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

(8) The provisions are—

(a) paragraph 35(1)(b) of Schedule 33,

(b) section 31(1)(b) or (c) of TMA 1970,

(c) paragraph 9 of Schedule 1A to TMA 1970,

(d) 5paragraph 34(3) of Schedule 18 to FA 1998, and

(e) paragraph 35(1)(b) of Schedule 10 to FA 2003.

Bound arrangements opinion notices and right to make representations

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

(a) a notice of binding is given to a person in relation to any tax
10arrangements (“the bound arrangements”) by virtue of
Condition 1 in paragraph 1, and

(b) an opinion notice (or opinion notices) under paragraph 11(2)
of Schedule 43 about tax arrangements which are the lead
arrangements in relation to the bound arrangements is
15subsequently given to a designated HMRC officer.

(2) The officer must give the person a bound arrangements opinion
notice.

(3) Where a designated HMRC officer gives a person a notice of binding
by virtue of Condition 2 in paragraph 1, the officer must, at the same
20time, give the person a bound arrangements opinion notice.

4 (1) In relation to a person who is, or has been, given a notice of binding,
“bound arrangements opinion notice” means a written notice
which—

(a) sets out a report prepared by HMRC of any opinion of the
25GAAR Advisory Panel about the lead arrangements,

(b) explains the person’s right to make representations falling
within sub-paragraph (2), and

(c) sets out the period in which those representations may be
made.

(2) 30A person who is given a bound arrangements opinion notice has 30
days beginning with the day on which the notice is given to make
representations in any of the following categories—

(a) representations that no tax advantage has arisen to the
person from the arrangements to which the notice relates;

(b) 35representations that the person has already been given a
notice under paragraph 3 of this Schedule in relation to the
arrangements concerned (but with reference to different lead
arrangements);

(c) representations as to why the arrangements to which the
40notice relates are or may be materially different from the lead
arrangements.

(3) In sub-paragraph (2)(c) references to “arrangements” include any
circumstances which would be relevant in accordance with section
207 to a determination of whether the tax arrangements in question
45are abusive.

Notice of final decision after considering Panel’s opinion about lead arrangements

5 (1) This paragraph applies where—

(a) a person has been given a notice of binding in relation to any
tax arrangements by virtue of Condition 1 in paragraph 1,
5and

(b) a designated HMRC officer has given a notice under
paragraph 12 of Schedule 43 in relation to the lead
arrangements.

(2) The officer must, having considered any opinion of the GAAR
10Advisory Panel about the lead arrangements and any
representations made under paragraph 4(2) about the arrangements
mentioned in paragraph 5(1)(a), give the person a written notice
setting out whether the tax advantage arising from those
arrangements is to be counteracted under the general anti-abuse
15rule.

6 (1) This paragraph applies where—

(a) a person has been given a notice of binding by virtue of
Condition 2 in paragraph 1, and

(b) the period of 30 days for making representations under
20paragraph 4(2) has expired.

(2) A designated HMRC officer must, having considered any opinion of
the GAAR Advisory Panel about the lead arrangements and any
representations made under paragraph 4(2) in relation to the
arrangements specified in the notice of binding, give the person a
25written notice setting out whether the tax advantage arising from the
arrangements specified in the notice of binding is to be counteracted
under the general anti-abuse rule.

7 If a notice under paragraph 5(2) or 6(2) states that a tax advantage is
to be counteracted, it must also set out—

(a) 30the adjustments required to give effect to the counteraction,
and

(b) if relevant, any steps the person concerned is required to take
to give effect to it.

“Equivalent arrangements”

8 (1) 35For the purposes of paragraph 1, tax arrangements are “equivalent”
to one another if they are substantially the same as the one another
having regard to—

(a) their substantive results,

(b) the means of achieving those results, and

(c) 40the characteristics on the basis of which it could reasonably
be argued, in each case, that the arrangements are abusive tax
arrangements under which a tax advantage has arisen to a
person.

