Finance Bill (HC Bill 47)

(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,

5are treated for all purposes as effecting a valid counteraction of the tax
advantage under that section.

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

(a) specifies adjustments (the “notified adjustments”) which the
officer reasonably believes may be required under section
10209(1) to counteract a tax advantage that would (ignoring this
Part) arise to the person from tax arrangements;

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

(c) notifies the person of the person’s rights of appeal with respect
15to the notified adjustments (when made) and contains a
statement that if an appeal is made against the making of the
adjustments—

(i) no steps may be taken in relation to the appeal unless
and until the person is given a notice referred to in
20section 209F(2), and

(ii) the notified adjustments will be cancelled if HMRC fails
to take at least one of the actions mentioned in section
209B(4) within the period specified in section 209B(2).

(3) It does not matter whether the notice is given before or at the same time
25as the making of the adjustments.

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

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

(1) 30This 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) The 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
35provisional 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
mentioned in subsection (4)(c), (d) or (e) is taken before or after the
provisional counteraction notice is given (but if that action is taken
40before the provisional counteraction notice is given subsection (5) does
not have effect).

(4) The actions are—

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

(b) 45an officer of Revenue and Customs giving the taxpayer written
notice of the withdrawal of the provisional counteraction notice
(without cancelling the notified adjustments);

(c) a 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,
5and

(ii) specifies 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) 10a 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,
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);

(e) a designated HMRC officer giving the taxpayer a notice under
20paragraph 1(2) of Schedule 43B which—

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

(ii) specifies the notified adjustments (or lesser
25adjustments) as the counteraction that the officer
considers ought to be taken.

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

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

(b) the notice of binding, or

(c) 30the 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) The officer may not take the action in subsection (4)(b) unless the officer
was authorised to make the notified adjustments otherwise than under
35this Part.

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

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

(1) 40This 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
adjustments are to be treated as cancelled with effect from the date of
the designated HMRC officer’s decision under paragraph 6(2) of
45Schedule 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) A 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) 5If the taxpayer is given a notice under paragraph 12 of Schedule 43
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.

(5) 10A 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) If the taxpayer is given a notice under paragraph 12 of Schedule 43
15stating 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
20be 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) If the taxpayer is given a notice under paragraph 8(2) or 9(2) of
25Schedule 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) A notice under paragraph 8(2) or 9(2) of Schedule 43A may not contain
30the 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 8(2) or 9(2) of
Schedule 43A stating that the specified tax advantage is to be
35counteracted—

(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
40be 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) If the notice under paragraph 1(2) of Schedule 43B is withdrawn, the
45notified 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
subsection (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 8(2) of Schedule 43B,
5which 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 8(2) of Schedule 43B may not contain the
10statement referred to in subsection (4) unless HMRC was authorised to
make the adjustments otherwise than under this Part.

(6) If the taxpayer is given a notice under paragraph 8(2) of Schedule 43B
stating that the specified tax advantage is to be counteracted—

(a) the notified adjustments are confirmed only so far as they are
15specified 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
be treated as cancelled.

209F Appeals against provisional counteractions: further provision

(1) 20Subsections (2) to (5) 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) No steps after the initial notice of appeal are to be taken in relation to
the appeal unless and until the taxpayer is given—

(a) 25a 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
statement described in section 209C(2) (statement that
adjustments are not to be treated as cancelled),

(c) 30a notice under paragraph 12 of Schedule 43,

(d) a notice under paragraph 8(2) or 9(2) of Schedule 43A, or

(e) a notice under paragraph 8 of Schedule 43B,

in respect of the tax arrangements concerned.

(3) The taxpayer has until the end of the period mentioned in subsection
35(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
subsection (2).

(5) In subsection (2) the reference to “steps” does not include the
40withdrawal of the appeal.””

(2) In section 214(1) of FA 2013 (interpretation of Part 5), at the appropriate place
insert—

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

• 45““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
time (whether before or on or after the day on which this Act is passed).

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

(1) 5Part 5 of FA 2013 (general anti-abuse rule) is amended in accordance with
subsections (2) to (11).

