Finance (No. 2) Bill (HC Bill 155)

“Table 1

15Table 2

(b) 10in the sentence immediately following the tables, for paragraphs (a)
and (b) substitute—

“(a) in column (3), in the last two rows, “285” were
substituted for “490” and “505”, and

(b) in column (4), in the last two rows, “295” were
15substituted for “500” and “515”.”

(4) In paragraph 1J (VED rates for light goods vehicles), in paragraph (a), for
“£225” substitute “£230”.

(5) In paragraph 2(1) (VED rates for motorcycles)—

(a) in paragraph (b), for “£38” substitute “£39”,

(b) 20in paragraph (c), for “£59” substitute “£60”, and

(c) in paragraph (d), for “£81” substitute “£82”.

(6) The amendments made by this section have effect in relation to licences taken
out on or after 1 April 2016.

139 VED: extension of old vehicles exemption from 1 April 2017

(1) 25Paragraph 1A of Schedule 2 to VERA 1994 (exemption for old vehicles) is
amended as follows.

(2) In sub-paragraph (1) for the words from “if” to the end substitute “during the
period of 12 months beginning with 1 April in any year if it was constructed
more than 40 years before 1 January in that year.”

(3) 30After that sub-paragraph insert—

“(1A) But nothing in sub-paragraph (1) has the effect that a nil licence is
required to be in force in respect of a vehicle while a vehicle licence
is in force in respect of it.”

(4) The amendments made by this section come into force on 1 April 2017.

Other excise duties

140 Gaming duty: rates

(1) In section 11(2) of FA 1997 (rates of gaming duty), for the table substitute—

(2) The amendment made by this section has effect in relation to accounting
periods beginning on or after 1 April 2016.

141 Fuel duties: aqua methanol etc

(1) 15Schedule 17 contains provision relating to fuel duties.

(2) Part 1 of the Schedule provides for charging excise duty on aqua methanol.

(3) Part 2 of the Schedule contains miscellaneous amendments.

(4) Part 3 of the Schedule makes provision about commencement.

142 Tobacco products duty: rates

(1) 20For the table in Schedule 1 to TPDA 1979 substitute—

(2) The amendment made by this section is treated as having come into force at
306pm on 16 March 2016.

143 Alcoholic liquor duties: rates

(1) ALDA 1979 is amended as follows.

(2) In section 62(1A)(a) (rate of duty on sparkling cider of a strength exceeding
5.5%) for “£264.61” substitute “£268.99”.

(3) For Part 1 of the table in Schedule 1 substitute—

““Part 1

Part 10 Tax avoidance and evasion

25General anti-abuse rule

144 General anti-abuse rule: provisional counteractions

(1) In Part 5 of FA 2013 (general anti-abuse rule), after section 209 insert—

“209A Effect of adjustments specified in a provisional counteraction notice

(1) Adjustments made by an officer of Revenue and Customs which—

(a) 30are specified in a provisional counteraction notice given to a
person by the officer (and have not been cancelled: see sections
209B to 209E),

(b) are made in respect of a tax advantage that would (ignoring this
Part) arise from tax arrangements that are abusive, and

(c) but for section 209(6)(a), would have effected a valid
counteraction of that tax advantage under section 209,

are treated for all purposes as effecting a valid counteraction of the tax
advantage under that section.

(2) 5A “provisional counteraction notice” is a notice which—

(a) specifies adjustments (the “notified adjustments”) which the
officer reasonably believes may be required under section
209(1) to counteract a tax advantage that would (ignoring this
Part) arise to the person from tax arrangements;

(b) 10specifies the arrangements and the tax advantage concerned,
and

(c) explains the effect of sections 209B to 209F (including an
explanation of the conditions under which the matter would, or
would not, be referred to the GAAR Advisory Panel under
15Schedule 43, 43A or 43B).

(3) It does not matter whether the notice is given before or at the same time
as the making of the adjustments.

(4) In this section “adjustments” includes adjustments made in any way
permitted by section 209(5).

209B 20Notified adjustments: 12 month period for taking action if appeal
made

(1) This section applies where a person (the “taxpayer”) to whom a
provisional counteraction notice has been given appeals against the
making of the notified adjustments.