Notices may be given on assumption that tax advantage does arise

9 (1) A designated HMRC officer may give a notice, or do anything else,
under this Schedule where the officer considers that a tax advantage
might have arisen to the person concerned.

(2) 5Accordingly, any notice given by a designated HMRC officer under
this Schedule may be expressed to be given on the assumption that a
tax advantage does arise (without conceding that it does).

Power to amend

10 (1) The Treasury may by regulations amend this Schedule (apart from
10this paragraph).

(2) Regulations under sub-paragraph (1) may include—

(a) any amendment of this Part that is appropriate in
consequence of an amendment by virtue of sub-paragraph
(1);

(b) 15transitional provision.

(3) Regulations under sub-paragraph (1) are to be made by statutory
instrument.

(4) A statutory instrument containing regulations under sub-paragraph
(1) is subject to annulment in pursuance of a resolution of the House
20of Commons.”

(3) After Schedule 43A insert—

““Schedule 43B Procedural requirements: generic referral of tax arrangements

Notice of proposal to make generic referral of tax arrangements

1 (1) Sub-paragraph (2) applies if a designated HMRC officer considers—

(a) 25that there are two or more cases in which a tax advantage
which ought to be counteracted under section 209 has arisen
to a person from tax arrangements that are abusive, and

(b) that the tax arrangements in each case are equivalent to one
another.

(2) 30The officer may give each of those persons (“the notified taxpayers”)
a written notice in respect of the particular tax arrangements and
particular tax advantage in question.

(3) But no notice may be given under sub-paragraph (2) unless a notice
of binding under paragraph 1(4) of Schedule 43A has previously
35been given in relation to at least one of the sets of tax arrangements
mentioned in sub-paragraph (1), or tax arrangements which are
equivalent to those arrangements.

(4) A notice given to a person (“T”) under sub-paragraph (2) must—

(a) specify the arrangements (the “specified arrangements”) and
40the tax advantage (the “specified advantage”) to which the
notice relates,

(b) explain why the officer considers that a tax advantage has
arisen to T from tax arrangements that are abusive,

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

(d) 5inform T of the period under paragraph 2 for making
representations, and

(e) explain the effect of—

(i) paragraphs 3 to 9,

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

(iii) 10section 212A.

(5) The notice may set out steps that T may take to avoid the proposed
counteraction.

(6) The officer may not give a notice under this paragraph to a person
who has already been given a notice under paragraph 3 of Schedule
1543, or a notice of binding (which has not been withdrawn), in respect
of the specified arrangements.

2 (1) T has 30 days beginning with the day on which the notice under
paragraph 1 is given to notify HMRC that T is willing for the
specified arrangements to be considered by the GAAR Advisory
20Panel under paragraph 10 of Schedule 43.

(2) A notice under sub-paragraph (1) may include representations as to
why the specified arrangements would be suitable for use as the lead
arrangements under Schedule 43A for the purpose of the giving of
notices by HMRC in relation to any tax arrangements which may be
25equivalent to them.

(3) If representations are made in accordance with sub-paragraph (2) a
designated HMRC officer must consider them.

Corrective action by a notified taxpayer

3 (1) If T takes the relevant corrective action in relation to the specified
30advantage before the beginning of the closed period mentioned in
section 209(9), T is treated for the purposes of paragraph 4 (generic
referral) as not having been given the notice under paragraph 1(2).

(2) For the purposes of this Schedule the “relevant corrective action” is
taken in relation to the specified advantage if (and only if) T takes the
35steps set out in sub-paragraphs (3) and (4).

(3) The first step is that—

(a) T amends a return or claim to counteract the specified
advantage, or

(b) if T has made a tax appeal (by notifying HMRC or otherwise)
40on the basis that the specified advantage arises from the
specified arrangements, T takes all necessary action to enter
into an agreement with HMRC (in writing) for the purpose of
relinquishing that advantage.

(4) The second step is that T notifies HMRC—

(a) 45that T has taken the first step, 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) In determining the additional amount which has or will become due
5and payable in respect of tax for the purposes of sub-paragraph
(4)(b), it is to be assumed that, where T takes the necessary action as
mentioned in sub-paragraph (3)(b), the agreement is then entered
into.

