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

company that consist of the provision of tax advice or related professional
services to other persons.

(4) The publication of information as a company tax strategy does not constitute
publication of the strategy for the purposes of paragraph 22 unless the
5company makes clear (in a way that will be readily apparent to anyone
accessing the information online) that the company regards its publication
as complying with the duty under paragraph 22(2) in the current financial
year.

Penalty for non-compliance with paragraph 22

24 (1) 10This paragraph applies where paragraph 22 requires a company tax strategy
to be published for a UK company in any financial year.

(2) The company is liable to a penalty of £7,500 if—

(a) there is a failure to publish a company tax strategy for the company
that complies with paragraph 22(2), or

(b) 15where a company tax strategy has been published, there is a failure
to comply with paragraph 22(6).

(3) Subject to sub-paragraph (5), the company is only liable to one penalty by
virtue of sub-paragraph (2) in respect of a company tax strategy required for
the financial year in question.

(4) 20Sub-paragraph (5) applies where—

(a) a penalty is imposed under this paragraph in respect of a failure
mentioned in sub-paragraph (2)(a), and

(b) no company tax strategy that complies with paragraph 22(2)
(disregarding paragraph 22(4)) is published within the period of 6
25months after the last day on which the duty under paragraph 22(2)
could have been complied with.

(5) At the end of that period, the company is liable—

(a) to a further penalty of £7,500, and

(b) where the failure mentioned in sub-paragraph (4)(b) continues, to a
30further penalty of £7,500 at the end of each subsequent month in
which no such company tax strategy is published.

Qualifying partnerships: duty to publish a partnership tax strategy

25 (1) Paragraphs 22 to 24 apply in relation to a UK partnership which is (in any
financial year of the partnership) a qualifying partnership as they apply to a
35UK company which is (in any financial year of the company) a qualifying
company.

(2) Those paragraphs have effect in their application to a qualifying
partnership—

(a) with the omission of paragraph 22(3) and (8),

(b) 40as if for “company tax strategy” (in each place) there were
substituted “partnership tax strategy”, and

(c) as if for “company” and “company’s” (in each place) there were
substituted respectively “partnership” and “partnership’s”.

Penalties under this Part: general provisions

26 (1) Paragraphs 27 to 33 apply in relation to the liability of any person to a
penalty under this Part and, accordingly, in those paragraphs—

• “failure”, in relation to a liability for a penalty, means a failure which
  5could give rise to that liability,

• “liability to a penalty” means a liability under paragraph 18, 21 or 24
  (including paragraph 24 as applied to a qualifying UK partnership),
  and

• “penalty” means a penalty under any of those paragraphs.

(2) 10In those paragraphs “tribunal” means the First-tier Tribunal or, where
determined by or under the Tribunal Procedure Rules, the Upper Tribunal.

Failure to comply with a time limit

27 A failure to do anything required by this Part to be done within a limited
period of time goes not give rise to liability to a penalty if it is done within
15such further time (if any) as an officer of Revenue and Customs may have
allowed.

Reasonable excuse

28 (1) Liability to a penalty for a failure does not arise if the person who would
otherwise be liable to that penalty satisfies HMRC or (on an appeal notified
20to the tribunal) the tribunal that the person had a reasonable excuse for that
failure.

(2) For the purposes of this paragraph—

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

(b) 25where the person relies on another person to do anything, that
cannot be a reasonable excuse—

(i) unless the first person took reasonable care to avoid the
failure, or

(ii) if the first person is a UK group or UK sub-group, where the
30person relied on is another member of the group or sub-
group,

(c) where the person had a reasonable excuse but the excuse has 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
35ceased.

Assessment of penalties

29 (1) Where a person becomes liable to a penalty—

(a) HMRC may assess the penalty, and

(b) if they do so, HMRC must notify the person of the assessment.

(2) 40An assessment of a penalty may not be made—

(a) more than 6 months after the failure first comes to the attention of an
officer of Revenue and Customs, or

(b) more than 6 years after the end of the financial year in which the tax
strategy to which the failure relates was (or was originally) required
to be published.

Appeal

30 (1) 5A person may appeal against a decision of HMRC that a penalty is payable
by that person.

