Finance Bill (HC Bill 47)

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of 6 months after the last day on which the duty under paragraph
16(2) could have been complied with.

(5) At the end of that period, the head of the group—

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

(b) 5where the failure mentioned in sub-paragraph (4)(b) continues, is
liable to a further penalty of £7,500 at the end of each subsequent
month in which no such group tax strategy is published.

UK sub-groups: duty to publish a sub-group tax strategy

19 (1) This paragraph applies to a UK sub-group of a foreign group if in any
10financial year (“the current financial year”) the foreign group is a qualifying
group.

(2) The head of the sub-group must ensure that a sub-group tax strategy for the
sub-group, giving the information required by paragraph 20, is prepared
and published in accordance with this paragraph.

(3) 15The sub-group tax strategy—

(a) must be published before the end of the current financial year, and

(b) if the group of which the sub-group is part was a qualifying group in
the previous financial year, must not be published more than 15
months after the day on which its sub-group tax strategy for that
20year was published;

(4) The sub-group tax strategy—

(a) must be published on the internet by any of the UK companies that
are members of the foreign group so as to be accessible to the public
free of charge (whether or not it is also published in any other way),
25and

(b) may be published as a separate document or as a self-contained part
of a wider document.

(5) The head of the sub-group must ensure that the sub-group tax strategy
published on the internet remains accessible to the public free of charge—

(a) 30if a sub-group tax strategy for the sub-group’s next financial year is
required by this paragraph to be published, until that tax strategy is
published, or

(b) if paragraph (a) does not apply, for at least one year.

(6) For the purposes of this paragraph—

(a) 35 a sub-group tax strategy is published when it is first published on
the internet as mentioned in sub-paragraph (4)(a),

(b) the identity of the sub-group is not affected by any change in its
membership in the current financial year resulting from a relevant
body becoming or ceasing to be a 51% subsidiary of a member of the
40sub-group, and

(c) if the sub-group becomes a UK sub-group of another foreign group
during the current financial year, for the rest of that year it is to be
treated as if it were still a UK sub-group of the original foreign group
(but only a UK company within the sub-group may publish a sub-
45group tax strategy for the sub-group after that change).

(7) In this paragraph “financial year”, in relation to a UK sub-group, means a
financial year of the head of the group of which it is a sub-group.

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Content of a sub-group tax strategy

20 (1) Paragraph 17 applies in relation to a sub-group tax strategy required to be
published on behalf of a UK sub-group by paragraph 19 as it applies to a
group tax strategy required to be published by a qualifying UK group.

(2) 5In the application of paragraph 17 to a sub-group tax strategy, references to
the group or members of the group are to be read as references to the UK
sub-group or members of the UK sub-group.

(3) In the application of paragraph 17 as modified by this paragraph to a sub-
group tax strategy, a UK permanent establishment of a foreign member of
10the UK sub-group is to be treated as if it were a member of the sub-group.

Penalty for non-compliance with requirements of paragraph 19

21 (1) This paragraph applies where paragraph 19 requires a sub-group tax
strategy to be published for a UK sub-group in any financial year of the head
of the sub-group.

(2) 15The head of the sub-group is liable to a penalty of £7,500 if—

(a) there is a failure to publish a sub-group tax strategy for the sub-
group that complies with paragraph 19(2), or

(b) where a sub-group tax strategy has been published, there is a failure
to comply with paragraph 19(5).

(3) 20Subject to sub-paragraph (5), the head of the sub-group is only liable to one
penalty by virtue of sub-paragraph (2) in respect of a sub-group tax strategy
required for the financial year in question.

(4) Sub-paragraph (5) applies where—

(a) the head of the sub-group is liable to a penalty under this paragraph
25in respect of a failure mentioned in sub-paragraph (2)(a), and

(b) no sub-group tax strategy for the sub-group that complies with
paragraph 19(2) (disregarding paragraph 19(3)) is published within
the period of 6 months after the last day on which the duty under
paragraph 19(2) could have been complied with.

(5) 30At the end of that period, the head of the sub-group is liable—

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

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

35Qualifying companies: duty to publish a company tax strategy

22 (1) This paragraph applies in relation to a UK company which in any financial
year (“the current financial year”) is a qualifying company.

(2) The company must prepare and publish a company tax strategy, containing
the information required by paragraph 23, in accordance with this
40paragraph.

(3) The duty under sub-paragraph (2) applies even if the company becomes a
member of a UK group or a UK sub-group during the current financial year.

(4) The company tax strategy—

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(a) must be published by the company before the end of the current
financial year, and

(b) if the company was a qualifying company in the previous financial
year, must not be published more than 15 months after the day on
5which its company tax strategy was published in the previous
financial year.

(5) The company tax strategy—

(a) must be published on the internet so as to be accessible to the public
free of charge (whether or not published in any other way), and

(b) 10may be published as a separate document or a self- contained part of
a wider document.

(6) The company must ensure that the company tax strategy published on the
internet remains accessible to the public free of charge—

(a) if a company tax strategy for the next financial year is required by
15this paragraph to be published, until that tax strategy is published, or

(b) if paragraph (a) does not apply, for at least one year.

