Finance (No. 2) Bill (HL Bill 156)

Part 12 General

Meaning of “tax”

54 (1) In this Schedule “tax” includes any of the following taxes—

(a) 5income tax,

(b) corporation tax, including any amount chargeable as if it were
corporation tax or treated as if it were corporation tax,

(c) capital gains tax,

(d) petroleum revenue tax,

(e) 10diverted profits tax,

(f) apprenticeship levy,

(g) inheritance tax,

(h) stamp duty land tax, and

(i) annual tax on enveloped dwellings,

15and also includes national insurance contributions.

(2) The Treasury may by regulations amend sub-paragraph (1) so as to—

(a) add a tax to the list of taxes for the time being set out in that sub-
paragraph;

(b) remove a tax for the time being set out in that sub-paragraph;

(c) 20remove the reference to national insurance contributions;

(d) substitute for that reference a reference to national insurance
contributions of a particular class or classes;

(e) where provision has been made under paragraph (d)—

(i) add a class or classes of national insurance contributions to
25those for the time being specified in that sub-paragraph;

(ii) remove a class or classes of national insurance contributions
for the time being so specified.

(3) Regulations under this paragraph may—

(a) make supplementary, incidental, and consequential provision,
30including provision amending or repealing any provision of this
Schedule;

(b) make transitional provision.

Meaning of “tax advantage”

55 In this Schedule “tax advantage” includes—

(a) 35relief 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) 40avoidance 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.

Other definitions

56 (1) In this Schedule—

• “abusive tax arrangements” has the meaning given by paragraph 3;

• “arrangements” includes any agreement, understanding, scheme,
  5transaction or series of transactions (whether or not legally
  enforceable);

• “business” includes any trade or profession;

• “the Commissioners” means the Commissioners for Her Majesty‘s
  Revenue and Customs;

• 10“company” has the same meaning as in the Corporation Tax Acts (see
  section 1121 of CTA 2010);

• “contract settlement” (except in paragraph 46(6)) means an agreement
  in connection with a person’s liability to make a payment to the
  Commissioners under or by virtue of an enactment;

• 15“a defeat”, in relation to arrangements, is to be read in accordance with
  paragraph 4;

• a “designated HMRC officer” means an officer of Revenue and
  Customs who has been designated by the Commissioners for the
  purposes of this Schedule;

• 20“the GAAR Advisory Panel” has the meaning given by paragraph 1 of
  Schedule 43 to FA 2013;

• “group” is to be read in accordance with sub-paragraph (2);

• “HMRC” means Her Majesty’s Revenue and Customs;

• “national insurance contributions” means contributions under Part 1 of
  25the Social Security Contributions and Benefits Act 1992 or Part 1 of
  the Social Security Contributions and Benefits (Northern Ireland)
  Act 1992;

• a “NICs decision” means a decision under section 8 of the Social
  Security Contributions (Transfer of Functions, etc.) Act 1999 or
  30Article 7 of the Social Security Contributions (Transfer of Functions,
  etc.) (Northern Ireland) Order 1999 (SI 1999/671SI 1999/671) relating to a
  person‘s liability for relevant contributions;

• “relevant contributions” means any of the following contributions
  under Part 1 of the Social Security Contributions and Benefits Act
  351992 or Part 1 of the Social Security Contributions and Benefits
  (Northern Ireland) Act 1992—

  (a)

  Class 1 contributions;

  (b)

  Class 1A contributions;

  (c)

  Class 1B contributions;

  (d)

  40Class 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) does not apply;

• “tax” is to be read in accordance with paragraph 54;

• “tax advantage” is to be read in accordance with paragraph 55.

(2) 45For the purposes of this Schedule two companies are members of the same
group if—

(a) one is a 75% subsidiary of the other, or

(b) both are 75% subsidiaries of a third company;

and in this paragraph “75% subsidiary” has, subject to sub-paragraph (3), the
50meaning given by section 1154 of CTA 2010.

(3) So far as relating to 75% subsidiaries, section 151(4) of CTA 2010
(requirements relating to beneficial ownership) applies for the purposes of
this Schedule as it applies for the purposes of Part 5 of that Act.

(4) In this Schedule references to an assessment to tax, however expressed—

(a) 5in relation to inheritance tax and petroleum revenue tax, include a
determination;

(b) in relation to relevant contributions, include a NICs decision.

Regulations

57 (1) Any regulations under this Schedule must be made by statutory instrument.

(2) 10A statutory instrument which contains (alone or with other provision) any
regulations within sub-paragraph (3) may not be made unless a draft of the
instrument has been laid before, and approved by a resolution of, the House
of Commons.

