Finance Bill (HC Bill 47)

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(3) A person who is not a taxable person obtains a tax advantage if the person’s
non-refundable tax is less than it otherwise would be.

(4) In sub-paragraph (3) “non-refundable tax”, in relation to a person who is not
a taxable person, means—

(a) 5VAT on the supply to the person of any goods or services,

(b) VAT on the acquisition by the person from another member State of
any goods, and

(c) VAT paid or payable by the person on the importation of any goods
from a place outside the member States,

10but excluding (in each case) any VAT in respect of which the person is
entitled to a refund from the Commissioners by virtue of any provision of
VATA 1994.

Meaning of “non-deductible tax”

6 (1) In this Schedule “non-deductible tax”, in relation to a taxable person,
15means—

(a) input tax for which the person is not entitled to credit under section
25 of VATA 1994, and

(b) any VAT incurred by the person which is not input tax and in respect
of which the person is not entitled to a refund from the
20Commissioners by virtue of any provision of VATA 1994.

(2) For the purposes of sub-paragraph (1)(b), the VAT “incurred” by a taxable
person is—

(a) VAT on the supply to the person of any goods or services,

(b) VAT on the acquisition by the person from another member State of
25any goods, and

(c) VAT paid or payable by the person on the importation of any goods
from a place outside the member States.

“Tax advantage”: other taxes

7 In relation to taxes other than VAT, “tax advantage” includes—

(a) 30relief or increased relief from tax,

(b) repayment or increased repayment of tax,

(c) receipt, or advancement of a receipt, of a tax credit,

(d) avoidance or reduction of a charge to tax, an assessment of tax or a
liability to pay tax,

(e) 35avoidance of a possible assessment to tax or liability to pay tax,

(f) deferral of a payment of tax or advancement of a repayment of tax,
and

(g) avoidance of an obligation to deduct or account for tax.

“DOTAS arrangements”

8 (1) 40For the purposes of this Schedule arrangements are “DOTAS arrangements”
at any time if they are notifiable arrangements at the time in question and a
person—

(a) has provided information in relation to the arrangements under
section 308(3), 309 or 310 of FA 2004, or

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(b) has failed to comply with any of those provisions in relation to the
arrangements.

(2) But for the purposes of this Schedule “DOTAS arrangements” does not
include arrangements in respect of which HMRC has given notice under
5section 312(6) of FA 2004 (notice that promoters not under duty to notify
client of reference number).

(3) For the purposes of sub-paragraph (1) a person who would be required to
provide information under subsection (3) of section 308 of FA 2004—

(a) but for the fact that the arrangements implement a proposal in
10respect of which notice has been given under subsection (1) of that
section, or

(b) but for subsection (4A), (4C) or (5) of that section,

is treated as providing the information at the end of the period referred to in
subsection (3) of that section.

(4) 15In this paragraph “notifiable arrangements” has the same meaning as in Part
7 of FA 2004.

“Disclosable VAT arrangements”

9 For the purposes of this Schedule arrangements are “disclosable VAT
arrangements” at any time if at that time—

(a) 20a person has complied with paragraph 6 of Schedule 11A to VATA
1994 in relation to the arrangements (duty to notify Commissioners),

(b) a person under a duty to comply with that paragraph in relation to
the arrangements has failed to do so, or

(c) a reference number has been allocated to the scheme under
25paragraph 9 of that Schedule (voluntary notification of avoidance
scheme which is not a designated scheme).

Paragraphs 8 and 9: “failure to comply”

10 (1) A person “fails to comply” with any provision mentioned in paragraph 8(1)
or 9(a) if and only if any of the conditions in sub-paragraphs (2) to (4) is met.

(2) 30The condition in this sub-paragraph is that—

(a) the tribunal has determined that the person has failed to comply with
the provision concerned,

(b) the appeal period has ended, and

(c) the determination has not been overturned on appeal.

(3) 35The condition in this sub-paragraph is that—

(a) the tribunal has determined for the purposes of section 118(2) of
TMA 1970 that the person is to be deemed not to have failed to
comply with the provision concerned as the person had a reasonable
excuse for not doing the thing required to be done,

(b) 40the appeal period has ended, and

(c) the determination has not been overturned on appeal.

(4) The condition in this sub-paragraph is that the person admitted in writing to
HMRC that the person has failed to comply with the provision concerned.