(2) Notice of an appeal must be given—

(a) in writing,

(b) before the end of the period of 30 days beginning with the date on
10which the notification under paragraph 29(1)(b) was issued,

(3) Notice of an appeal must state the grounds of appeal.

(4) On an appeal that is notified to the tribunal, the tribunal may confirm or
cancel the decision.

(5) Subject to this paragraph and paragraph 31, the provisions of Part 5 of TMA
151970 relating to appeals have effect in relation to appeals under this
Schedule as they have effect in relation to an appeal against an assessment
to income tax.

Enforcement

31 (1) A penalty must be paid—

(a) 20before the end of the period of 30 days beginning with the date on
which the notification under paragraph 29(1)(b) was issued, or

(b) if a notice of appeal is given, before the end of 30 days beginning with
the day on which the appeal is determined or withdrawn.

(2) A penalty may be enforced as if it were corporation tax charged in an
25assessment and due and payable.

Power to change amount of penalties

32 (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
any sums for the time being specified in paragraph 18, 21 or 24 such other
30sum as appear to them to be justified by the change.

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

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

(b) each date on which the power conferred by that sub-paragraph has
been exercised.

(3) 35Regulations under this paragraph do not apply to a failure that occurs in
respect of a financial year (of the body or partnership responsible for the
failure) that begins before the date on which they come into force.

Application of provisions of TMA 1970

33 Subject to the provisions of this Part, the following provisions of TMA 1970
40apply for the purposes of this Part as they apply for the purposes of the
Taxes Acts—

(a) section 108 (responsibility of company officers),

(b) section 114 (want of form), and

(c) section 115 (delivery and service of documents).

Meaning of “tax strategy”

34 5In this Part “tax strategy” means—

(a) a group tax strategy (see paragraphs 16 to 18),

(b) a sub-group tax strategy (see paragraphs 19 to 21),

(c) a company tax strategy (see paragraphs 22 to 24), or

(d) a partnership tax strategy (see paragraph 25).

10Part 3 Sanctions for persistently unco-operative large businesses

Large groups falling within Part 3

35 A UK group falls within this Part of this Schedule (“this Part”) if—

(a) the group has persistently engaged in unco-operative behaviour (see
15paragraphs 36 to 38),

(b) some or all of the unco-operative behaviour has caused there to be,
or contributed to there being, two or more significant tax issues in
respect of the group or members of the group which are unresolved
(see paragraph 39), and

(c) 20there is a reasonable likelihood of further instances of the group
engaging in unco-operative behaviour in a manner which causes
there to be, or contributes to there being, significant tax issues in
respect of the group or members of the group.

36 (1) A UK group has “engaged in unco-operative behaviour” if—

(a) 25a member of the group has satisfied either or both of the conditions
listed in sub-paragraph (2), or

(b) two or more of the members of the group, taken together, have
satisfied either or both of those conditions.

(2) Those conditions are—

(a) 30the behaviour condition (see paragraph 37);

(b) the arrangements condition (see paragraph 38).

(3) A UK group has engaged in unco-operative behaviour “persistently” if—

(a) a member of the group has done so persistently, or

(b) two or more members of the group, taken together, have done so
35persistently.

(4) References in this Part to doing something “persistently” include doing it on
a sufficient number of occasions for it to be clear that it represents a pattern
of behaviour.

37 (1) A member of a UK group has, or two or more members of a UK group (taken
40together) have, “satisfied the behaviour condition” if it has, or they have,
behaved in a manner which has delayed or otherwise hindered HMRC in
the exercise of their functions in connection with determining the liability to
UK taxation of the group or a member of the group.

(2) Factors which may indicate that a member of a UK group has behaved as
described in sub-paragraph (1) include—

(a) the extent to which HMRC have used statutory powers to obtain
information relating to the UK group or members of the group;

(b) 5the reasons why those powers have been used;

(c) the number and seriousness of inaccuracies in, and omissions from,
documents given to HMRC by or on behalf of the UK group or
members of the group;

(d) the extent to which, in dealings with HMRC, members of the group
10(or people acting on their behalf) have relied on interpretations of
legislation relating to UK taxation which, at the time, are speculative.

(3) An interpretation of legislation relating to UK taxation is “speculative” if it
is likely that a court or tribunal would disagree with it.

