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

(b) also a promoter in relation to the notifiable arrangements or
notifiable arrangements which are substantially the same (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
5the notifiable proposal or notifiable arrangements is discharged if—

(a) the person who complied with paragraph 12(1) has notified the
identity and address of the other person to HMRC or the other
person holds the reference number allocated to the notifiable
arrangements under paragraph 22(1), and

(b) 10the other person holds the information provided to HMRC in
compliance with paragraph 12(1).

15 Where a person is a promoter in relation to two or more notifiable proposals
or sets of notifiable arrangements which are substantially the same (whether
they relate to the same parties or different parties) the person need not
15provide information under paragraph 11(1) or 12(1) if the person has already
provided information under either of those paragraphs in relation to any of
the other proposals or arrangements.

Duty of promoter: supplemental information

16 (1) This paragraph applies where—

(a) 20a promoter (P) has provided information in purported compliance
with paragraph 11(1) or 12(1), but

(b) HMRC believe that P has not provided all the prescribed
information.

(2) HMRC may apply to the tribunal for an order requiring P to provide
25specified information about, or documents relating to, the notifiable
proposal or arrangements.

(3) The tribunal may make an order under sub-paragraph (2) in respect of
information or documents only if satisfied that HMRC have reasonable
grounds for suspecting that the information or documents—

(a) 30form part of the prescribed information, or

(b) will support or explain the prescribed information.

(4) A requirement by virtue of sub-paragraph (2) is to be treated as part of P’s
duty under paragraph 11(1) or 12(1).

(5) In so far as P’s duty under sub-paragraph (1) of paragraph 11 or 12 arises out
35of an order made by virtue of sub-paragraph (2) above the relevant period
for the purposes of that sub-paragraph (1) is—

(a) the period of 11 days beginning with the date of the order, or

(b) such longer period as HMRC may direct.

Duty of person dealing with promoter outside United Kingdom

17 (1) 40This paragraph applies where a person enters into any transaction forming
part of any notifiable arrangements in relation to which—

(a) a promoter is resident outside the United Kingdom, and

(b) no promoter is resident in the United Kingdom.

(2) The person must, within the relevant period, provide HMRC with
45prescribed information relating to the arrangements.

(3) In sub-paragraph (2) “the relevant period” is the period of 6 days beginning
with the day on which the person enters into the first transaction forming
part of the arrangements.

(4) Compliance with paragraph 11(1) or 12(1) by any promoter in relation to the
5arrangements discharges the person’s duty under sub-paragraph (1).

Duty of parties to notifiable arrangements not involving promoter

18 (1) This paragraph applies to any person who enters into any transaction
forming part of notifiable arrangements as respects which neither that
person nor any other person in the United Kingdom is liable to comply with
10paragraph 11(1), 12(1) or 17(2).

(2) The person must at the prescribed time provide HMRC with prescribed
information relating to the arrangements.

Duty to provide further information requested by HMRC

19 (1) This paragraph applies where—

(a) 15a person has provided the prescribed information about notifiable
proposals or arrangements in compliance with paragraph 11(1),
12(1), 17(2) or 18(2), or

(b) a person has provided information in purported compliance with
paragraph 17(2) or 18(2) but HMRC believe that the person has not
20provided all the prescribed information.

(2) HMRC may require the person to provide—

(a) further specified information about the notifiable proposals or
arrangements (in addition to the prescribed information under
paragraph 11(1), 12(1), 17(2) or 18(2));

(b) 25documents relating to the notifiable proposals or arrangements.

(3) Where HMRC impose a requirement on a person under this paragraph, the
person must comply with the requirement within—

(a) the period of 10 working days beginning with the day on which
HMRC imposed the requirement, or

(b) 30such longer period as HMRC may direct.

20 (1) This paragraph applies where HMRC—

(a) have required a person to provide information or documents under
paragraph 19, but

(b) believe that the person has failed to provide the information or
35documents required.

(2) HMRC may apply to the tribunal for an order requiring the person to
provide the information or documents required.

(3) The tribunal may make an order imposing such a requirement only if
satisfied that HMRC have reasonable grounds for suspecting that the
40information or documents will assist HMRC in considering the notifiable
proposals or arrangements.

(4) Where the tribunal makes an order imposing such a requirement, the person
must comply with the requirement within—

(a) the period of 10 working days beginning with the day on which the
tribunal made the order, or

(b) such longer period as HMRC may direct.

Duty of promoters to provide updated information

21 (1) 5This paragraph applies where—

(a) information has been provided under paragraph 11(1), or 12(1) about
any notifiable arrangements, or proposed notifiable arrangements,
to which a reference number is allocated under paragraph 22, and

(b) after the provision of the information, there is a change in relation to
10the arrangements of a kind mentioned in sub-paragraph (2).

