
Schedule has effect as if, in sub-paragraph (2) of that paragraph for
“within 30 days” there were substituted “before the end of the
payment period (within the meaning of paragraph 6(5) of
Schedule 32 to the Finance Act 2014)”.

(5) 15The time limits otherwise applicable to amendment of a company
tax return do not prevent an amendment being made in
accordance with paragraph 75(6) of Schedule 18 to FA 1998 where
the relevant partner withdraws consent by virtue of sub-
paragraph (3).

(6) 20In paragraph 8 (withdrawal, suspension or modification of partner payment
notices), in sub-paragraph (2)—

(a) before paragraph (a) insert—

(za) section 227(2)(d), (12A) and (16) has effect as if the
references to section 220(2)(d) or 221(2)(d) were to
25paragraph 4(1)(d) of this Schedule,, and

(b) omit the “and” after paragraph (a) and after paragraph (b) insert “,
and

(c) section 227(12A) has effect as if the reference to
section 225A(3) were to paragraph 6A(3) of this
30Schedule.

Consequential amendment

11 In section 55 of TMA 1970 (recovery of tax not postponed), in subsection (8C)
omit the “or” after paragraph (b) and after paragraph (c) insert , or

(d) the amount of tax specified in an assessment under
35paragraph 76 of Schedule 18 to the Finance Act 1998 where—

(i) an asserted surrenderable amount is specified in the
notice under section 220(2)(d) of the Finance Act 2014
or under paragraph 4(1)(d) of Schedule 32 to that Act,
and

(ii) 40the claimant company has failed to act in accordance
with paragraph 75(6) of Schedule 18 to the Finance
Act 1998.

Transitional provision

12 (1) Section 225A(3) of FA 2014 (effect of notices: surrender of losses ineffective)
45(inserted by paragraph 7 of this Schedule) has effect in relation to an amount
specified in a notice in accordance with section 220(2)(d) or 221(2)(d) of that
Act (inserted by paragraphs 3(2) and 4(2) of this Schedule) whether the

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consent to a claim for group relief was given, or the claim itself was made,
before or on or after the day on which this Act is passed.

(2) Paragraph 6A(3) of Schedule 32 to FA 2014 (partnerships: effect of notices:
surrender of losses ineffective) (inserted by paragraph 10(5) of this Schedule)
5has effect in relation to an amount specified in a notice in accordance with
paragraph 4(1)(d) of that Schedule (inserted by paragraph 10(2) of this
Schedule) whether the consent to a claim for group relief was given, or the
claim itself was made, before or on or after the day on which this Act is
passed.

Section 119

10SCHEDULE 19 Promoters of tax avoidance schemes

1 Part 5 of FA 2014 (promoters of tax avoidance schemes) is amended as
follows.

Treating persons as meeting a threshold condition

2 (1) 15Section 237 (duty to give conduct notice) is amended as follows.

(2) After subsection (1) insert—

(1A) Subsections (5) to (9) also apply if an authorised officer becomes
aware at any time (“the relevant time”) that—

(a) a person has, in the period of 3 years ending with the relevant
20time, met one or more threshold conditions,

(b) at the relevant time another person (“P”) meets one or more
of those conditions by virtue of Part 2 of Schedule 34 (meeting
the threshold conditions: bodies corporate and partnerships),
and

(c) 25P is, at the relevant time, carrying on a business as a
promoter.

(3) In subsection (3), for the words from “the” to the end substitute “when a
person is treated as meeting a threshold condition”.

(4) For subsection (5) substitute—

(5) 30The authorised officer must determine—

(a) in a case within subsection (1), whether or not P’s meeting of
the condition mentioned in subsection (1)(a) (or, if more than
one condition is met, the meeting of all of those conditions,
taken together) should be regarded as significant in view of
35the purposes of this Part, or

(b) in a case within subsection (1A), whether or not—

(i) the meeting of the condition by the person as
mentioned in subsection (1A)(a) (or, if more than one
condition is met, the meeting of all of those
40conditions, taken together), and

(ii) P’s meeting of the condition (or conditions) as
mentioned in subsection (1A)(b),

should be regarded as significant in view of those purposes.

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(5) In subsection (7), for “subsection (5)” substitute “subsection (5)(a)”.