(5) In this paragraph “the appeal period” means—

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(a) the period during which an appeal could be brought against the
determination of the tribunal, or

(b) where an appeal mentioned in paragraph (a) has been brought, the
period during which that appeal has not been finally determined,
5withdrawn or otherwise disposed of.

(6) In this paragraph “the tribunal” means the First-tier tribunal or, where
determined by or under Tribunal Procedure Rules, the Upper Tribunal.

“Relevant defeat”

11 (1) A person (“P”) incurs a “relevant defeat” in relation to arrangements if any
10of Conditions A to E is met in relation to P and the arrangements.

(2) The relevant defeat is incurred when the condition in question is first met.

Condition A

12 (1) Condition A is that—

(a) P has been given a notice under paragraph 12 of Schedule 43 to FA
152013 (general anti-abuse rule: notice of final decision), paragraph 8 or
9 of Schedule 43A to that Act (pooled arrangements: notice of final
decision) or paragraph 8 of Schedule 43B to that Act (generic
referrals: notice of final decision) stating that a tax advantage arising
from the arrangements is to be counteracted,

(b) 20that tax advantage has been counteracted under section 209 of FA
2013, and

(c) the counteraction is final.

(2) For the purposes of this paragraph the counteraction of a tax advantage is
“final” when the adjustments made to effect the counteraction, and any
25amounts arising as a result of those adjustments, can no longer be varied, on
appeal or otherwise.

Condition B

13 (1) Condition B is that (in a case not falling within Condition A above) a
follower notice has been given to P by reference to the arrangements (and
30not withdrawn) and—

(a) the necessary corrective action for the purposes of section 208 of FA
2014 has been taken in respect of the denied advantage, or

(b) the denied advantage has been counteracted otherwise than as
mentioned in paragraph (a) and the counteraction of the denied
35advantage is final.

(2) In sub-paragraph (1) the reference to giving a follower notice to P includes a
reference to giving a partnership follower notice in respect of a partnership
return in relation to which P is a relevant partner (as defined in paragraph
2(5) of Schedule 31 to FA 2014).

(3) 40For the purposes of this paragraph it does not matter whether the denied
advantage has been dealt with—

(a) wholly as mentioned in one or other of paragraphs (a) and (b) of sub-
paragraph (1), or

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(b) partly as mentioned in one and partly as mentioned in the other of
those paragraphs.

(4) In this paragraph “the denied advantage” has the same meaning as in
Chapter 2 of Part 4 of FA 2014 (see section 208(3) of and paragraph 4(3) of
5Schedule 31 to that Act).

(5) For the purposes of this paragraph the counteraction of a tax advantage is
“final” when the adjustments made to effect the counteraction, and any
amounts arising as a result of those adjustments, can no longer be varied, on
appeal or otherwise.

(6) 10In this Schedule “follower notice” means a follower notice under Chapter 2
of Part 4 of FA 2014.

(7) For the purposes of this paragraph a partnership follower notice is given “in
respect of” the partnership return mentioned in paragraph (a) or (b) of
paragraph 2(2) of Schedule 31 to FA 2014.

15Condition C

14 (1) Condition C is that (in a case not falling within Condition A or B)—

(a) the arrangements are DOTAS arrangements,

(b) P has relied on the arrangements (see sub-paragraph (2))—

(c) the arrangements have been counteracted, and

(d) 20the counteraction is final.

(2) For the purposes of sub-paragraph (1), P “relies on the arrangements” if—

(a) P makes a return, claim or election, or a partnership return is made,
on the basis that a relevant tax advantage arises, or

(b) P fails to discharge a relevant obligation (“the disputed obligation”)
25and there is reason to believe that P’s failure to discharge that
obligation is connected with the arrangements.

(3) For the purposes of sub-paragraph (2) “relevant tax advantage” means a tax
advantage which the arrangements might be expected to enable P to obtain.

(4) For the purposes of sub-paragraph (2) an obligation is a “relevant
30obligation” if the arrangements might be expected to have the result that the
obligation does not arise.

(5) For the purposes of this paragraph the arrangements are “counteracted” if—

(a) adjustments, other than taxpayer emendations, are made in respect
of P’s tax position—

(i) 35on the basis that the whole or part of the relevant tax
advantage mentioned in sub-paragraph (2)(a) does not arise,
or

(ii) on the basis that the disputed obligation does (or did) arise,
or

(b) 40an assessment to tax other than a self-assessment is made, or any
other action is taken by HMRC, on the basis mentioned in paragraph
(a)(i) or (ii) (otherwise than by way of an adjustment).