(6) No enactment limiting the time during which amendments may be
10made to returns or claims operates to prevent T 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
in respect of a tax enquiry to the extent that the amendment takes
15into account an amendment made by the taxpayer to a return or
claim in taking the first step mentioned in sub-paragraph (3)(a).

(8) The provisions are—

(a) paragraph 35(1)(b) of Schedule 33,

(b) section 31(1)(b) or (c) of TMA 1970,

(c) 20paragraph 9 of Schedule 1A to TMA 1970,

(d) paragraph 34(3) of Schedule 18 to FA 1998, and

(e) paragraph 35(1)(b) of Schedule 10 to FA 2003.

Generic referral

4 (1) This paragraph applies where a designated HMRC officer has given
25notices to the notified taxpayers in accordance with paragraph 1(2).

(2) If none of the notified taxpayers has given a notice under paragraph
2 by the end of the 30 day period mentioned in that paragraph, the
officer must make a referral to the GAAR Advisory Panel in respect
of the notified taxpayers and the arrangements which are specified
30arrangements in relation to them.

(3) If at least one of the notified taxpayers gives a notice in accordance
with paragraph 2, the designated HMRC officer must decide
whether to—

(a) withdraw the notices given to the notified taxpayers under
35paragraph 1(2) (by notice in writing), or

(b) make a referral to the GAAR Advisory Panel in respect of the
notified taxpayers and the arrangements which are specified
arrangements in relation to them.

(4) A referral under this paragraph is a “generic referral”.

5 (1) 40If a generic referral is made to the GAAR Advisory Panel, the
designated HMRC officer must at the same time provide it with—

(a) a general statement of the material characteristics of the
specified arrangements, and

(b) a declaration that—

(i) 45the statement under paragraph (a) is applicable to all
the specified arrangements, and

(ii) as far as HMRC is aware, nothing which is material to
the GAAR Advisory Panel’s consideration of the
matter has been omitted.

(2) The general statement under sub-paragraph (1)(a) must—

(a) 5contain a factual description of the tax arrangements;

(b) set out HMRC’s view as to whether the tax arrangements
accord with established practice (when the arrangements
were entered into);

(c) explain why it is the designated HMRC officer’s view that a
10tax advantage of the nature described in the statement arising
from tax arrangements having the characteristics described
in the statement would be a tax advantage arising from
arrangements that are abusive;

(d) set out any matters the designated officer is aware of which
15may suggest that any view of HMRC or the designated
HMRC officer expressed in the general statement is not
correct;

(e) set out any other matters which are required for the purposes
of the exercise of the GAAR Advisory Panel’s functions
20under paragraph 7.

6 If a generic referral is made the designated HMRC officer must at the
same time give each of the notified taxpayers a notice which—

(a) specifies that a generic referral is being made, and

(b) is accompanied by a copy of the statement given to the GAAR
25Advisory Panel in accordance with paragraph 5(1)(a).

Decision of GAAR Advisory Panel and opinion notices

7 (1) If a generic referral is made to the GAAR Advisory Panel under
paragraph 4, the Chair must arrange for a sub-panel consisting of 3
members of the GAAR Advisory Panel (one of whom may be the
30Chair) to consider it.

(2) The sub-panel must produce—

(a) one opinion notice stating the joint opinion of all the
members of the sub-panel, or

(b) two or three opinion notices which taken together state the
35opinions of all the members.

(3) The sub-panel must give a copy of the opinion notice or notices to the
designated HMRC officer.

(4) An opinion notice is a notice which states that in the opinion of the
members of the sub-panel, or one or more of those members—

(a) 40the entering into and carrying out of tax arrangements such
as are described in the general statement under paragraph
5(1)(a) is a reasonable course of action in relation to the
relevant tax provisions,

(b) the entering into or carrying out of such tax arrangements is
45not a reasonable course of action in relation to the relevant tax
provisions, or

(c) it is not possible, on the information available, to reach a view
on that matter,

and the reasons for that opinion.

