Finance Bill (HC Bill 47)

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(ii) there is a reasonable likelihood that, if it had engaged in the
behaviour before the notice expired, a designated HMRC
officer would have considered that the group fell within this
Part (so that a special measures notice or confirmation notice
5could have been given to the head of the group),

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

(c) 10the period of 9 months beginning with that day has not elapsed.

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

15Circumstances in which warning and special measures notices are treated as having been given

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

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

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

(2) 20H1 is to be treated as having been given a warning notice on the day on
which the warning notice was given to B1.

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

(4) 25Sub-paragraphs (5) to (7) apply where—

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

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

(5) H2 is to be treated as having been given a special measures notice on the day
30on which the special measures notice was given to B2.

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

(7) Paragraph 47(1) does not by virtue of sub-paragraphs (5) and (6) of this
35paragraph apply to an inaccuracy in a document given to HMRC by or on
behalf of a person—

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

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

(8) 40Sub-paragraphs (9) and (10) apply where—

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

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

(9) H3 is to be treated as having been given a confirmation notice on the day on
45which the confirmation notice was given to B3.

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

(11) The Treasury may by regulations make provision for warning notices,
5special measures notices and confirmation notices to be treated as having
been given to relevant bodies in other circumstances described in the
regulations.

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

(a) make provision about the validity of notices treated as given by
10virtue of the regulations;

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

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

47 (1) For the purposes of Schedule 24 to FA 2007 (penalties for errors), an
15inaccuracy in a document given to HMRC by or on behalf of a person is to
be treated as being due to failure by the person to take reasonable care if—

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

(b) the inaccuracy—

(i) 20relates to a tax avoidance scheme (as defined in paragraph
38) entered into by the person at a time when the person was
a member of a group subject to a special measures notice, or

(ii) is, entirely or partly, attributable to an interpretation of
legislation relating to UK taxation which, at the time the
25document was given to HMRC, was speculative.

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

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

(b) is in force.

(3) 30An interpretation of legislation relating to UK taxation is “speculative” if it
is likely that a court or tribunal would disagree with it.

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

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

(b) 35it is in fact due to a failure by the person or someone acting on the
person’s behalf to take reasonable care, or

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

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

(3) 40Paragraph 47 of Schedule 19 to FA 2016 (special measures for
persistently unco-operative large businesses) provides for certain
inaccuracies to be treated, for the purposes of this Schedule, as
being due to a failure by P to take reasonable care.”

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Sanctions: Commissioners publishing information

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

(a) 5the name of the group, including any previous name;

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

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

(d) the fact that the group is subject to a confirmed special measures
10notice.

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

(3) This sub-paragraph is satisfied if—

(a) a special measures notice has been given to the head of the group and
15confirmed under paragraph 44, and

(b) the special measures notice is in force.

(4) This sub-paragraph is satisfied if—

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

(b) 20that notice has ceased to have effect,

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

(d) 25that notice is in force.

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

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

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

(6) 30If, after information about a group is published under this paragraph, the
group ceases to be subject to a confirmed special measures notice, the
Commissioners must publish a notice stating that the group is no longer
subject to a confirmed special measures notice.

(7) A notice under sub-paragraph (6) must be published before the end of the
35period of 30 days beginning with the day on which the special measures
notice is withdrawn or has expired.

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

Application of Part 3 to large UK sub-groups

50 (1) 40A UK sub-group of a foreign group falls within this Part if—

(a) the sub-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

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respect of the sub-group or members of the sub-group which are
unresolved (see paragraph 39), and

(c) there is a reasonable likelihood of further instances of the sub-group
engaging in unco-operative behaviour in a manner which causes
5there to be, or contributes to there being, significant tax issues in
respect of the sub-group or members of the sub-group.

(2) Paragraphs 36 to 40 apply in relation to a UK sub-group as they apply in
relation to a UK group.

(3) Paragraphs 41 to 45 apply in relation to the head of a UK sub-group of a
10foreign group that is a qualifying group at the material time as they apply in
relation to the head of a UK group.