(6) For the purposes of this paragraph a counteraction is “final” when the
assessment, adjustments or action in question, and any amounts arising

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from the assessment, adjustments or action, can no longer be varied, on
appeal or otherwise.

(7) For the purposes of sub-paragraph (1) the time at which it falls to be
determined whether or not the arrangements are DOTAS arrangements is
5when the counteraction becomes final.

(8) The following are “taxpayer emendations” for the purposes of sub-
paragraph (5)

(a) an adjustment made by P at a time when P had no reason to believe
that HMRC had begun or were about to begin enquiries into P’s
10affairs relating to the tax in question;

(b) an adjustment (by way of an assessment or otherwise) made by
HMRC with respect to P’s tax position as a result of a disclosure
made by P which meets the conditions in sub-paragraph (9).

For the purposes of paragraph (a) a payment in respect of a liability to pay
15national insurance contributions is not an adjustment unless it is a payment
in full.

(9) The conditions are that the disclosure—

(a) is a full and explicit disclosure of an inaccuracy in a return or other
document or of a failure to comply with an obligation, and

(b) 20was made at a time when P had no reason to believe that HMRC
were about to begin enquiries into P’s affairs relating to the tax in
question.

(10) For the purposes of this paragraph a contract settlement which HMRC
enters into with P is treated as an assessment to tax (other than a self-
25assessment); and in relation to contract settlements references in sub-
paragraph (5) to the basis an which any assessment or adjustments are
made, or any other action is taken, are to be read with any necessary
modifications.

Condition D

15 (1) 30Condition D is that—

(a) P is a taxable person;

(b) the arrangements are disclosable VAT arrangements to which P is a
party,

(c) P has relied on the arrangements (see sub-paragraph (2));

(d) 35the arrangements have been counteracted, and

(e) the counteraction is final.

(2) For the purposes of sub-paragraph (1) P “relies on the arrangements” if—

(a) P makes a return or claim on the basis that a relevant tax advantage
arises, or

(b) 40P fails to discharge a relevant obligation (“the disputed obligation”)
and there is reason to believe that P’s failure to discharge that
obligation is connected with those arrangements.

(3) For the purposes of sub-paragraph (2) “relevant tax advantage” means a tax
advantage which the arrangements might be expected to enable P to obtain.

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(4) For the purposes of sub-paragraph (2) an obligation is a “relevant
obligation” if the arrangements might be expected to have the result that the
obligation does not arise.

(5) For the purposes of this paragraph the arrangements are “counteracted” if—

(a) 5adjustments, other than taxpayer emendations, are made in respect
of P’s tax position—

(i) on the basis that the whole or part of the relevant tax
advantage mentioned in sub-paragraph (2)(a) does not arise,
or

(ii) 10on the basis that the disputed obligation does (or did) arise,
or

(b) an assessment to tax is made, or any other action is taken by HMRC,
on the basis mentioned in paragraph (a)(i) or (ii) (otherwise than by
way of an adjustment).

(6) 15For the purposes of this paragraph a counteraction is “final” when the
assessment, adjustments or action in question, and any amounts arising
from the assessment, adjustments or action, can no longer be varied, on
appeal or otherwise.

(7) For the purposes of sub-paragraph (1) the time at which it falls to be
20determined whether or not the arrangements are disclosable VAT
arrangements is when the counteraction becomes final.

(8) The following are “taxpayer emendations” for the purposes of sub-
paragraph (5)

(a) an adjustment made by P at a time when P had no reason to believe
25that HMRC had begun or were about to begin enquiries into P’s
affairs relating to VAT;

(b) an adjustment made by HMRC with respect to P’s tax position (by
way of an assessment or otherwise) as a result of a disclosure made
by P which meets the conditions in sub-paragraph (9).

(9) 30The conditions are that the disclosure—

(a) is a full and explicit disclosure of an inaccuracy in a return or other
document or of a failure to comply with an obligation, and

(b) was made at a time when P had no reason to believe that HMRC
were about to begin enquiries into P’s affairs relating to VAT.

35Condition E

16 (1) Condition E is that the arrangements are disclosable VAT arrangements to
which P is a party and—

(a) the arrangements relate to the position with respect to VAT of a
person other than P (“S”) who has made supplies of goods or services
40to P,

(b) the arrangements might be expected to enable P to obtain a tax
advantage in connection with those supplies of goods or services,

(c) the arrangements have been counteracted, and

(d) the counteraction is final.

