Finance Bill (HC Bill 47)

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

(b) inform T of the period under paragraph 2 for making a
5proposal.

2 (1) T has 30 days beginning with the day on which the notice under
paragraph 1 is given to propose to HMRC that it—

(a) should give T a notice under paragraph 3 of Schedule 43 in
respect of the arrangements to which the notice under
10paragraph 1 relates, and

(b) should not proceed with the proposal to make a generic
referral to the GAAR Advisory Panel in respect of those
arrangements.

(2) If a proposal is made in accordance with sub-paragraph (1) a
15designated HMRC officer must consider it.

Generic referral

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

(2) If none of the notified taxpayers has made a proposal under
20paragraph 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 arrangements in relation to them.

(3) If at least one of the notified taxpayers makes a proposal in
25accordance with paragraph 2, the designated HMRC officer must,
after the end of that 30 day period, decide whether to—

(a) give a notice under paragraph 3 of Schedule 43 in respect of
one set of tax arrangements in the relevant pool, or

(b) make a referral to the GAAR Advisory Panel in respect of the
30tax arrangements in the relevant pool.

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

4 (1) If 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
35specified arrangements, and

(b) a declaration that—

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

(ii) as far as HMRC is aware, nothing which is material to
40the GAAR Advisory Panel’s consideration of the
matter has been omitted.

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

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

(b) set out HMRC’s view as to whether the tax arrangements
45accord with established practice (when the arrangements
were entered into);

(c) explain why it is the designated HMRC officer’s view that a
tax advantage of the nature described in the statement and
arising from tax arrangements having the characteristics
described in the statement would be a tax advantage arising
5from arrangements that are abusive;

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

(e) 10set out any other matters which the designated officer
considers are required for the purposes of the exercise of the
GAAR Advisory Panel’s functions under paragraph 6.

5 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) 15specifies that a generic referral is being made, and

(b) is accompanied by a copy of the statement given to the GAAR
Advisory Panel in accordance with paragraph 4(1)(a).

Decision of GAAR Advisory Panel and opinion notices

6 (1) If a generic referral is made to the GAAR Advisory Panel under
20paragraph 3, the Chair must arrange for a sub-panel consisting of 3
members of the GAAR Advisory Panel (one of whom may be the
Chair) to consider it.

(2) The sub-panel must produce—

(a) one opinion notice stating the joint opinion of all the
25members of the sub-panel, or

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

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

(4) 30An 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) the entering into and carrying out of tax arrangements such
as are described in the general statement under paragraph
4(1)(a) is a reasonable course of action in relation to the
35relevant tax provisions,

(b) the entering into or carrying out of such tax arrangements is
not 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
40on 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
45paragraph 4(1)(a),

(b) assume (unless the contrary is stated in the statement under
paragraph 4(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)
of 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,
5the arrangements are to be assumed to be tax arrangements.

(7) In this Part, a reference to any opinion of the GAAR Advisory Panel
in 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.

10Notice of right to make representations

7 (1) Where a designated HMRC officer is given an opinion notice (or
opinion notices) under paragraph 6, the officer must give each of the
notified taxpayers a copy of the opinion notice (or notices) and a
written notice which—

(a) 15explains the notified taxpayer’s right to make representations
falling within sub-paragraph (2), and

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

(2) A notified taxpayer (“T”) who is given a notice under sub-paragraph
20(1) 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 from the
specified arrangements;

(b) representations that T has already been given a notice under
25paragraph 6 of Schedule 43A in relation to the specified
arrangements;

(c) representations that any matter set out in the statement under
paragraph 4(1)(a) is materially inaccurate as regards the
specified arrangements (having regard to all circumstances
30which would be relevant in accordance with section 207 to a
determination of whether the tax arrangements in question
are abusive).

Notice of final decision after considering opinion of GAAR Advisory Panel

8 (1) A designated HMRC officer who has received a notice or notices
35under paragraph 6(3) in respect of a generic referral must consider
the case of each notified taxpayer in accordance with sub-paragraph
(2).

(2) The officer must, having considered—

(a) any opinion of the GAAR Advisory Panel about the matters
40referred to it, and

(b) any representations made by the notified taxpayer under
paragraph 7,

give to the notified taxpayer a written notice setting out whether the
specified advantage is to be counteracted under the general anti-
45abuse rule.