(4) In the application of paragraph 41 in the case of a UK sub-group, sub-
paragraph (4) has effect in relation to a UK sub-group as if for paragraphs
(b) and (c) there were substituted—

(b) 15the identity of the sub-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 sub-
group, or

(ii) 20ceasing to be a 51% subsidiary of another member
of the sub- group; and

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

(5) 25As applied by this paragraph, paragraphs 36 to 45 have effect as if references
to a UK group (including in references to the head of a UK group or
members of a UK group) were references to a UK sub-group.

(6) In paragraphs 40, 41, 46, 47 and 49, references to a group (including in
references to the head of a group or members of a group) include a UK sub-
30group.

(7) In paragraph 46, references to the head of a UK group include the head of a
UK sub-group.

Application of Part 3 to large companies

51 (1) A UK company falls within this Part if—

(a) 35the company 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 company which are unresolved (see paragraph 39),
40and

(c) there is a reasonable likelihood of further instances of the company
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 company.

(2) 45Paragraphs 36 to 39 apply in relation to a company as they apply in relation
to a UK group.

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(3) Paragraphs 41 to 45 apply in relation to a company as they apply in relation
to the head of a UK group.

(4) As applied by this paragraph, paragraphs 36 to 39 and 41 to 45 have effect as
if references to a UK group, the head of a UK group or a member of a UK
5group were references to a company.

(5) Paragraph 47 applies in relation to a company as it applies in relation to a
member of a group.

(6) Paragraph 49 applies in relation to a company as it applies in relation to a
group.

(7) 10As applied by this paragraph, paragraphs 47 and 49 have effect as if
references to a group, the head of a group or a member of a group were
references to a company.

Application of Part 3 to large partnerships

52 (1) A UK partnership falls within this Part if—

(a) 15the partnership 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 partnership which are unresolved (see paragraph 39),
20and

(c) there is a reasonable likelihood of further instances of the
partnership 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 partnership.

(2) 25Paragraphs 36 to 39 of this Schedule apply in relation to a UK partnership as
they apply in relation to a UK group.

(3) Paragraphs 41 to 45 of this Schedule apply in relation to the representative
partner of a UK partnership as they apply in relation to the head of a UK
group.

(4) 30As applied by this paragraph, paragraphs 36 to 39 and 41 to 45 have effect as
if—

(a) references to a UK group were references to a UK partnership;

(b) references to the head of a UK group were references to the
representative partner of a UK partnership;

(c) 35references to a member of a UK group were references to a partner of
a UK partnership, acting in the person’s capacity as such.

(5) The Treasury may by regulations make provision for warning notices,
special measures notices and confirmation notices to be treated as having
been given to the representative partner of a UK partnership in
40circumstances described in the regulations.

(6) Paragraph 46(12) applies to regulations under this paragraph.

(7) Paragraph 47 applies in relation to an inaccuracy in a document given to
HMRC by a partner of a UK partnership, acting in the person’s capacity as
such, as if—

(a) 45references to a group were references to a partnership;

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(b) references to the head of a group were references to the
representative partner of a partnership;

(c) references to a member of a group were references to a partner of a
partnership.

(8) 5Paragraph 47 applies in relation to an inaccuracy in any other document
given to HMRC on behalf of a UK partnership as if—

(a) references to a person included a UK partnership;

(b) references to a group, or a member of a group, were references to a
UK partnership;

(c) 10references to the head of a group were references to the
representative partner of a UK partnership.

(9) Paragraph 49 applies in relation to a UK partnership as it applies in relation
to a group.

(10) As applied by this paragraph, paragraph 49 has effect as if—

(a) 15references to a group were references to a UK partnership;

(b) references to the head of a group were references to the
representative partner of a UK partnership.

Meaning of “designated HMRC officer”

53 In this Part “designated HMRC officer” means an officer of Revenue and
20Customs who has been designated by the Commissioners for Her Majesty’s
Revenue and Customs for the purposes of this Part.

Part 4 Supplementary

Amendment of power under section 122 of FA 2015

54 25The power to make regulations under section 122(6)(c) of FA 2015 (country-
by-country reporting: incidental etc provision that may be included in
regulations) includes power to amend paragraph 7 above.

Regulations

55 (1) Regulations under this Schedule are to be made by statutory instrument.

(2) 30A statutory instrument containing regulations under this Schedule is subject
to annulment in pursuance of a resolution of the House of Commons.