(2) After Schedule 43 insert—

““Schedule 43A Procedural requirements: pooling notices and notices of binding

10Pooling notices

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

(2) The condition is that the period of 45 days mentioned in paragraph
154(1) of Schedule 43 has expired but no notice under paragraph 12 of
Schedule 43 or paragraph 8of Schedule 43B has yet been given in
respect of the matter.

(3) If a designated HMRC officer considers—

(a) that a tax advantage has arisen to another person (“R”) from
20tax arrangements that are abusive,

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

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

25the officer may give R a notice (a “pooling notice”) which places R’s
arrangements in a pool with the lead arrangements.

(4) There is one pool for any lead arrangements, so all tax arrangements
placed in a pool with the lead arrangements (as well as the lead
arrangements themselves) are in one and the same pool.

(5) 30Tax arrangements which have been placed in a pool do not cease to
be in the pool except where that is expressly provided for by this
Schedule (regardless of whether or not the lead arrangements or any
other tax arrangements remain in the pool).

(6) The officer may not give R a pooling notice if R has been given in
35respect of R’s arrangements a notice under paragraph 3 of Schedule
43.

Notice of proposal to bind arrangements to counteracted arrangements

2 (1) This paragraph applies where a counteraction notice has been given
to a person in relation to any tax arrangements (the “counteracted
40arrangements”) which are in a pool created under paragraph 1.

(2) If a designated HMRC officer considers—

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

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

(c) 5that the advantage ought to be counteracted under section
209,

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

(3) The officer may not give R a notice of binding if R has been given in
10respect of R’s arrangements a notice under—

(a) paragraph 1, or

(b) paragraph 3 of Schedule 43.

(4) In this paragraph “counteraction notice” means a notice such as is
mentioned in sub-paragraph (2) of paragraph 12 of Schedule 43 or
15sub-paragraph (3) of paragraph 8 of Schedule 43B (notice of final
decision to counteract).

3 (1) The decision whether or not to give R a pooling notice or 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
20facts.

(2) A pooling notice or notice of binding must—

(a) specify 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
25equivalent to the lead arrangements or the counteracted
arrangements (as the case may be),

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

(d) set out the counteraction that the officer considers ought to be
30taken, and

(e) explain the effect of—

(i) paragraphs 4 to 10,

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

(iii) section 212A.

(3) 35A pooling notice or notice of binding may set out steps that R may
(subject to subsection (9) of section 209) take to avoid the proposed
counteraction.

Corrective action by a notified taxpayer

4 (1) If a person to whom a pooling notice or notice of binding has been
40given takes the relevant corrective action in relation to the tax
arrangements and tax advantage specified in the notice before the
beginning of the closed period mentioned in section 209(9), the
person is to be treated for the purposes of paragraphs 8 and 9 and
Schedule 43B (generic referral of tax arrangements) as not having
45been given the notice in question (and accordingly the tax
arrangements in question are no longer in the pool).

(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-
paragraphs (3) and (4).

(3) The first step is that—

(a) 5the person amends a return or claim to counteract the tax
advantage specified in the pooling notice or notice of
binding, or

(b) if the person has made a tax appeal (by notifying HMRC or
otherwise) on the basis that the tax advantage specified in the
10pooling notice or notice of binding arises from the tax
arrangements specified in that notice, the person 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 the person notifies HMRC—

(a) 15that 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) Where a person takes the first step described in sub-paragraph (3)(b),
20HMRC may proceed as if the person had not taken the relevant
corrective action if the person fails to enter into the written
agreement.

(6) In determining the additional amount which has or will become due
and payable in respect of tax for the purposes of sub-paragraph
25(4)(b), it is to be assumed that, where the person takes the necessary
action as mentioned in sub-paragraph (3)(b), the agreement is then
entered into.

(7) No enactment limiting the time during which amendments may be
made to returns or claims operates to prevent the person taking the
30first step mentioned in sub-paragraph (3)(a) before the tax enquiry is
closed.

(8) No appeal may be brought, by virtue of a provision mentioned in
sub-paragraph (9), against an amendment made by a closure notice
in respect of a tax enquiry to the extent that the amendment takes
35into account an amendment made by the taxpayer to a return or
claim in taking the first step mentioned in sub-paragraph (3)(a).

(9) The provisions are—

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

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

(c) 40paragraph 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.