(5) In forming their opinions for the purposes of sub-paragraph (4)
members of the sub-panel must—

(a) have regard to all the matters set out in the statement under
5paragraph 5(1)(a),

(b) assume (unless the contrary is stated in the statement under
paragraph 5(1)(a)) that the tax arrangements do not form part
of any other arrangements,

(c) have regard to the matters mentioned in paragraphs (a) to (c)
10of section 207(2), and

(d) take account of subsections (4) to (6) of section 207.

(6) For the purposes of the giving of an opinion under this paragraph,
the arrangements are to be assumed to be tax arrangements.

(7) In this Part, a reference to any opinion of the GAAR advisory panel
15in respect of a generic referral of any tax arrangements is a reference
to the contents of any opinion notice given in relation to a generic
referral in respect of the arrangements.

Notice of right to make representations

8 (1) Where a designated HMRC officer is given an opinion notice (or
20opinion notices) under paragraph 7, the officer must give each of the
notified taxpayers a copy of the opinion notice (or notices) and a
written notice which—

(a) explains the notified taxpayer’s right to make representations
falling within sub-paragraph (2), and

(b) 25sets out the period in which those representations may be
made.

(2) A notified taxpayer (“T”) who is given a notice under sub-paragraph
(1) has 30 days beginning with the day on which the notice is given
to make representations in any of the following categories—

(a) 30representations that no tax advantage has arisen from the
specified arrangements;

(b) representations that T has already been given a notice under
paragraph 3 of Schedule 43A in relation to the specified
arrangements;

(c) 35representations that any matter set out in the statement under
paragraph 5(1)(a) is materially inaccurate as regards the
specified arrangements (having regard to all circumstances
which would be relevant in accordance with section 207 to a
determination of whether the tax arrangements in question
40are abusive).

Notice of final decision after considering opinion of GAAR Advisory Panel

9 (1) A designated HMRC officer who has received a notice or notices
under paragraph 7(3) in respect of a generic referral must consider
the case of each notified taxpayer in accordance with sub-paragraph
45(2).

(2) The officer must, having considered—

(a) any opinion of the GAAR Advisory Panel about the matters
referred to it, and

(b) any representations made by the notified taxpayer under
paragraph 8,

5give to the notified taxpayer a written notice setting out whether the
specified advantage is to be counteracted under the general anti-
abuse rule.

(3) If the notice states that a tax advantage is to be counteracted, it must
also set out—

(a) 10the adjustments required to give effect to the counteraction,
and

(b) if relevant, any steps that the taxpayer is required to take to
give effect to it.

Notices may be given on assumption that tax advantage does arise

10 (1) 15A designated HMRC officer may give a notice, or do anything else,
under this Schedule where the officer considers that a tax advantage
might have arisen to the person concerned.

(2) Accordingly, any notice given by a designated HMRC officer under
this Schedule may be expressed to be given on the assumption that a
20tax advantage does arise (without conceding that it does).

Power to amend

11 (1) The Treasury may by regulations amend this Schedule (apart from
this paragraph).

(2) Regulations under sub-paragraph (1) may include—

(a) 25any amendment of this Part that is appropriate in
consequence of an amendment by virtue of sub-paragraph
(1);

(b) transitional provision.

(3) Regulations under sub-paragraph (1) are to be made by statutory
30instrument.

(4) A statutory instrument containing regulations under sub-paragraph
(1) is subject to annulment in pursuance of a resolution of the House
of Commons.”

(4) In section 209 (counteracting tax advantages), in subsection (6)(a), after
35“Schedule 43” insert “, 43A or 43B”.

(5) In section 211 (proceedings before a court or tribunal), in subsection (2)(b), for
the words from “Panel” to the end substitute “Panel given—

(i) under paragraph 11 of Schedule 43 about the
arrangements or any tax arrangements which are, as a
40result of a notice under paragraph 1 of Schedule 43A, the
lead arrangements in relation to the arrangements, or

(i) under paragraph 7 of Schedule 43B in respect of a
generic referral of the arrangements.”