Terms defined for purposes of more than one paragraph of this Schedule

Term Paragraph
balance sheet total paragraph 14(2)
confirmation notice (in Part 3) 35paragraph 44
designated HMRC officer (in Part 3) paragraph 53
engaged in unco-operative behaviour (in Part 3) paragraph 36

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Term Paragraph
failure (in paragraphs 27 to 33) paragraph 26(1)
financial year (in relation to a UK group) (in paragraphs
16 and 17)
paragraph 16(7)
foreign (in relation to a relevant body) 5paragraph 2(2)
foreign (in relation to a group) paragraph 6(3)
group paragraph 6(1)
group other than an MNE Group paragraph 8
head (in relation to a group) paragraph 9
head (in relation to a UK sub-group) 10paragraph 11(2)
“liability to a penalty” (in paragraphs 27 to 33) paragraph 26(1)
MNE Group paragraph 7(1)
member (in relation to a group) paragraph 8(2) and (3)
penalty (in paragraphs 27 to 33) paragraph 26(1)
qualifying company 15paragraph 5
qualifying group paragraph 10
qualifying UK partnership paragraph 12(2)
relevant body paragraph 2(1)
representative partner paragraph 12(5)
satisfied the arrangements condition (in Part 3) 20paragraph 38
satisfied the behaviour condition (in Part 3) paragraph 37
special measures notice paragraphs 42 and 45
tax strategy (in Part 2) paragraph 34
tribunal (in paragraphs 27 to 33) paragraph 26(2)
turnover 25paragraph 14(1)
UK company paragraph 3
UK group paragraph 6(2)
UK partnership paragraph 12(1)
UK permanent establishment paragraph 4(1)
UK sub-group 30paragraph 11(1)
UK taxation paragraph 15
warning notice paragraph 41.

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SCHEDULE 20 Section 161 Penalties for enablers of offshore tax evasion or non-compliance

Part 1 Liability for penalty

5Liability for penalty

1 (1) A penalty is payable by a person (P) who has enabled another person (Q) to
carry out offshore tax evasion or non-compliance, where conditions A and B
are met.

(2) For the purposes of this Schedule—

(a) 10Q carries out “offshore tax evasion or non-compliance” by—

(i) committing a relevant offence, or

(ii) engaging in conduct that makes Q liable (if the applicable
conditions are met) to a relevant civil penalty,

where the tax at stake is income tax, capital gains tax or inheritance
15tax, and

(b) P “has enabled” Q to carry out offshore tax evasion or non-
compliance if P has encouraged, assisted or otherwise facilitated
conduct by Q that constitutes offshore tax evasion or non-
compliance.

(3) 20The relevant offences are-

(a) an offence of cheating the public revenue involving offshore activity,
or

(b) an offence under section 106A of TMA 1970 (fraudulent evasion of
income tax) involving offshore activity,

(c) 25an offence under section 106B, 106C or 106D of TMA 1970 (offences
relating to certain failures to comply with section 7 or 8 by a taxpayer
chargeable to income tax or capital gains tax on or by reference to
offshore income, assets or liabilities).

(4) The relevant civil penalties are—

(a) 30a penalty under paragraph 1 of Schedule 24 to FA 2007 (errors in
taxpayer’s document) involving an offshore matter or an offshore
transfer (within the meaning of that Schedule),

(b) a penalty under paragraph 1 of Schedule 41 to FA 2008 (failure to
notify etc) in relation to a failure to comply with section 7(1) of TMA
351970 involving offshore activity,

(c) a penalty under paragraph 6 of Schedule 55 to FA 2009 (failure to
make return for 12 months) involving offshore activity,

(d) a penalty under paragraph 1 of Schedule 21 to FA 2015 (penalties in
connection with relevant offshore asset moves).

(5) 40Condition A is that P knew when P’s actions were carried out that they
enabled, or were likely to enable, Q to carry out offshore tax evasion or non-
compliance.

(6) Condition B is that—

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(a) in the case of offshore tax evasion or non-compliance consisting of
the commission of a relevant offence, Q has been convicted of the
offence and the conviction is final, or

(b) in the case of offshore tax evasion or non-compliance consisting of
5conduct that makes Q liable to a relevant penalty—

(i) Q has been found to be liable to such a penalty, assessed and
notified, and the penalty is final, or

(ii) a contract has been made between the Commissioners for
Her Majesty’s Revenue and Customs and Q under which the
10Commissioners undertake not to assess the penalty or (if it
has been assessed) not to take proceedings to recover it.