Corrective action by lead taxpayer

5 If the person mentioned in paragraph 1(1) takes the relevant
45corrective action (as defined in paragraph 4A of Schedule 43) before
the end of the period of 75 days beginning with the day on which the

notice mentioned in paragraph 1(1) was given to that person, the
lead arrangements are treated as ceasing to be in the pool.

Opinion notices and right to make representations

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

(a) 5a pooling notice is given to a person in relation to any tax
arrangements, and

(b) an opinion notice (or opinion notices) under paragraph 11(2)
of Schedule 43 about another set of tax arrangements in the
pool (“the referred arrangements”) is subsequently given to a
10designated HMRC officer.

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

(3) No more than one pooled arrangements opinion notice may be given
to a person in respect of the same tax arrangements.

(4) 15Where a designated HMRC officer gives a person a notice of binding,
the officer must, at the same time, give the person a bound
arrangements opinion notice.

7 (1) In relation to a person who is, or has been, given a pooling notice,
“pooled arrangements opinion notice” means a written notice
20which—

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

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

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

(2) In relation to a person who is 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
30GAAR Advisory Panel about the counteracted arrangements
(see paragraph 2(1)),

(b) explains the person’s right to make representations falling
within sub-paragraph (3), and

(c) sets out the period in which those representations may be
35made.

(3) A person who is given a pooled arrangements opinion notice or 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) 40representations that no tax advantage has arisen to the
person from the arrangements to which the notice relates;

(b) representations as to why the arrangements to which the
notice relates are or may be materially different from—

(i) the referred arrangements (in the case of a pooled
45arrangements opinion notice), or

(ii) the counteracted arrangements (in the case of a bound
arrangements opinion notice).

(4) In sub-paragraph (3)(b) 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
are abusive.

5Notice of final decision

8 (1) This paragraph applies where—

(a) any tax arrangements have been placed in a pool by a notice
given to a person under paragraph 1, and

(b) a designated HMRC officer has given a notice under
10paragraph 12 of Schedule 43 in relation to any other
arrangements in the pool (the “referred arrangements”).

(2) The officer must, having considered any opinion of the GAAR
Advisory Panel about the referred arrangements and any
representations made under paragraph 7(3) in relation to the
15arrangements mentioned in sub-paragraph (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 rule.

9 (1) This paragraph applies where—

(a) 20a person has been given a notice of binding under paragraph
2, and

(b) the period of 30 days for making representations under
paragraph 7(3) has expired.

(2) A designated HMRC officer must, having considered any opinion of
25the GAAR Advisory Panel about the counteracted arrangements and
any representations made under paragraph 7(3) in relation to the
arrangements specified in the notice of binding, give the person a
written notice setting out whether the tax advantage arising from the
arrangements specified in the notice of binding is to be counteracted
30under the general anti-abuse rule.

10 If a notice under paragraph 8(2) or 9(2) states that a tax advantage is
to be counteracted, it must also set out—

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

(b) 35if relevant, any steps the person concerned is required to take
to give effect to it.

“Equivalent arrangements”

11 (1) For the purposes of paragraph 1, tax arrangements are “equivalent”
to one another if they are substantially the same as one another
40having regard to—

(a) their substantive results,

(b) the means of achieving those results, and

(c) the characteristics on the basis of which it could reasonably
be argued, in each case, that the arrangements are abusive tax
45arrangements under which a tax advantage has arisen to a
person.

Notices may be given on assumption that tax advantage does arise

12 (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

13 (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) 25Sub-paragraph (2) applies if—

(a) pooling notices given under paragraph 1 of Schedule 43A
have placed one or more sets of tax arrangements in a pool
with the lead arrangements,

(b) the lead arrangements (see paragraph 1(1) of Schedule 43A)
30have ceased to be in the pool, and

(c) no referral under paragraph 5 or 6 of Schedule 43 has been
made in respect of any arrangements in the pool.

(2) A designated HMRC officer may determine that, in respect of each of
the tax arrangements that are in the pool, there is to be given (to the
35person to whom the pooling notice in question was given) a written
notice of a proposal to make a generic referral to the GAAR Advisory
Panel in respect of the arrangements in the pool.

(3) Only one determination under sub-paragraph (2) may be made in
relation to any one pool.

(4) 40The persons to whom those notices are given are “the notified
taxpayers”.

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