(3) If the notice 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) 5if 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

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
10might 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
tax advantage does arise (without conceding that it does).

Power to amend

10 (1) 15The Treasury may by regulations amend this Schedule (apart from
this 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
20(1);

(b) transitional provision.

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

(4) A statutory instrument containing regulations under sub-paragraph
25(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
“Schedule 43” insert “, 43A or 43B”.

(5) In section 210 (consequential relieving adjustments), in subsection (1)(b), after
30“Schedule 43,” insert “paragraph 8 or 9 of Schedule 43A or paragraph 8 of
Schedule 43B,”.

(6) 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
35arrangements or any tax arrangements which are, as a
result of a notice under paragraph 1 or 2 of Schedule
43A, the referred or (as the case may be) counteracted
arrangements in relation to the arrangements, or

(ii) under paragraph 6 of Schedule 43B in respect of a
40generic referral of the arrangements.””

(7) Section 214 (interpretation of Part 5) is amended in accordance with
subsections (8) to (10).

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

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

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

• ““notice of binding” has the meaning given by paragraph 2(2) of
  5Schedule 43A;

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

• ““tax appeal” has the meaning given by paragraph 1A of Schedule
  43;”

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

(10) After subsection (1) insert—

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

(11) In Schedule 43 (general anti-abuse rule: procedural requirements), in
20paragraph 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.””

(12) Section 10 of the National Insurance Contributions Act 2014 (GAAR to apply
25to national insurance contributions) is amended in accordance with
subsections (13) to (16).

(13) In subsection (4), at the end insert “, paragraph 8 or 9 of Schedule 43A to that
Act (pooling of tax arrangements: notice of final decision) or paragraph 8 of
Schedule 43B to that Act (generic referral of arrangements: notice of final
30decision)”.

(14) After subsection (6) insert—

“(6A) Where, by virtue of this section, a case falls within paragraph 4A of
Schedule 43 to the Finance Act 2013 (referrals of single schemes:
relevant corrective action) or paragraph 4 of Schedule 43A to that Act
35(pooled schemes: relevant corrective action)—

(a) the person (“P”) mentioned in sub-paragraph (1) of that
paragraph takes the “relevant corrective action” for the
purposes of that paragraph if (and only if)—

(i) in a case in which the tax advantage in question can be
40counteracted by making a payment to HMRC, P makes
that payment and notifies HMRC that P has done so, or

(ii) in any case, P takes all necessary action to enter into an
agreement in writing with HMRC for the purpose of
relinquishing the tax advantage, and

(b) 45accordingly, sub-paragraphs (2) to (8) of that paragraph do not
apply.””

(15) In subsection (11)—

(a) for “and HMRC” substitute “, “HMRC” and “tax advantage””;

(b) after “2013” insert “(as modified by this section)”.

(16) After subsection (11) insert—

“(12) See section 10A for further modifications of Part 5 of the Finance Act
52013.””

(17) After section 10 of the National Insurance Contributions Act 2014 insert—

“10A Application of GAAR in relation to penalties

(1) For the purposes of this section a penalty under section 212A of the
Finance Act 2013 is a “relevant NICs-related penalty” so far as the
10penalty relates to a tax advantage in respect of relevant contributions.

(2) A relevant NICs-related penalty may be recovered as if it were an
amount of relevant contributions which is due and payable.

(3) Section 117A of the Social Security Administration Act 1992 or (as the
case may be) section 111A of the Social Security Administration
15(Northern Ireland) Act 1992 (issues arising in proceedings:
contributions etc) has effect in relation to proceedings before a court for
recovery of a relevant NICs-related penalty as if the assessment of the
penalty were a NICs decision as to whether the person is liable for the
penalty.

(4) 20Accordingly, paragraph 5(4)(b) of Schedule 43C to the Finance Act 2013
(assessment of penalty to be enforced as if it were an assessment to tax)
does not apply in relation to a relevant NICs-related penalty.

(5) In the application of Schedule 43C to the Finance Act 2013 in relation to
a relevant NICs-related penalty, paragraph 9(5) has effect as if the
25reference to an appeal against an assessment to the tax concerned were
to an appeal against a NICs decision.