(6) Section 214 (interpretation of Part 5) is amended in accordance with
subsections (7) to (9).

(7) Renumber section 214 as subsection (1) of section 214.

(8) In subsection (1) (as renumbered), at the appropriate places insert—

• 5“““designated HMRC officer” has the meaning given by paragraph
  2 of Schedule 43;”.

• ““notice of binding” has the meaning given by paragraph 1(4) of
  Schedule 43A;

• ““tax appeal” has the meaning given by paragraph 1A of Schedule
  1043;”

• ““tax enquiry” has the meaning given by section 202(2) of FA
  2014.”

(9) After subsection (1) insert—

“(2) In this Part references to any “opinion of the GAAR Advisory Panel”
15about any tax arrangements are to be interpreted in accordance with
paragraph 11(5) of Schedule 43.

(3) In this Part references to tax arrangements which are “equivalent” to
one another are to be interpreted in accordance with paragraph 8 of
Schedule 43A.”

(10) 20In Schedule 43 (general anti-abuse rule: procedural requirements), in
paragraph 6, after sub-paragraph (2) insert—

“(3) The officer must, as soon as reasonably practicable after deciding
whether or not the matter is to be referred to the GAAR Advisory
Panel, give the taxpayer written notice of the decision.”

(11) 25Section 219 of FA 2014 (circumstances in which an accelerated payment notice
may be given) is amended in accordance with subsections (12) and (13).

(12) In subsection (4), after paragraph (c) insert—

“(d) a notice of binding has been given under Schedule 43A to FA
2013 (GAAR: arrangements bound to lead arrangements) in
30relation to the asserted advantage or part of it and the chosen
arrangements (or is so given at the same time as the accelerated
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 equivalent matter under paragraph
3510 of Schedule 43 to FA 2013 was as set out in paragraph 11(3)(b)
of that Schedule;

(e) a notice under paragraph 9(2) of Schedule 43B to FA 2013
(GAAR: generic referral of arrangements) has been given in
relation to the asserted advantage or part of it and the chosen
40arrangements (or is so given at the same time as the accelerated
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 generic referral in respect of those
arrangements under paragraph 7 of Schedule 43B to FA 2013
45was as set out in paragraph 7(4)(b) of that Schedule.”

(13) After subsection (7) insert—

“(8) In subsection (4)(d) “the equivalent matter” means the matter to which
the notice given in relation to the lead arrangements which is referred
to in paragraph 1(1) of Schedule 43A to FA 2013 related (notice of
5proposed counteraction of tax advantage considered to have arisen
from the lead arrangements).”

(14) 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
time (whether before or on or after the day on which this Act is passed).

146 10General anti-abuse rule: penalty

(1) Part 5 of FA 2013 (general anti-abuse rule) is amended as follows.

(2) After section 212 insert—

“212A Penalty

(1) A person is liable to pay a penalty if—

(a) 15the person has given a tax document to HMRC in connection
with any tax arrangements,

(b) the person has been given a notice under

(i) paragraph 12 of Schedule 43,

(ii) paragraph 5 or 6 of Schedule 43A, or

(iii) 20paragraph 9 of Schedule 43B,

stating that a tax advantage arising from the tax arrangements
is to be counteracted, and

(c) the tax advantage has been counteracted by the making of
adjustments under section 209.

(2) 25The penalty is 60% of the value of the counteracted advantage.

(3) Schedule 43C—

(a) gives the meaning of “the value of the counteracted advantage”,
and

(b) makes other provision in relation to penalties under this
30section.

(4) In this section “tax document” means any return, claim or other
document submitted in compliance (or purported compliance) with
any provision of, or made under, an Act.”

(3) After Schedule 43B insert—

““Schedule 43C 35Penalty under section 212A: supplementary provision

Value of the counteracted advantage: introduction

1 Paragraphs 2 to 4 set out how to calculate the “value of the
counteracted advantage” for the purposes of section 212A.