38 (1) A member of a UK group has “satisfied the arrangements condition” if it is
15a party to a tax avoidance scheme.

(2) “Tax avoidance scheme” means—

(a) arrangements in respect of which a notice of final decision has been
given under—

(i) paragraph 12 of Schedule 43 to FA 2013,

(ii) 20paragraph 5 or 6 of Schedule 43A to FA 2013, or

(iii) paragraph 9 of Schedule 43B to FA 2013,

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

(b) arrangements which are notifiable arrangements for the purposes of
25Part 7 of FA 2004 (disclosure of tax avoidance schemes), other than
arrangements in relation to which HMRC have given notice under
section 312(6) of FA 2004 (notice that promoters not under duty to
provide clients with prescribed information);

(c) a scheme which is a notifiable scheme for the purposes of Schedule
3011A to VATA 1994 (disclosure of avoidance schemes).

39 (1) There is a significant tax issue in respect of a UK group or a member of a UK
group where—

(a) there is a disagreement between HMRC and a member of the group
about an issue affecting the amount of the liability of the group or a
35member of the group to UK taxation,

(b) the issue has been, or could be, referred to a court or tribunal to
determine, and

(c) as regards the amount of the liability, the difference between
HMRC’s view and the view of the member is, or is likely to be, not
40less than £2 million.

(2) The reference in sub-paragraph (1)(a) to circumstances in which there is a
disagreement include circumstances in which there is a reasonable
likelihood of a disagreement.

(3) The Treasury may by regulations substitute a higher amount for the amount
45for the time being specified in sub-paragraph (1)(c).

40 The references in paragraphs 36 to 39 to things done by a member of a UK
group (“the group in question”)—

(a) include acts and omissions of a relevant body that is not a member of
the group in question if they took place at a time when the relevant
body was a member of a group headed by the body that is the head
of the group in question;

(b) 5do not include acts or omissions of a relevant body that is a member
of the group in question if they took place at a time when the relevant
body was not a member of a group headed by the body that is the
head of the group in question.

Warning notices

41 (1) 10A designated HMRC officer may give the head of a UK group a notice under
this paragraph (a “warning notice”) if the officer considers that the group is
a qualifying group that falls within this Part.

(2) The notice must set out the reasons why the officer considers that the group
falls within this Part.

(3) 15The notice—

(a) may be withdrawn by a designated HMRC officer at any time by
giving a further notice to the head of the group, and

(b) expires (if not previously withdrawn) at the end of the period of 15
months beginning with the day on which it was given.

(4) 20Once a warning notice has been given —

(a) it is immaterial for the purposes of this Part whether the group
remains a qualifying group,

(b) the identity of the group is not to be regarded as altered by any
change in its membership resulting from a relevant body—

(i) 25becoming a 51% subsidiary of a member of the group, or

(ii) ceasing to be a 51% subsidiary of another member of the
group; and

(c) if the group becomes a UK sub-group of a foreign group it is to be
treated as if it were still a UK group.

(5) 30Sub-paragraph (4) applies while the group is subject to—

(a) the warning notice, or

(b) any other notice under this Part issued as a result of the group having
been given the warning notice.

Special measures notices

42 (1) 35This paragraph applies to a UK group if—

(a) the head of the group has been given a warning notice in relation to
the group that has not been withdrawn,

(b) the period of 12 months beginning with the day on which the
warning notice was given has elapsed, and

(c) 40the period of 15 months beginning with that day has not elapsed.

(2) If a designated HMRC officer considers that the group falls within this Part,
the officer may give the head of the group a notice under this paragraph (a
“special measures notice”).

(3) When considering whether the group falls within this Part, the officer may
take into account any relevant behaviour, whether or not it is mentioned in
the warning notice.

(4) When deciding whether to give a special measures notice, the designated
5HMRC officer must consider any representations made by a member of the
group before the end of the period of 12 months beginning with the day on
which the warning notice was given.

(5) The special measures notice must set out the reasons why the officer
considers that the group falls within this Part.

(6) 10Paragraph 45 deals with other circumstances in which a UK group may be
given a special measures notice.