(2) 25The notified adjustments are to be treated as cancelled with effect from
the end of the period of 12 months beginning with the day on which the
provisional counteraction notice is given unless an action mentioned in
subsection (4) is taken before that time.

(3) For the purposes of subsection (2) it does not matter whether the action
30mentioned in subsection (4)(c), (d) or (e) is taken before or after the
provisional counteraction notice is given (but if that action is taken
before the provisional counteraction notice is given subsection (5) does
not have effect).

(4) The actions are—

(a) 35an officer of Revenue and Customs notifying the taxpayer that
the notified adjustments are cancelled;

(b) an officer of Revenue and Customs giving the taxpayer written
notice of the withdrawal of the provisional counteraction notice
(without cancelling the notified adjustments);

(c) 40a designated HMRC officer giving the taxpayer a notice under
paragraph 3 of Schedule 43 which—

(i) specifies the arrangements and the tax advantage which
are specified in the provisional counteraction notice,
and

(ii) 45specifies the notified adjustments (or lesser
adjustments) as the counteraction that the officer
considers ought to be taken (see paragraph 3(2)(c) of
that Schedule);

(d) a designated HMRC officer giving the taxpayer a notice of
binding under paragraph 1 of Schedule 43A which—

(i) specifies the arrangements and the tax advantage which
are specified in the provisional counteraction notice,
5and

(ii) specifies the notified adjustments (or lesser
adjustments) as the counteraction that the officer
considers ought to be taken (see paragraph 1(4)(c) of
that Schedule).

(e) 10a designated HMRC officer giving the taxpayer a notice under
paragraph 1(2) of Schedule 43B which—

(i) specifies the arrangements and the tax advantage which
are specified in the provisional counteraction notice,
and

(ii) 15specifies the notified adjustments (or lesser
adjustments) as the counteraction that the officer
considers ought to be taken (see paragraph 1(4)(c) of
that Schedule).

(5) In a case within subsection (4)(c), (d) or (e), if—

(a) 20the notice under paragraph 3 of Schedule 43, or

(b) the notice of binding, or

(c) the notice under paragraph 1(2) of Schedule 43B,

(as the case may be) specifies lesser adjustments the officer must
modify the notified adjustments accordingly.

(6) 25The officer may not take the action in subsection (4)(b) unless the officer
was authorised to make the notified adjustments otherwise than under
this Part.

(7) In this section “lesser adjustments” means adjustments which assume a
smaller tax advantage than was assumed in the provisional
30counteraction notice.

209C Notified adjustments: case within section 209B(4)(c)

(1) This section applies if the action in section 209B(4)(c) (notice to taxpayer
of proposed counteraction of tax advantage) is taken.

(2) If the matter is not referred to the GAAR Advisory Panel, the notified
35adjustments are to be treated as cancelled with effect from the date of
the designated HMRC officer’s decision under paragraph 6(2) of
Schedule 43 unless the notice under paragraph 6(3) of Schedule 43
states that the adjustments are not to be treated as cancelled under this
section.

(3) 40A notice under paragraph 6(3) of Schedule 43 may not contain the
statement referred to in subsection (2) unless HMRC would have been
authorised to make the adjustments if the general anti-abuse rule did
not have effect.

(4) If the taxpayer is given a notice under paragraph 12 of Schedule 43
45which states that the specified tax advantage is not to be counteracted
under the general anti-abuse rule, the notified adjustments are to be
treated as cancelled unless that notice states that those adjustments are
not to be treated as cancelled under this section.

(5) A notice under paragraph 12 of Schedule 43 may not contain the
statement referred to in subsection (4) unless HMRC would have been
authorised to make the adjustments if the general anti-abuse rule did
not have effect.

(6) 5If the taxpayer is given a notice under paragraph 12 of Schedule 43
stating that the specified tax advantage is to be counteracted—

(a) the notified adjustments are confirmed only so far as they are
specified in that notice as adjustments required to give effect to
the counteraction, and

(b) 10so far as they are not confirmed, the notified adjustments are to
be treated as cancelled.

209D Notified adjustments: case within section 209B(4)(d)

(1) This section applies if the action in section 209B(4)(d) (notice of
binding) is taken.