(2) 45For the purposes of this paragraph the arrangements are “counteracted” if—

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(a) HMRC assess S to tax or take any other action on a basis which
prevents P from obtaining (or obtaining the whole of) the tax
advantage in question, or

(b) adjustments, other than taxpayer emendations, are made in relation
5to S’s VAT affairs on a basis such as is mentioned in paragraph (a).

(3) For the purposes of this paragraph a counteraction is “final” when the
assessment, adjustments or action in question, and any amounts arising
from the assessment, adjustments or action, can no longer be varied, on
appeal or otherwise.

(4) 10For the purposes of sub-paragraph (1) the time when it falls to be
determined whether or not the arrangements are disclosable VAT
arrangements is when the counteraction becomes final.

(5) The following are “taxpayer emendations” for the purposes of sub-
paragraph (2)

(a) 15an adjustment made by S at a time when neither P nor S had reason
to believe that HMRC had begun or were about to begin enquiries
into the affairs of S or P relating to VAT;

(b) an adjustment (by way of an assessment or otherwise) made by
HMRC with respect to S’s tax position as a result of a disclosure
20made by S which meets the conditions in sub-paragraph (6).

(6) The conditions are that the disclosure—

(a) is a full and explicit disclosure of an inaccuracy in a return or other
document or of a failure to comply with an obligation, and

(b) was made at a time when neither S nor P had reason to believe that
25HMRC were about to begin enquiries into the affairs of S or P relating
to VAT.

Part 3 Annual information notices and naming

Annual information notices

17 (1) 30A person (“P”) who has been given a warning notice under this Schedule
must give HMRC a written notice (an “information notice”) in respect of
each reporting period in the warning period (see sub-paragraph (11)).

(2) An information notice must be given not later than the 30th day after the end
of the reporting period to which it relates.

(3) 35An information notice must state whether or not P—

(a) has in the reporting period delivered a return, or made a claim or
election, on the basis that a relevant tax advantage arises, or has since
the end of the reporting period delivered on that basis a return which
P was required to deliver before the end of that period,

(b) 40has in the reporting period failed to take action which P would be
required to take under or by virtue of an enactment relating to tax
but for particular DOTAS arrangements or disclosable VAT
arrangements to which P is a party,

(c) has in the reporting period become a party to arrangements which—

(i) 45relate to the position with respect to VAT of another person
(“S”) who has made supplies of goods or services to P, and

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(ii) might be expected to enable P to obtain a relevant tax
advantage (“the expected tax advantage”) in connection with
those supplies of goods or services,

(d) has failed to deliver a return which P was required to deliver by a
5date falling in the reporting period.

(4) In this paragraph “relevant tax advantage” means a tax advantage which
particular DOTAS arrangements or disclosable VAT arrangements enable,
or might be expected to enable, P to obtain.

(5) If P has, in the reporting period concerned, made a return, claim or election
10on the basis mentioned in sub-paragraph (3)(a) or failed to take action as
mentioned in sub-paragraph (3)(b) the information notice must—

(a) explain (on the assumptions made by P in so acting or failing to act)
how the DOTAS arrangements or disclosable VAT arrangements
enable P to obtain the tax advantage, or (as the case may be) have the
15result that P is not required to take the action in question, and

(b) state (on the same assumptions) the amount of the relevant tax
advantage mentioned in sub-paragraph (3)(a) or (as the case may be)
the amount of any tax advantage which arises in connection with the
absence of a requirement to take the action mentioned in sub-
20paragraph (3)(b).

(6) If P has, in the reporting period, become a party to arrangements such as are
mentioned in sub-paragraph (3)(c), the information notice—

(a) must state whether or not it is P’s view that the expected tax
advantage arises to P, and

(b) 25if that is P’s view, must explain how the arrangements enable P to
obtain the tax advantage and state the amount of the tax advantage.

(7) If the time by which P must deliver a return falls within a reporting period
and P fails to deliver the return by that time, HMRC may require P to give
HMRC a written notice (a “supplementary information notice”) setting out
30any matters which P would have been required to set out in an information
notice had P delivered the return in that reporting period.

(8) A requirement under sub-paragraph (7) must be made by a written notice
which states the period within which P must comply with the notice.