(6) After subsection (7) insert—

(7A) If the authorised officer determines under subsection (5)(b) that
both—

(a) 5the meeting of the condition or conditions by the person as
mentioned in subsection (1A)(a), and

(b) P’s meeting of the condition or conditions as mentioned in
subsection (1A)(b),

should be regarded as significant, the officer must give P a conduct
10notice, unless subsection (8) applies.

(7) In subsection (9), omit “mentioned in subsection (1)(a)”.

(8) After subsection (9) insert—

(10) If, as a result of subsection (1A), subsections (5) to (9) apply to a
person, this does not prevent the giving of a conduct notice to the
15person mentioned in subsection (1A)(a).

3 In section 283 (interpretation of Part 5), in the definition of “conduct notice”,
after “section 237(7)” insert “or (7A)”.

4 (1) Part 2 of Schedule 34 (meeting the threshold conditions) is amended as
follows.

(2) 20In the heading, at the end insert “and partnerships”.

(3) For paragraph 13 substitute—

Interpretation

13A (1) This paragraph contains definitions for the purposes of this Part of
this Schedule.

(2) 25Each of the following is a “relevant body”—

(a) a body corporate, and

(b) a partnership.

(3) “Relevant time” means the time referred to in section 237(1A)
(duty to give conduct notice to person treated as meeting
30threshold condition).

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

(a) paragraph 2 (deliberate tax defaulters);

(b) paragraph 4 (dishonest tax agents);

(c) 35paragraph 6 (criminal offences);

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

(e) paragraph 8 (disciplinary action against a member of a
trade or profession);

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

(g) 40paragraph 10 (failure to comply with information notice).

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(5) A person controls a body corporate if the person has power to
secure that the affairs of the body corporate are conducted in
accordance with the person’s wishes—

(a) by means of the holding of shares or the possession of
5voting power in relation to the body corporate or any other
relevant body,

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

(c) 10by means of controlling a partnership.

(6) A person controls a partnership if the person is a controlling
member or the managing partner of the partnership.

(7) “Controlling member” has the same meaning as in Schedule 36
(partnerships).

(8) 15“Managing partner”, in relation to a partnership, means the
member of the partnership who directs, or is on a day-to-day level
in control of, the management of the business of the partnership.

Treating persons under another’s control as meeting a threshold condition

13B (1) A relevant body (“RB”) is treated as meeting a threshold condition
20at the relevant time if—

(a) the threshold condition was met by a person (“C”) at a time
when—

(i) C was carrying on a business as a promoter, or

(ii) RB was carrying on a business as a promoter and C
25controlled RB, and

(b) RB is controlled by C at the relevant time.

(2) Where C is an individual sub-paragraph (1) applies only if the
threshold condition mentioned in sub-paragraph (1)(a) is a
relevant threshold condition.

(3) 30For the purposes of determining whether the requirements of sub-
paragraph (1) are met by reason of meeting the requirement in
sub-paragraph (1)(a)(i), it does not matter whether RB existed at
the time when the threshold condition was met by C.

Treating persons in control of others as meeting a threshold condition

13C (1) 35A person other than an individual is treated as meeting a
threshold condition at the relevant time if—

(a) a relevant body (“A”) met the threshold condition at a time
when A was controlled by the person, and

(b) at the time mentioned in paragraph (a) A, or another
40relevant body (“B”) which was also at that time controlled
by the person, carried on a business as a promoter.

(2) For the purposes of determining whether the requirements of sub-
paragraph (1) are met it does not matter whether A or B (or
neither) exists at the relevant time.

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Treating persons controlled by the same person as meeting a threshold condition

13D (1) A relevant body (“RB”) is treated as meeting a threshold condition
at the relevant time if—

(a) RB or another relevant body met the threshold condition at
5a time (“time T”) when it was controlled by a person (“C”),

(b) at time T, there was a relevant body controlled by C which
carried on a business as a promoter, and

(c) RB is controlled by C at the relevant time.

(2) For the purposes of determining whether the requirements of sub-
10paragraph (1) are met it does not matter whether—

(a) RB existed at time T, or

(b) any relevant body (other than RB) by reason of which the
requirements of sub-paragraph (1) are met exists at the
relevant time.

5 15In Schedule 36 (partnerships)—

(a) omit paragraph 4 (threshold conditions: actions of partners in a
personal capacity) and the italic heading before it,

(b) omit paragraph 20 (definition of “managing partner”) and the italic
heading before it, and

(c) 20in paragraph 21 (power to amend definitions) omit “or 20”.