(3) Regulations within this sub-paragraph are—

(a) 15regulations under paragraph 12;

(b) regulations under paragraph 14(1);

(c) regulations under paragraph 14(2) which amend or repeal any
provision of this Schedule;

(d) regulations under paragraph 51;

(e) 20regulations under paragraph 54.

(4) A statutory instrument containing only—

(a) regulations under paragraph 14(2) which do not amend or repeal
any provision of this Schedule, or

(b) regulations under paragraph 44,

25is subject to annulment in pursuance of a resolution of the House of
Commons.

Consequential amendments

58 In section 103ZA of TMA 1970 (disapplication of sections 100 to 103 of that
Act in the case of certain penalties)—

(a) 30omit “or” at the end of paragraph (i), and

(b) after paragraph (j) insert “or

(k) paragraph 1 or 45 of Schedule 27 to the Finance Act
2017 (enablers of defeated tax avoidance etc).””

59 In section 54 of ITTOIA 2005 (no deduction allowed for certain penalties etc)
35at the end of the table in subsection (2) insert—

60 In section 1303 of CTA 2009 (no deduction allowed for certain penalties etc)

at the end of the table in subsection (2) insert—

61 In Schedule 34 to FA 2014 (promoters of tax avoidance schemes: threshold
5conditions), in paragraph 7—

(a) in paragraph (a), for the words after “promoter” substitute “—

(b) in paragraph (b), for the words after “referral” substitute “under (as
the case may be)—

Commencement

62 (1) Subject to sub-paragraphs (2) and (3), paragraphs 1 to 61 of this Schedule
30have effect in relation to arrangements entered into on or after the day on
which this Act is passed.

(2) In determining in relation to any particular arrangements whether a person
is a person who enabled the arrangements, any action of the person carried
out before the day on which this Act is passed is to be disregarded.

(3) 35The amendments made by paragraph 61 do not apply in relation to a person
who is a promoter in relation to arrangements if by virtue of sub-paragraph
(2) above that person is not a person who enabled the arrangements.

Section 126

SCHEDULE 28 Disclosure of tax avoidance schemes: VAT and other indirect taxes

Part 1 Duties to disclose avoidance schemes etc

5Preliminary: application of definitions

1 The definitions in paragraphs 2, 3, and 7 to 10 apply for the purposes of this
Schedule.

“Indirect tax”

2 (1) “Indirect tax” means any of the following—

• 10VAT

• insurance premium tax

• general betting duty

• pool betting duty

• remote gaming duty

• 15machine games duty

• gaming duty

• lottery duty

• bingo duty

• air passenger duty

• 20hydrocarbon oils duty

• tobacco products duty

• duties on spirits, beer, wine, made-wine and cider

• soft drinks industry levy

• aggregates levy

• 25landfill tax

• climate change levy

• customs duties.

(2) The Treasury may by regulations amend the list in sub-paragraph (1) by
adding, varying or omitting an entry for a tax.

30“Notifiable arrangements” and “notifiable proposal”

3 (1) “Notifiable arrangements” means any arrangements not excluded by sub-
paragraph (2) which—

(a) fall within any description prescribed by the Treasury by
regulations,

(b) 35enable, or might be expected to enable, any person to obtain a tax
advantage in relation to any indirect tax that is so prescribed in
relation to arrangements of that description, and

(c) are such that the main benefit, or one of the main benefits, that might
be expected to arise from the arrangements is the obtaining of that
40tax advantage.

(2) Arrangements that meet the requirements in paragraphs (a) to (c) of sub-
paragraph (1) are not notifiable arrangements if they implement a proposal
which is excluded from being a notifiable proposal by sub-paragraph (4).

(3) “Notifiable proposal” means a proposal for arrangements which, if entered
5into, would be notifiable arrangements (whether the proposal relates to a
particular person or to any person who may seek to take advantage of it).

(4) A proposal is not a notifiable proposal if any of the following occur before 1
September 2017—

(a) a promoter first makes a firm approach to another person in relation
10to the proposal,

(b) a promoter makes the proposal available for implementation by any
other person, or

(c) a promoter first becomes aware of any transaction forming part of
arrangements implementing the proposal.

4 (1) 15HMRC may apply to the tribunal for an order that—

(a) a proposal is notifiable, or

(b) arrangements are notifiable.

(2) An application must specify—

(a) the proposal or arrangements in respect of which the order is sought,
20and

(b) the promoter.

(3) On an application the tribunal may make the order only if satisfied that
paragraph 3(1)(a) to (c) applies to the relevant arrangements and that they
are not excluded from being notifiable by paragraph 3(2).