43 (1) A special measures notice—

(a) may be withdrawn by a designated HMRC officer at any time by
giving a further notice to the head of the UK group, and

(b) 15expires, if not previously withdrawn, at the end of the period of 27
months beginning with the relevant day.

(2) “The relevant day” means the later of—

(a) the day on which the special measures notice was given, and

(b) the day on which it was last confirmed under paragraph 44.

44 (1) 20This paragraph applies to a UK group if—

(a) the head of the group has been given a special measures notice in
relation to the group which has not been withdrawn,

(b) the period of 24 months beginning with the relevant day has elapsed,
and

(c) 25the period of 27 months beginning with that day has not elapsed.

(2) If a designated HMRC officer considers that the group falls within this Part,
the officer may give the head of the group a notice under this paragraph (a
“confirmation notice”) confirming the special measures notice given in
relation to the group.

(3) 30When considering whether the group falls within this Part, the officer may
take into account any relevant behaviour, whether or not it is mentioned in
the special measures notice which is to be confirmed, in any previous
confirmation notice or in the warning notice.

(4) “The relevant day” has the same meaning as in paragraph 43(2).

(5) 35The confirmation notice must set out the reasons why the officer considers
that the group falls within this Part.

(6) When deciding whether to give a confirmation notice, a designated HMRC
officer must consider any representations made by a member of the group
before the end of the period of 24 months beginning with the relevant day.

(7) 40A confirmation notice—

(a) may be withdrawn by a designated HMRC officer at any time by
giving a further notice to the head of the group, and

(b) expires, if not previously withdrawn, at the end of the period of 27
months beginning with the day on which it is given.

45 (1) 45This paragraph applies in relation to a UK group where—

(a) the head of the group has been given a warning notice or a special
measures notice in relation to the group, and

(b) that notice has expired.

(2) A designated HMRC officer may give the head of a UK group a special
5measures notice if—

(a) it appears to the officer that—

(i) during the period of 6 months beginning with the day on
which the notice mentioned in sub-paragraph (1)(a) expired
(“the expiry day”), the group has engaged in unco-operative
10behaviour (see paragraphs 36 to 38), and

(ii) there is a reasonable likelihood that, if it had engaged in the
behaviour before the notice expired, a designated HMRC
officer would have considered that the group fell within this
Part (so that a special measures notice or confirmation notice
15could have been given to the head of the group),

(b) during the period of 7 months beginning with the expiry day, a
designated HMRC officer has notified the head of the group that the
power under this paragraph may be exercised in relation to the
group, and

(c) 20the period of 9 months beginning with that day has not elapsed.

(3) When deciding whether to give a special measures notice under this
paragraph, the officer must consider any representations made by a member
of the group before the end of the period of 8 months beginning with the
expiry day.

25Circumstances in which warning and special measures notices are treated as having been given

46 (1) Sub-paragraphs (2) and (3) apply where—

(a) a relevant body (“B1”) is given a warning notice, and

(b) before the notice ceases to have effect, B1 becomes a member of a
group headed by another relevant body (“H1”).

(2) 30H1 is to be treated as having been given a warning notice on the day on
which the warning notice was given to B1.

(3) A warning notice treated as given under sub-paragraph (2) is valid whether
or not, on the day mentioned in that sub-paragraph, H1 was the head of a
qualifying UK group that fell within this Part.

(4) 35Sub-paragraphs (5) to (7) apply where—

(a) a relevant body (“B2”) is given a special measures notice, and

(b) before the notice ceases to have effect, B2 becomes a member of a
group headed by another relevant body (“H2”).

(5) H2 is to be treated as having been given a special measures notice on the day
40on which the special measures notice was given to B2.

(6) A special measures notice treated as given under sub-paragraph (5) is valid
whether or not, on the day mentioned in that sub-paragraph, H2 was the
head of a qualifying UK group that fell within this Part.

(7) Paragraph 47(1) does not by virtue of sub-paragraphs (5) and (6) of this
45paragraph apply to an inaccuracy in a document given to HMRC by or on
behalf of a person—

(a) at a time when the person was a member of a group headed by H2,
but

(b) before the day B2 becomes a member of H2.

(8) Sub-paragraphs (9) and (10) apply where—

(a) 5a relevant body (“B3”) is given a confirmation notice, and

(b) before the notice ceases to have effect, B3 becomes a member of a
group headed by another relevant body (“H3”).