(9) If P fails to comply with a requirement of (or imposed under) this paragraph
35HMRC may by written notice extend the warning period to the end of the
period of 5 years beginning with—

(a) the day by which the information notice or supplementary
information notice should have been given (see sub-paragraphs (1)
and (8)) or, as the case requires,

(b) 40the day on which P gave the defective information notice or
supplementary information notice to HMRC,

or, if earlier, the time when the warning period would have expired but for
the extension.

(10) HMRC may permit information notices given by members of the same
45group of companies (as defined in paragraph 46(9)) to be combined.

(11) For the purposes of this paragraph—

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(a) the first reporting period in any warning period begins with the first
day of the warning period and ends with a day specified by HMRC
(“the specified day”),

(b) the remainder of the warning period is divided into further reporting
5periods each of which begins immediately after the end of the
preceding reporting period and is twelve months long or (if that
would be shorter) ends at the end of the warning period.

Naming

18 (1) The Commissioners may publish information about a person if the person—

(a) 10incurs a relevant defeat in relation to arrangements which the person
has used in a warning period, and

(b) has been given at least two warning notices in respect of other
defeats of arrangements which were used in the same warning
period.

(2) 15Information published for the first time under sub-paragraph (1) must be
published within the 12 months beginning with the day on which the most
recent of the warning notices falling within that sub-paragraph has been
given to the person.

(3) No information may be published (or continue to be published) after the end
20of the period of 12 months beginning with the day on which it is first
published.

(4) The information that may be published is—

(a) the person’s name (including any trading name, previous name or
pseudonym),

(b) 25the person’s address (or registered office),

(c) the nature of any business carried on by the person,

(d) information about the fiscal effect of the defeated arrangements (had
they not been defeated), for instance information about total
amounts of tax understated or total amounts by which claims, or
30statements of losses, have been adjusted,

(e) the amount of any penalty to which the person is liable under
paragraph 30 in respect of the relevant defeat of any defeated
arrangements,

(f) the periods in which or times when the defeated arrangements were
35used, and

(g) any other information the Commissioners may consider it
appropriate to publish in order to make clear the person’s identity.

(5) If the person mentioned in sub-paragraph (1) is a member of a group of
companies (as defined in paragraph 46(9)), the information which may be
40published also includes—

(a) any trading name of the group, and

(b) information about other members of the group of the kind described
in sub-paragraph (4)(a), (b) or (c).

(6) If the person mentioned in sub-paragraph (1) is a person carrying on a trade
45or business in partnership, the information which may be published also
includes—

(a) any trading name of the partnership, and

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(b) information about other members of the partnership of the kind
described in sub-paragraph (4)(a) or (b).

(7) The information may be published in any manner the Commissioners may
consider appropriate.

(8) 5Before publishing any information the Commissioners—

(a) must inform the person that they are considering doing so, and

(b) afford the person reasonable opportunity to make representations
about whether or not it should be published.

(9) Arrangements are “defeated arrangements” for the purposes of sub-
10paragraph (4) if the person used them in the warning period mentioned in
sub-paragraph (1) and a warning notice specifying the defeat of those
arrangements has been given to the person before the information is
published.

(10) If a person has been given a single warning notice in relation to two or more
15relevant defeats, the person is treated for the purposes of this paragraph as
having been given a separate warning notice in relation to each of those
relevant defeats.

(11) Nothing in this paragraph prevents the power under sub-paragraph (1)
from being exercised on a subsequent occasion in relation to arrangements
20used by the person in a different warning period.

Part 4 Restriction of reliefs

Duty to give a restriction relief notice

19 (1) HMRC must give a person a written notice (a “restriction of relief notice”)
25if—

(a) the person incurs a relevant defeat in relation to arrangements which
the person has used in a warning period,

(b) the person has been given at least two warning notices in respect of
other relevant defeats of arrangements which were used in that same
30warning period, and

(c) the defeats mentioned in paragraphs (a) and (b) meet the conditions
in sub-paragraph (2).

(2) The conditions are that—

(a) each of the relevant defeats is by virtue of Condition A, B or C,

(b) 35each of the relevant defeats relates to the misuse of a relief (see sub-
paragraph (5)), and

(c) in the case of each of the relevant defeats, either—

(i) that the relevant counteraction (see sub-paragraph (7)) was
made on the basis that a particular avoidance-related rule
40applies in relation to a person’s affairs, or

(ii) that the misused relief is a loss relief.

(3) In sub-paragraph (2)(c)

(a) the “misused relief” means the relief mentioned in sub-paragraph
(5), and