(6) In paragraph 8 of that Schedule (aggregate penalties), references to a
“relevant penalty provision” include—

(a) any provision mentioned in sub-paragraph (5) of that
30paragraph, as applied in relation to any class of national
insurance contributions by regulations (whenever made);

(b) section 98A of the Taxes Management Act 1970, as applied in
relation to any class of national insurance contributions by
regulations (whenever made);

(c) 35any provision in regulations made by the Treasury under which
a penalty can be imposed in respect of any class of national
insurance contributions.

(7) The Treasury may by regulations—

(a) disapply, or modify the effect of, subsection (6)(a) or (b);

(b) 40modify paragraph 8 of Schedule 43C to the Finance Act 2013 as
it has effect in relation to a relevant penalty provision by virtue
of subsection (6)(b) or (c).

(8) Section 175(3) to (5) of SSCBA 1992 (various supplementary powers)
applies to a power to make regulations conferred by subsection (7).

(9) Regulations under subsection (7) must be made by statutory
instrument.

(10) A statutory instrument containing regulations under subsection (7) is
subject to annulment in pursuance of a resolution of either House of
5Parliament.

(11) In this section “NICs decision” means a decision under section 8 of the
Social Security Contributions (Transfer of Functions, etc) Act 1999 or
Article 7 of the Social Security Contributions (Transfer of Functions,
etc) (Northern Ireland) Order 1999 (SI 1999/671SI 1999/671).

(12) 10In this section “relevant contributions” means the following
contributions under Part 1 of SSCBA 1992 or Part 1 of SSCB(NI)A
1992—

(a) Class 1 contributions;

(b) Class 1A contributions;

(c) 15Class 1B contributions;

(d) Class 2 contributions which must be paid but in relation to
which section 11A of the Act in question (application of certain
provisions of the Income Tax Acts in relation to Class 2
contributions under section 11(2) of that Act) does not apply.””

(18) 20Section 219 of FA 2014 (circumstances in which an accelerated payment notice
may be given) is amended in accordance with subsections (19) and (20).

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

“(d) a notice has been given under paragraph 8(2) or 9(2) of Schedule
43A to FA 2013 (notice of final decision after considering Panel’s
25opinion about referred or counteracted arrangements) in
relation 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
30Panel about the other arrangements (see subsection (8)) was as
set out in paragraph 11(3)(b) of Schedule 43 to FA 2013;

(e) a notice under paragraph 8(2) of Schedule 43B to FA 2013
(GAAR: generic referral of tax arrangements) has been given in
relation to the asserted advantage or part of it and the chosen
35arrangements (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 6 of Schedule 43B to FA 2013
was as set out in paragraph 6(4)(b) of that Schedule.””

(20) After subsection (7) insert—

“(8) In subsection (4)(d) “other arrangements” means—

(a) in relation to a notice under paragraph 8(2) of Schedule 43A to
FA 2013, the referred arrangements (as defined in that
45paragraph);

(b) in relation to a notice under paragraph 9(2) of that Schedule, the
counteracted arrangements (as defined in paragraph 2 of that
Schedule).”

(21) In section 220 of FA 2014 (content of notice given while a tax enquiry is in
progress)—

(a) in subsection (4)(c), after “219(4)(c)” insert “, (d) or (e)”;

(b) in subsection (5)(c), after “219(4)(c)” insert “, (d) or (e)”;

(c) 5in subsection (7), for the words from “under” to the end substitute
“under—

“(a) paragraph 12 of Schedule 43 to FA 2013,

(b) paragraph 8 or 9 of Schedule 43A to that Act, or

(c) paragraph 8 of Schedule 43B to that Act,

10as the case may be.””

(22) Section 287 of FA 2014 (Code of Practice on Taxation for Banks) is amended in
accordance with subsections (23) to (25).

(23) In subsection (4), after “(5)” insert “or (5A)”.

(24) In subsection (5)(b), after “Schedule” insert “or paragraph 8 or 9 of Schedule
1543A to that Act”.

(25) After subsection (5) insert—

“(5A) This subsection applies to any conduct—

(a) in relation to which there has been given—

(i) an opinion notice under paragraph 6(4)(b) of Schedule
2043B to FA 2013 (GAAR advisory panel: opinion that
such conduct unreasonable) stating the joint opinion of
all the members of a sub-panel arranged under that
paragraph, or

(ii) one or more such notices stating the opinions of at least
25two members of such a sub-panel, and

(b) in relation to which there has been given a notice under
paragraph 8 of that Schedule (HMRC final decision on tax
advantage) stating that a tax advantage is to be counteracted.