(2) 15If the taxpayer is given a notice under paragraph 5(2) or 6(2) of
Schedule 43A which states that the specified tax advantage is not to be
counteracted under the general anti-abuse rule, the notified
adjustments are to be treated as cancelled, unless that notice states that
those adjustments are not to be treated as cancelled under this section.

(3) 20A notice under paragraph 5(2) or 6(2) of Schedule 43A may not contain
the statement referred to in subsection (2) unless HMRC would have
been authorised to make the adjustments if the general anti-abuse rule
did not have effect.

(4) If the taxpayer is given a notice under paragraph 5(2) or 6(2) of
25Schedule 43A stating that the specified tax advantage is to be
counteracted—

(a) the notified adjustments are confirmed only so far as they are
specified in that notice as adjustments required to give effect to
the counteraction, and

(b) 30so far as they are not confirmed, the notified adjustments are to
be treated as cancelled.

209E Notified adjustments: case within section 209B(4)(e)

(1) This section applies if the action in section 209B(4)(e) (notice of proposal
to make generic referral) is taken.

(2) 35If the notice under paragraph 1(2) of Schedule 43B is withdrawn, the
notified adjustments are to be treated as cancelled unless the notice of
withdrawal states that the adjustments are not to be treated as cancelled
under this section.

(3) The notice of withdrawal may not contain the statement referred to in
40subsection (2) unless HMRC was authorised to make the notified
adjustments otherwise than under this Part.

(4) If the taxpayer is given a notice under paragraph 9(2) of Schedule 43B,
which states that the specified tax advantage is not to be counteracted
under the general anti-abuse rule, the notified adjustments are to be
45treated as cancelled, unless that notice states that those adjustments are
not to be treated as cancelled under this section.

(5) A notice under paragraph 9(2) of Schedule 43B may not contain the
statement referred to in subsection (2) unless HMRC was authorised to
make the adjustments otherwise than under this Part.

(6) If the taxpayer is given a notice under paragraph 9(2) of Schedule 43B
5stating that the specified tax advantage is to be counteracted—

(a) the notified adjustments are confirmed only so far as they are
specified in that notice as adjustments required to give effect to
the counteraction, and

(b) so far as they are not confirmed, the notified adjustments are to
10be treated as cancelled.

209F Appeals against provisional counteractions: further provision

(1) Subsections (2) to (6) have effect in relation to an appeal by a person
(“the taxpayer”) against the making of adjustments which are specified
in a provisional counteraction notice.

(2) 15No steps after the initial notice of appeal are to be taken in relation to
the appeal unless and until the taxpayer is given—

(a) a notice under section 209B(4)(b),

(b) a notice under paragraph 6(3) of Schedule 43 (notice of decision
not to refer matter to GAAR advisory panel) containing the
20statement described in section 209B(2) (statement that
adjustments are not to be treated as cancelled),

(c) a notice under paragraph 12 of Schedule 43, or

(d) a notice under paragraph 5(2) or 6(2) of Schedule 43A,

(e) a notice under paragraph 9 of Schedule 43B,

25in respect of the tax arrangements concerned.

(3) The taxpayer has until the end of the period mentioned in subsection
(4) to comply with any requirement to specify the grounds of appeal.

(4) The period mentioned in subsection (3) is the 30 days beginning with
the day on which the taxpayer receives the notice mentioned in
30subsection (2).

(5) In subsection (2) the reference to “steps” does not include the
withdrawal of the appeal.”

(2) In section 214 (interpretation of Part 5), at the appropriate place insert—

• “““notified adjustments”, in relation to a provisional counteraction
  35notice, has the meaning given by section 209A(2);”

• ““provisional counteraction notice” has the meaning given by
  section 209A(2);”.

(3) The amendments made by this section have effect in relation to tax
arrangements (within the meaning of Part 5 of FA 2013) entered into at any
40time (whether before or on or after the day on which this Act is passed).

145 General anti-abuse rule: binding of tax arrangements to lead arrangements

(1) Part 5 of FA 2013 (general anti-abuse rule) is amended in accordance with
subsections (2) to (10).