Failure to comply with Part 7 of FA 2004

6 In Schedule 34 (threshold conditions), in paragraph 5 (non-compliance with
Part 7 of FA 2004), for sub-paragraph (2) substitute—

(2) For the purposes of sub-paragraph (1), a person (“P”) fails to
25comply with a provision mentioned in that sub-paragraph if and
only if any of conditions A to C are met.

(3) Condition A is met if—

(a) the tribunal has determined that P has failed to comply
with the provision concerned,

(b) 30the appeal period has ended, and

(c) the determination has not been overturned on appeal.

(4) Condition B is met if—

(a) the tribunal has determined for the purposes of section
118(2) of TMA 1970 that P is to be deemed not to have
35failed to comply with the provision concerned as P had a
reasonable excuse for not doing the thing required to be
done,

(b) the appeal period has ended, and

(c) the determination has not been overturned on appeal.

(5) 40Condition C is met if P has admitted in writing to HMRC that P
has failed to comply with the provision concerned.

(6) The “appeal period” means—

(a) the period during which an appeal could be brought
against the determination of the tribunal, or

Finance (No. 2) BillPage 326

(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.

Disciplinary action in relation to professionals etc

7 (1) 5In Schedule 34 (threshold conditions), paragraph 8 (disciplinary action:
professionals etc) is amended as follows.

(2) For sub-paragraph (1) substitute—

(1) A person who carries on a trade or profession that is regulated by
a professional body meets this condition if all of the following
10conditions are met—

(a) the person is found guilty of misconduct of a prescribed
kind,

(b) action of a prescribed kind is taken against the person in
relation to that misconduct, and

(c) 15a penalty of a prescribed kind is imposed on the person as
a result of that misconduct.

(3) In the heading, for “by a professional body” substitute “against a member of a
trade or profession
”.

(4) In sub-paragraph (3), in paragraph (h), for “for” substitute “of”.

20Power to amend Schedule 34

8 In Part 3 of Schedule 34 (power to amend), at the end of paragraph 14(2)
insert—

(c) vary any of the circumstances described in paragraphs 13B
to 13D in which a person is treated as meeting a threshold
25condition (including by amending paragraph 13A);

(d) add new circumstances in which a person will be so
treated.

Commencement

9 The amendments made by paragraphs 2 to 7 have effect for the purposes of
30determining whether a person meets a threshold condition in a period of
three years ending on or after the day on which this Act is passed.

Section 120

SCHEDULE 20 Penalties in connection with offshore matters and offshore transfers

Penalties for errors

1 35Schedule 24 to FA 2007 is amended as follows.

2 (1) Paragraph 4 (penalties payable under paragraph 1) is amended as follows.

(2) After sub-paragraph (1) insert—

(1A) If the inaccuracy is in category 0, the penalty is—

Finance (No. 2) BillPage 327

(a) for careless action, 30% of the potential lost revenue,

(b) for deliberate but not concealed action, 70% of the potential
lost revenue, and

(c) for deliberate and concealed action, 100% of the potential
5lost revenue.

(3) In sub-paragraph (2)—

(a) in paragraph (a), for “30%” substitute “37.5%”,

(b) in paragraph (b), for “70%” substitute “87.5%”, and

(c) in paragraph (c), for “100%” substitute “125%”.

(4) 10In sub-paragraph (5), for “3” substitute “4”.

3 (1) Paragraph 4A (categorisation of inaccuracies) is amended as follows.

(2) For sub-paragraph (1) substitute—

(A1) An inaccuracy is in category 0 if—

(a) it involves a domestic matter,

(b) 15it involves an offshore matter or an offshore transfer, the
territory in question is a category 0 territory and the tax at
stake is income tax, capital gains tax or inheritance tax, or

(c) it involves an offshore matter and the tax at stake is a tax
other than income tax, capital gains tax or inheritance tax.

(1) 20An inaccuracy is in category 1 if—

(a) it involves an offshore matter or an offshore transfer,

(b) the territory in question is a category 1 territory, and

(c) the tax at stake is income tax, capital gains tax or
inheritance tax.

(3) 25In sub-paragraph (2)—

(a) in paragraph (a), after “matter” insert “or an offshore transfer”, and

(b) in paragraph (c), for “or capital gains tax” substitute “, capital gains
tax or inheritance tax”.

(4) In sub-paragraph (3)—

(a) 30in paragraph (a), after “matter” insert “or an offshore transfer”, and

(b) in paragraph (c), for “or capital gains tax” substitute “, capital gains
tax or inheritance tax”.