(7) For the purposes of this paragraph a company tax strategy is published
when it is first published as mentioned in sub-paragraph (5)(a).

(8) A UK permanent establishment which in any financial year is by virtue of
20paragraph 5(6) to be treated as a qualifying company is to be treated for the
purposes of this paragraph and paragraphs 23 and 24 as if it were a UK
company which in that financial year is a qualifying company.

Content of a company tax strategy

23 (1) The company tax strategy must set out—

(a) 25the company’s approach to risk management and governance
arrangements in relation to UK taxation,

(b) the company’s attitude towards tax planning (so far as affecting UK
taxation),

(c) the level of risk in relation to UK taxation that the company is
30prepared to accept,

(d) the company’s approach towards its dealings with HMRC.

(2) The company tax strategy may include other information relating to taxation
(whether UK taxation or otherwise).

(3) The information required by sub-paragraph (1) to be included in a company
35tax strategy does not include any information about activities of the
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
40company 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.

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Penalty for non-compliance with paragraph 22

24 (1) This 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) 5there is a failure to publish a company tax strategy for the company
that complies with paragraph 22(2), or

(b) where 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
10virtue of sub-paragraph (2) in respect of a company tax strategy required for
the financial year in question.

(4) Sub-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) 15no company tax strategy that complies with paragraph 22(2)
(disregarding paragraph 22(4)) is published within the period of 6
months 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) 20to a further penalty of £7,500, and

(b) where the failure mentioned in sub-paragraph (4)(b) continues, to a
further 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) 25Paragraphs 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
UK company which is (in any financial year of the company) a qualifying
company.

(2) Those paragraphs have effect in their application to a qualifying
30partnership—

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

(b) as 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
35substituted 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
    40could 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.

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(2) In 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
5period of time goes not give rise to liability to a penalty if it is done within
such 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
10otherwise be liable to that penalty satisfies HMRC or (on an appeal notified
to 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
15attributable to events outside the person’s control,

(b) where 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) 20if the first person is a UK group or UK sub-group, where the
person 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
25the failure is remedied without unreasonable delay after the excuse
ceased.

Assessment of penalties

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

(a) HMRC may assess the penalty, and

(b) 30if they do so, HMRC must notify the person of the assessment.

(2) An 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
35strategy to which the failure relates was (or was originally) required
to be published.

Appeal

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

(2) 40Notice of an appeal must be given—

(a) in writing,

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

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(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
51970 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) 10before 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
15assessment 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
20sum 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) 25Regulations 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
30apply 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).

35Meaning of “tax strategy”

34 In 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) 40a partnership tax strategy (see paragraph 25).

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Part 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) 5the group has persistently engaged in unco-operative behaviour (see
paragraphs 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
10(see paragraph 39), and

(c) there 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) 15A UK group has “engaged in unco-operative behaviour” if—

(a) a 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) 20Those conditions are—

(a) the 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) 25two or more members of the group, taken together, have done so
persistently.

(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) 30A member of a UK group has, or two or more members of a UK group (taken
together) 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) 35Factors 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) the reasons why those powers have been used;

(c) 40the 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
(or people acting on their behalf) have relied on interpretations of
45legislation relating to UK taxation which, at the time, are speculative.

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(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
a party to a tax avoidance scheme.

(2) 5“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) paragraph 5 or 6 of Schedule 43A to FA 2013, or

(iii) 10paragraph 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
Part 7 of FA 2004 (disclosure of tax avoidance schemes), other than
15arrangements 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
11A to VATA 1994 (disclosure of avoidance schemes).

39 (1) 20There 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
member of the group to UK taxation,

(b) 25the 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
less than £2 million.

(2) 30The 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
for the time being specified in sub-paragraph (1)(c).

40 35The 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
40of the group in question;

(b) do 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.

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Warning notices

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

(3) The 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) 10expires (if not previously withdrawn) at the end of the period of 15
months beginning with the day on which it was given.

(4) Once a warning notice has been given —

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

(b) 15the identity of the group is not to be regarded as altered by any
change in its membership resulting from a relevant body—

(i) becoming 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) 20if 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) Sub-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
25been given the warning notice.

Special measures notices

42 (1) This 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) 30the period of 12 months beginning with the day on which the
warning notice was given has elapsed, and

(c) the 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
35“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
40HMRC 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.

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(6) Paragraph 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
5giving a further notice to the head of the UK group, and

(b) expires, 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) 10the day on which it was last confirmed under paragraph 44.

44 (1) This 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,
15and

(c) the 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
20relation to the group.

(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 special measures notice which is to be confirmed, in any previous
confirmation notice or in the warning notice.

(4) 25“The relevant day” has the same meaning as in paragraph 43(2).

(5) The 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
30before the end of the period of 24 months beginning with the relevant day.

(7) A 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
35months beginning with the day on which it is given.

45 (1) This 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) 40A designated HMRC officer may give the head of a UK group a special
measures 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
45(“the expiry day”), the group has engaged in unco-operative
behaviour (see paragraphs 36 to 38), and