(5B) For the purposes of subsection (5), any opinions of members of the
30GAAR advisory panel which must be considered before a notice is
given under paragraph 8 or 9 of Schedule 43A to FA 2013 (opinions
about the lead arrangements) are taken to relate to the conduct to which
the notice relates.””

(26) In Schedule 32 to FA 2014 (accelerated payments and partnerships), paragraph
353 is amended in accordance with subsections (27) and (28).

(27) In sub-paragraph (5), after paragraph (c) insert—

“(d) the relevant partner in question has been given a notice under
paragraph 8(2) or 9(2) of Schedule 43A to FA 2013 (notice of
final decision after considering Panel’s opinion about
40referred or counteracted arrangements) in respect of any tax
advantage resulting from the asserted advantage or part of it
and the chosen arrangements (or is given such a notice at the
same time as the partner payment notice) in a case where the
stated opinion of at least two of the members of the sub-panel
45of the GAAR Advisory Panel about the other arrangements
(see sub-paragraph (7)) was as set out in paragraph 11(3)(b)
of Schedule 43 to FA 2013;

(e) the relevant partner in question has been given a notice under
paragraph 8(2) of Schedule 43B to FA 2013 (GAAR: generic
referral of arrangements) in respect of any tax advantage
resulting from the asserted advantage or part of it and the

5chosen arrangements (or is given such a notice at the same
time as the partner 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 was as set out in paragraph
106(4)(b) of that Schedule.””

(28) After sub-paragraph (6) insert—

“(7) “Other arrangements” means—

(a) in relation to a notice under paragraph 8(2) of Schedule 43A
to FA 2013, the referred arrangements (as defined in that
15paragraph);

(b) in relation to a notice under paragraph 9(2) of that Schedule,
the counteracted arrangements (as defined in paragraph 2 of
that Schedule).””

(29) In Schedule 34 to FA 2014 (promoters of tax avoidance schemes: threshold
20conditions), in paragraph 7—

(a) in paragraph (a), at the end insert “(referrals of single schemes) or are
in a pool in respect of which a referral has been made to that Panel
under Schedule 43B to that Act (generic referrals),”;

(b) in paragraph (b)—

(i) 25for “in relation to the arrangements” substitute “in respect of the
referral”;

(ii) after “11(3)(b)” insert “or (as the case may be) 6(4)(b)”;

(c) in paragraph (c)(i) omit “paragraph 10 of”.

(30) The amendments made by this section have effect in relation to tax
30arrangements (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).

157 General anti-abuse rule: penalty

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

(2) After section 212 insert—

“212A 35Penalty

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

(a) P has been given a notice under—

(i) paragraph 12 of Schedule 43,

(ii) paragraph 8 or 9 of Schedule 43A, or

(iii) 40paragraph 8 of Schedule 43B,

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

(b) a tax document has been given to HMRC on the basis that the
tax advantage arises to P from those arrangements,

(c) 45that document was given to HMRC—

(i) by P, or

(ii) by another person in circumstances where P knew, or
ought to have known, that the other person gave the
document on the basis mentioned in paragraph (c), and

(d) the tax advantage has been counteracted by the making of
5adjustments under section 209.

(2) The 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) 10makes other provision in relation to penalties under this
section.

(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.

(5) 15In this section the reference to giving a tax document to HMRC is to be
interpreted in accordance with paragraph 11(g) and (h) of Schedule
43C.”

(3) After Schedule 43B insert—

““Schedule 43C 20Penalty 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.

Value of the counteracted advantage: basic rule

2 (1) 25The “value of the counteracted advantage” is the additional amount
due or payable in respect of tax as a result of the counteraction
mentioned in section 212A(1)(c).

(2) The reference in sub-paragraph (1) to the additional amount due and
payable includes a reference to—

(a) 30an amount payable to HMRC having erroneously been paid
by way of repayment of tax, and

(b) an amount which would be repayable by HMRC if the
counteraction were not made.

(3) The following are ignored in calculating the value of the
35counteracted advantage—

(a) group relief, and

(b) any relief under section 458 of CTA 2010 (relief in respect of
repayment etc of loan) which is deferred under subsection (5)
of that section.

(4) 40For the purposes of this paragraph consequential adjustments under
section 210 are regarded as part of the counteraction in question.