(5) After sub-paragraph (4) insert—

(4A) Where the tax at stake is inheritance tax, assets are treated for the
35purposes of sub-paragraph (4) as situated or held in a territory
outside the UK if they are so situated or held immediately after the
transfer of value by reason of which inheritance tax becomes
chargeable.

(4B) An inaccuracy “involves an offshore transfer” if—

(a) 40it does not involve an offshore matter,

(b) it is deliberate (whether or not concealed) and results in a
potential loss of revenue,

(c) the tax at stake is income tax, capital gains tax or
inheritance tax, and

(d) 45the applicable condition in paragraph 4AA is satisfied.

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(6) In sub-paragraph (5), for the words following “revenue” substitute “and
does not involve either an offshore matter or an offshore transfer”.

(7) In sub-paragraph (6)(a), after “matters” insert “or transfers”.

(8) In sub-paragraph (7), for ““Category 1” substitute ““Category 0 territory”,
5“category 1”.

4 After paragraph 4A insert—

4AA (1) This paragraph makes provision in relation to offshore transfers.

(2) Where the tax at stake is income tax, the applicable condition is
satisfied if the income on or by reference to which the tax is
10charged, or any part of the income—

(a) is received in a territory outside the UK, or

(b) is transferred before the filing date to a territory outside
the UK.

(3) Where the tax at stake is capital gains tax, the applicable condition
15is satisfied if the proceeds of the disposal on or by reference to
which the tax is charged, or any part of the proceeds—

(a) are received in a territory outside the UK, or

(b) are transferred before the filing date to a territory outside
the UK.

(4) 20Where the tax at stake is inheritance tax, the applicable condition
is satisfied if—

(a) the disposition that gives rise to the transfer of value by
reason of which the tax becomes chargeable involves a
transfer of assets, and

(b) 25after that disposition but before the filing date the assets, or
any part of the assets, are transferred to a territory outside
the UK.

(5) In the case of a transfer falling within sub-paragraph (2)(b), (3)(b)
or (4)(b), references to the income, proceeds or assets transferred
30are to be read as including references to any assets derived from
or representing the income, proceeds or assets.

(6) In relation to an offshore transfer, the territory in question for the
purposes of paragraph 4A is the highest category of territory by
virtue of which the inaccuracy involves an offshore transfer.

(7) 35“Filing date” means the date when the document containing the
inaccuracy is given to HMRC.

(8) “Assets” has the same meaning as in paragraph 4A.

5 In paragraph 10 (standard percentage reductions for disclosure), in the Table
in sub-paragraph (2), at the appropriate places insert—

37.5% 18.75% 400%”,

Finance (No. 2) BillPage 329

“87.5% 43.75% 25%”, and
“125% 62.5% 40%.

6 In paragraph 12(5) (interaction with other penalties and late payment
surcharges: the relevant percentage)—

(a) 5before paragraph (a) insert—

(za) if the penalty imposed under paragraph 1 is for an
inaccuracy in category 0, 100%,, and

(b) in paragraph (a), for “100%” substitute “125%”.

7 (1) Paragraph 21A (classification of territories) is amended as follows.

(2) 10Before sub-paragraph (1) insert—

(A1) A category 0 territory is a territory designated as a category 0
territory by order made by the Treasury.

(3) For sub-paragraph (2) substitute—

(2) A category 2 territory is a territory that is not any of the
15following—

(a) a category 0 territory;

(b) a category 1 territory;

(c) a category 3 territory.

(4) For sub-paragraph (7) substitute—

(7) 20An instrument containing (whether alone or with other
provisions) the first order to be made under sub-paragraph (A1)
may not be made unless a draft of the instrument has been laid
before, and approved by a resolution of, the House of Commons.

8 (1) Paragraph 21B (location of assets etc) is amended as follows.

(2) 25After sub-paragraph (1) insert—

(1A) The Treasury may by regulations make provision for determining
for the purposes of paragraph 4AA where—

(a) income is received or transferred,

(b) the proceeds of a disposal are received or transferred, or

(c) 30assets are transferred.

(3) In sub-paragraph (2), for “and capital gains tax” substitute “, capital gains
tax and inheritance tax”.

Penalties for failure to notify

9 Schedule 41 to FA 2008 is amended as follows.

10 (1) 35Paragraph 6 (amount of penalty: standard amount) is amended as follows.

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