(7) For the purposes of sub-paragraph (6)(a)—

(a) “convicted of the offence” means convicted of the full offence (and
not for example of an attempt), and

(b) 15a conviction becomes final when the time allowed for bringing an
appeal against it expires or, if later, when any appeal against
conviction has been determined.

(8) For the purposes of sub-paragraph (6)(b)(i) a penalty becomes final when the
time allowed for any appeal or further appeal relating to it expires or, if later,
20any appeal or final appeal relating to it is determined.

(9) It is immaterial for the purposes of condition B that—

(a) any offence of which Q was convicted, or

(b) any penalty for which Q was found to be liable,

relates also to other tax evasion or non-compliance by Q.

(10) 25In this Schedule “other tax evasion or non-compliance by Q” means conduct
by Q that—

(a) constitutes an offence of cheating the public revenue or an offence of
fraudulent evasion of tax, or

(b) makes Q liable to a penalty under any provision of the Taxes Acts,

30but does not constitute offshore tax evasion or non-compliance.

(11) Nothing in condition B affects the law of evidence as to the relevance if any
of a conviction, assessment of a penalty or contract mentioned in sub-
paragraph (6) for the purpose of proving that condition A is met in relation
to P.

(12) 35In this Schedule “conduct” includes a failure to act.

Meaning of “involving offshore activity” and related expressions

2 (1) This paragraph has effect for the purposes of this Schedule.

(2) Conduct involves offshore activity if it involves—

(a) an offshore matter,

(b) 40an offshore transfer, or

(c) a relevant offshore asset move.

(3) Conduct involves an offshore matter if it results in a potential loss of revenue
that is charged on or by reference to—

(a) income arising from a source in a territory outside the United
45Kingdom,

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(b) assets situated or held in a territory outside the United Kingdom,

(c) activities carried on wholly or mainly in a territory outside the
United Kingdom, or

(d) anything having effect as if it were income, assets or activities of the
5kind described above.

(4) Where the tax at stake is inheritance tax, assets are treated for the purposes
of sub-paragraph (3) as situated or held in a territory outside the United
Kingdom if they are so held or situated immediately after the transfer of
value by reason of which inheritance tax becomes chargeable.

(5) 10Conduct involves an offshore transfer if—

(a) it does not involve an offshore matter,

(b) it is deliberate (whether or not concealed) and results in a potential
loss of revenue,

(c) the condition set out in paragraph 4AA of Schedule 24 to FA 2007 is
15satisfied.

(6) Conduct involves a relevant offshore asset move if at a time when Q is the
beneficial owner of an asset (“the qualifying time”)—

(a) the asset ceases to be situated or held in a specified territory and
becomes situated or held in a non-specified territory,

(b) 20the person who holds the asset ceases to be resident in a specified
territory and becomes resident in a non-specified territory, or

(c) there is a change in the arrangements for the ownership of the asset,

and Q remains the beneficial owner of the asset, or any part of it,
immediately after the qualifying time.

(7) 25Paragraphs 4(2) to (4) of Schedule 21 to FA 2015 apply for the purposes of
sub-paragraph (6) above as they apply for purposes of paragraph 4 of that
Schedule.

(8) In sub-paragraph (6) above, “specified territory” has the same meaning as in
paragraph 4(5) of Schedule 21 to FA 2015.

30Amount of penalty

3 (1) The penalty payable under paragraph 1 is (except in a case mentioned in
sub-paragraph (2)) the higher of—

(a) 100% of the potential lost revenue, or

(b) £3,000.

(2) 35In a case where P has enabled Q to engage in conduct which makes Q liable
to a penalty under paragraph 1 of Schedule 21 to FA 2015, the penalty
payable under paragraph 1 is the higher of—

(a) 50% of the potential lost revenue in respect of the original tax non-
compliance, and

(b) 40£3,000.

(3) In sub-paragraph (2)(a) “the original tax non-compliance” means the
conduct that incurred the original penalty and “the potential lost revenue”
(in respect of that non-compliance) is—

(a) the potential lost revenue under Schedule 24 to FA 2007,

(b) 45the potential lost revenue under Schedule 41 to FA 2008, or