(9) H3 is to be treated as having been given a confirmation notice on the day on
which the confirmation notice was given to B3.

(10) 10A confirmation notice treated as given under sub-paragraph (9) is valid
whether or not, on the day mentioned in that sub-paragraph, H3 was the
head of a qualifying UK group that fell within this Part.

(11) The Treasury may by regulations make provision for warning notices,
special measures notices and confirmation notices to be treated as having
15been given to relevant bodies in other circumstances described in the
regulations.

(12) Regulations under this paragraph may, in particular—

(a) make provision about the validity of notices treated as given by
virtue of the regulations;

(b) 20make provision about the effect of paragraph 47(1) in cases involving
such notices.

Sanctions: liability for penalties for errors in documents given to HMRC

47 (1) For the purposes of Schedule 24 to FA 2007 (penalties for errors), an
inaccuracy in a document given to HMRC by or on behalf of a person is to
25be treated as being due to failure by the person to take reasonable care if—

(a) the document was given to HMRC at a time when the person was a
member of a group subject to a special measures notice, and

(b) the inaccuracy—

(i) relates to a tax avoidance scheme (as defined in paragraph
3038) entered into by the person at a time when the person was
a member of a group subject to a special measures notice, or

(ii) is, entirely or partly, attributable to an interpretation of
legislation relating to UK taxation which, at the time the
document was given to HMRC, was speculative.

(2) 35A group is “subject to a special measures notice” if a special measures
notice—

(a) has been given to the head of the group in relation to the group, and

(b) is in force.

(3) An interpretation of legislation relating to UK taxation is “speculative” if it
40is likely that a court or tribunal would disagree with it.

(4) Sub-paragraph (1) does not apply to an inaccuracy if—

(a) it is deliberate on the part of the person or someone acting on the
person’s behalf,

(b) it is in fact due to a failure by the person or someone acting on the
45person’s behalf to take reasonable care, or

(c) it is treated as due to such a failure by virtue of another enactment.

48 In Schedule 24 to FA 2007 (penalties for errors), at the end of paragraph 3
(meaning of “careless” etc) insert—

“(3) Paragraph 47 of Schedule 19 to FA 2016 (special measures for
5persistently unco-operative large businesses) provides for certain
inaccuracies to be treated, for the purposes of this Schedule, as
being due to a failure by P to take reasonable care.”

Sanctions: Commissioners publishing information

49 (1) If a group is subject to a confirmed special measures notice, the
10Commissioners for Her Majesty’s Revenue and Customs (“the
Commissioners”) may publish the following information—

(a) the name of the group, including any previous name;

(b) the address or registered office of the head of the group;

(c) any other information that the Commissioners consider it
15appropriate to publish in order to identify the group;

(d) the fact that the group is subject to a confirmed special measures
notice.

(2) A group is “subject to a confirmed special measures notice” if sub-paragraph
(3) or (4) is satisfied.

(3) 20This sub-paragraph is satisfied if—

(a) a special measures notice has been given to the head of the group and
confirmed under paragraph 44, and

(b) the special measures notice is in force.

(4) This sub-paragraph is satisfied if—

(a) 25a special measures notice has been given to the head of the group and
confirmed under paragraph 44,

(b) that notice has ceased to have effect,

(c) a further special measures notice has been given to the head of the
group under paragraph 45 in the period of 9 months beginning with
30the day on which the special measures notice mentioned in
paragraph (a) ceased to have effect, and

(d) that notice is in force.

(5) Before publishing the information, the Commissioners must—

(a) inform the head of the group that they are considering doing so, and

(b) 35allow the head of the group a reasonable opportunity to make
representations about whether the information should be published.

(6) If, after information about a group is published under this paragraph, the
group ceases to be subject to a confirmed special measures notice, the
Commissioners must publish a notice stating that the group is no longer
40subject to a confirmed special measures notice.

(7) A notice under sub-paragraph (6) must be published before the end of the
period of 30 days beginning with the day on which the special measures
notice is withdrawn or has expired.

(8) The Commissioners may publish information and notices under this
45paragraph in any manner they consider appropriate.