5 (1) 25HMRC may apply to the tribunal for an order that—

(a) a proposal is to be treated as notifiable, or

(b) arrangements are to be treated as notifiable.

(2) An application must specify—

(a) the proposal or arrangements in respect of which the order is sought,
30and

(b) the promoter.

(3) On an application the tribunal may make the order only if satisfied that
HMRC—

(a) have taken all reasonable steps to establish whether the proposal or
35arrangements are notifiable, and

(b) have reasonable grounds for suspecting that the proposal or
arrangements may be notifiable.

(4) Reasonable steps under sub-paragraph (3)(a) may (but need not) include
taking action under paragraph 29 or 30.

(5) 40Grounds for suspicion under sub-paragraph (3)(b) may include—

(a) the fact that the relevant arrangements fall within a description
prescribed under paragraph 3(1)(a),

(b) an attempt by the promoter to avoid or delay providing information
or documents about the proposal or arrangements under or by virtue
45of paragraph 29 or 30,

(c) the promoter’s failure to comply with a requirement under or by
virtue of paragraph 29 or 30 in relation to another proposal or other
arrangements.

(6) Where an order is made under this paragraph in respect of a proposal or
5arrangements, the relevant period for the purposes of sub-paragraph (1) of
paragraph 11 or 12 in so far as it applies by virtue of the order is the period
of 11 days beginning with the day on which the order is made.

(7) An order under this paragraph in relation to a proposal or arrangements is
without prejudice to the possible application of any of paragraphs 11 to 15,
10other than by virtue of this paragraph, to the proposal or arrangements.

“Tax advantage” in relation to VAT

6 (1) A person (P) obtains a tax advantage in relation to VAT if—

(a) in any prescribed accounting period, the amount by which the
output tax accounted for by P exceeds the input tax deducted by P is
15less than it would otherwise be;

(b) P obtains a VAT credit when P would otherwise not do so, or obtains
a larger credit or obtains a credit earlier than would otherwise be the
case;

(c) in a case where P recovers input tax as a recipient of a supply before
20the supplier accounts for the output tax, the period between the time
when the input tax is recovered and the time when the output tax is
accounted for is greater than would otherwise be the case;

(d) in any prescribed accounting period, the amount of P’s non-
deductible tax is less than it otherwise would be;

(e) 25P avoids an obligation to account for tax.

(2) In sub-paragraph (1)(d) “non-deductible tax”, in relation to a taxable person,
means—

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

(b) 30any 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
Commissioners by virtue of any provision of VATA 1994.

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

(a) 35VAT 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,

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

(4) 40A person who is not a taxable person obtains a tax advantage in relation to
VAT if that person’s non-refundable tax is less that it otherwise would be.

(5) In sub-paragraph (4) “non-refundable tax” means—

(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
45goods,

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

but 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.

(6) Terms used in this paragraph which are defined in section 96 of VATA 1994
5have the meanings given by that section.

“Tax advantage” in relation to taxes other than VAT

7 “Tax advantage”, in relation to an indirect tax other than VAT, means—

(a) relief or increased relief from tax,

(b) repayment or increased repayment of tax,

(c) 10avoidance or reduction of a charge to tax, an assessment of tax or a
liability to pay tax,

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

(e) deferral of a payment of tax or advancement of a repayment of tax, or

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

15“Promoter”

8 (1) This paragraph describes when a person (P) is a promoter in relation to a
notifiable proposal or notifiable arrangements.

(2) P is a promoter in relation to a notifiable proposal if, in the course of a
relevant business, P—

(a) 20is to any extent responsible for the design of the proposed
arrangements,

(b) makes a firm approach to another person (C) in relation to the
proposal with a view to P making the proposal available for
implementation by C or any other person, or

(c) 25makes the proposal available for implementation by other persons.

(3) P is a promoter in relation to notifiable arrangements if—

(a) P is by virtue of sub-paragraph (2)(b) or (c) a promoter in relation to
a notifiable proposal which is implemented by the arrangements, or

(b) if in the course of a relevant business, P is to any extent responsible
30for—

(i) the design of the arrangements, or

(ii) the organisation or management of the arrangements.

(4) In this paragraph “relevant business” means any trade, profession or
business which—

(a) 35involves the provision to other persons of services relating to
taxation,

(b) is carried on by a bank or securities house.

(5) In sub-paragraph (4)(b)—

• “bank” has the meaning given by section 1120 of CTA 2010, and

• 40“securities house” has the meaning given by section 1009(3) of that Act.