(2) After Schedule 43 insert—

““Schedule 43A Procedural requirements: binding of tax arrangements to lead
arrangements

Notice to taxpayer of proposed binding of tax arrangements

1 (1) 5This paragraph applies where a person (“P”) has been given a notice
under paragraph 3 of Schedule 43 in relation to any tax arrangements
(the “lead arrangements”) and Condition 1 or 2 is met.

(2) Condition 1 is that the period of 45 days mentioned in paragraph 4(1)
of Schedule 43 has expired.

(3) 10Condition 2 is that a counteraction notice has been given in relation
to the lead arrangements.

(4) If a designated HMRC officer considers—

(a) that a tax advantage has arisen to another person (“R”) from
tax arrangements that are abusive,

(b) 15that those tax arrangements (“R’s arrangements”) are
equivalent to the lead arrangements, and

(c) that the advantage ought to be counteracted under section
209,

the officer may give R a notice (a “notice of binding”) in relation to
20R’s arrangements.

(5) The officer may not give R a notice of binding if R has been given in
respect of R’s arrangements a notice (which has not been withdrawn)
under—

(a) paragraph 3 of Schedule 43, or

(b) 25paragraph 1 of Schedule 43B.

(6) The decision whether or not to give R a notice of binding must be
taken, and any notice must be given, as soon as is reasonably
practicable after HMRC becomes aware of the relevant facts.

(7) A notice of binding must—

(a) 30specify the tax arrangements in relation to which the notice is
given and the tax advantage,

(b) explain why the officer considers R’s arrangements to be
equivalent to the lead arrangements,

(c) explain why the officer considers that a tax advantage has
35arisen to R from tax arrangements that are abusive,

(d) set out the counteraction that the officer considers ought to be
taken, and

(e) explain the effect of—

(i) paragraphs 2 to 7,

(ii) 40subsection (9) of section 209, and

(iii) section 212A.

(8) A notice of binding may set out steps that R may (subject to
subsection (9) of section 209) take to avoid the proposed
counteraction.

(9) Where this paragraph applies by virtue of Condition 1, a notice of
5binding may describe more than one set of lead arrangements and, if
so, sub-paragraph (7)(b) applies in relation to each set of lead
arrangements.

(10) In this paragraph “counteraction notice” means a notice such as is
mentioned in sub-paragraph (2) of paragraph 12 of Schedule 43
10(notice of final decision to counteract).

Corrective action by a notified taxpayer

2 (1) If a person to whom a notice of binding has been given takes the
relevant corrective action in relation to the tax arrangements and tax
advantage specified in the notice before the beginning of the closed
15period mentioned in section 209(9), the person is to be treated for the
purposes of paragraphs 5 and 6 as not having been given the notice
of binding.

(2) For the purposes of this Schedule the “relevant corrective action” is
taken if (and only if) the person takes the steps set out in sub-
20paragraphs (3) and (4).

(3) The first step is that—

(a) the person amends a return or claim to counteract the tax
advantage specified in the notice under paragraph 1, or

(b) if the person has made a tax appeal (by notifying HMRC or
25otherwise) on the basis that the tax advantage specified in the
notice under paragraph 1 arises from the tax arrangements
specified in that notice, P takes all necessary action to enter
into an agreement with HMRC (in writing) for the purpose of
relinquishing that advantage.

(4) 30The second step is that the person notifies HMRC—

(a) that the first step has been taken, and

(b) of any additional amount which has or will become due and
payable in respect of tax by reason of the first step being
taken.

(5) 35In determining the additional amount which has or will become due
and payable in respect of tax for the purposes of sub-paragraph
(4)(b), it is to be assumed that, where P takes the necessary action as
mentioned in sub-paragraph (3)(b), the agreement is then entered
into.

(6) 40No enactment limiting the time during which amendments may be
made to returns or claims operates to prevent P taking the first step
mentioned in sub-paragraph (3)(a) before the tax enquiry is closed.

(7) No appeal may be brought, by virtue of a provision mentioned in
sub-paragraph (8) against an amendment made by a closure notice
45in respect of a tax enquiry to the extent that the amendment takes
into account an amendment made by the taxpayer to a return or
claim in taking the first step mentioned in sub-paragraph (3)(a).