(6) For the purposes of this paragraph anything done by a company is to be
taken to be done in the course of a relevant business if it is done for the
purposes of a relevant business falling within sub-paragraph (4)(b) carried
on by another company which is a member of the same group.

(7) Section 170 of the TCGA 1992 has effect for determining for the purposes of
sub-paragraph (6) whether two companies are members of the same group,
but as if in that section—

(a) for each of the references to a 75 per cent subsidiary there were
5substituted a reference to a 51 per cent subsidiary, and

(b) subsection (3)(b) and subsections (6) to (8) were omitted.

(8) A person is not to be treated as a promoter by reason of anything done in
prescribed circumstances.

(9) In the application of this Schedule to a proposal or arrangements which are
10not notifiable, a reference to a promoter is a reference to a person who would
be a promoter under this paragraph if the proposal or arrangements were
notifiable.

“Introducer”

9 (1) A person is an introducer in relation to a notifiable proposal if the person
15makes a marketing contact with another person in relation to the proposal.

(2) A person is not to be treated as an introducer by reason of anything done in
prescribed circumstances.

(3) In the application of this Schedule to a proposal or arrangements which are
not notifiable, a reference to an introducer is a reference to a person who
20would be an introducer under this paragraph if the proposal or
arrangements were notifiable.

“Makes a firm approach” and “marketing contact”

10 (1) A person makes a firm approach to another person in relation to a notifiable
proposal if the person makes a marketing contact with the other person in
25relation to the proposal at a time when the proposed arrangements have
been substantially designed.

(2) A person makes a marketing contact with another person in relation to a
notifiable proposal if—

(a) the person communicates information about the proposal to the
30other person,

(b) the communication is made with a view to that other person, or any
other person, entering into transactions forming part of the proposed
arrangements, and

(c) the information communicated includes an explanation of the tax
35advantage that might be expected to be obtained from the proposed
arrangements.

(3) For the purposes of sub-paragraph (1) proposed arrangements have been
substantially designed at any time if by that time the nature of the
transactions to form part of them has been sufficiently developed for it to be
40reasonable to believe that a person who wished to obtain the tax advantage
mentioned in sub-paragraph (2)(c) might enter into—

(a) transactions of the nature developed, or

(b) transactions not substantially different from transactions of that
nature.

Duties of promoter in relation to notifiable proposals or notifiable arrangements

11 (1) A person who is a promoter in relation to a notifiable proposal must, within
the relevant period, provide HMRC with prescribed information relating to
the proposal.

(2) 5In sub-paragraph (1) “the relevant period” is the period of 31 days beginning
with the relevant date.

(3) In sub-paragraph (2) “the relevant date” is the earliest of the following—

(a) the date on which the promoter first makes a firm approach to
another person in relation to the proposal,

(b) 10the date on which the promoter makes the proposal available for
implementation by any other person, or

(c) the date on which the promoter first becomes aware of any
transaction forming part of notifiable arrangements implementing
the proposal.

12 (1) 15A person who is a promoter in relation to notifiable arrangements must,
within the relevant period after the date on which the person first becomes
aware of any transaction forming part of the arrangements, provide HMRC
with prescribed information relating to the arrangements.

(2) In sub-paragraph (1) “the relevant period” is the period of 31 days beginning
20with that date.

(3) The duty under sub-paragraph (1) does not apply if the notifiable
arrangements implement a proposal in respect of which notice has been
given to HMRC under paragraph 11(1).

13 (1) This paragraph applies where a person complies with paragraph 11(1) in
25relation to a notifiable proposal for arrangements and another person is—

(a) also a promoter in relation to the proposal or is a promoter in relation
to a notifiable proposal for arrangements which are substantially the
same as the proposed arrangements (whether they relate to the same
or different parties), or

(b) 30a promoter in relation to notifiable arrangements implementing the
proposal or notifiable arrangements which are substantially the
same as notifiable arrangements implementing the proposal
(whether they relate to the same or different parties).

(2) Any duty of the other person under paragraph 11(1) or 12(1) in relation to
35the notifiable proposal or notifiable arrangements is discharged if—

(a) the person who complied with paragraph 11(1) has notified the
identity and address of the other person to HMRC or the other
person holds the reference number allocated to the proposed
notifiable arrangements under paragraph 22(1), and

(b) 40the other person holds the information provided to HMRC in
compliance with paragraph 11(1).

14 (1) This paragraph applies where a person complies with paragraph 12(1) in
relation to notifiable arrangements and another person is—

(a) a promoter in relation to a notifiable proposal for arrangements
45which are substantially the same as the notifiable arrangements
(whether they relate to the same or different parties), or