(2) The changes referred to in sub-paragraph (1)(b) are—

(a) a change in the name by which the notifiable arrangements, or
proposed notifiable arrangements, are known;

(b) a change in the name or address of any person who is a promoter in
15relation to the arrangements or, in the case of proposed
arrangements, the notifiable proposal.

(3) A person who is a promoter in relation to the notifiable arrangements or, in
the case of proposed notifiable arrangements, the notifiable proposal must
inform HMRC of the change mentioned in sub-paragraph (1)(b) within 30
20days after it is made.

(4) Sub-paragraphs (5) and (6) apply for the purposes of sub-paragraph (3)
where there is more than one person who is a promoter in relation to the
notifiable arrangements or proposal.

(5) If the change in question is a change in the name or address of a person who
25is a promoter in relation to the notifiable arrangements or proposal, it is the
duty of that person to comply with sub-paragraph (3).

(6) If a person provides information in compliance with sub-paragraph (3), the
duty imposed by that sub-paragraph on any other person, so far as relating
to the provision of that information, is discharged.

30Arrangements to be given reference number

22 (1) Where a person (P) complies or purports to comply with paragraph 11(1),
12(1), 17(2) or 18(2) in relation to any notifiable proposal or notifiable
arrangements, HMRC may within 90 days allocate a reference number to the
notifiable arrangements or, in the case of a notifiable proposal, to the
35proposed notifiable arrangements.

(2) If HMRC do so it must notify the number to P and (where the person is one
who has complied or purported to comply with paragraph 11(1) or 12(1)), to
any other person—

(a) who is a promoter in relation to—

(i) 40the notifiable proposal (or arrangements implementing the
notifiable proposal), or

(ii) the notifiable arrangements (or proposal implemented by the
notifiable arrangements), and

(b) whose identity and address has been notified to HMRC by P.

(3) The allocation of a reference number to any notifiable arrangements (or
proposed notifiable arrangements) is not to be regarded as constituting any
indication by HMRC that the arrangements would or could as a matter of
law result in the obtaining by any person of a tax advantage.

(4) 5In this Part of this Schedule “reference number”, in relation to any notifiable
arrangements, means the reference number allocated under this paragraph.

Duty of promoter to notify client of number

23 (1) This paragraph applies where a person who is a promoter in relation to
notifiable arrangements is providing (or has provided) services to any
10person (“the client”) in connection with the arrangements.

(2) The promoter must, within 30 days after the relevant date, provide the client
with prescribed information relating to any reference number (or, if more
than one, any one reference number) that has been notified to the promoter
(whether by HMRC or any other person) in relation to—

(a) 15the notifiable arrangements, or

(b) any arrangements substantially the same as the notifiable
arrangements (whether involving the same or different parties).

(3) In sub-paragraph (2) “the relevant date” means the later of—

(a) the date on which the promoter becomes aware of any transaction
20which forms part of the notifiable arrangements, and

(b) the date on which the reference number is notified to the promoter.

(4) But where the conditions in sub-paragraph (5) are met the duty imposed on
the promoter under sub-paragraph (2) to provide the client with information
in relation to notifiable arrangements is discharged

(5) 25Those conditions are—

(a) that the promoter is also a promoter in relation to a notifiable
proposal and provides services to the client in connection with them
both,

(b) the notifiable proposal and the notifiable arrangements are
30substantially the same, and

(c) the promoter has provided to the client, in a form and manner
specified by HMRC, prescribed information relating to the reference
number that has been notified to the promoter in relation to the
proposed notifiable arrangements.

(6) 35HMRC may give notice that, in relation to notifiable arrangements specified
in the notice, promoters are not under the duty under sub-paragraph (2)
after the date specified in the notice.

Duty of client to notify parties of number

24 (1) In this paragraph “client” means a person to whom a person who is a
40promoter in relation to notifiable arrangements or a notifiable proposal is
providing (or has provided) services in connection with the arrangements or
proposal.

(2) Sub-paragraph (3) applies where the client receives prescribed information
relating to the reference number allocated to the arrangements or proposed
45arrangements,

(3) The client must, within the relevant period, provide prescribed information
relating to the reference number to any other person—

(a) who the client might reasonably be expected to know is or is likely to
be a party to the arrangements or proposed arrangements, and

(b) 5who might reasonably be expected to gain a tax advantage in relation
to any relevant tax by reason of the arrangements or proposed
arrangements.

(4) In sub-paragraph (3) “the relevant period” is the period of 30 days beginning
with the later of—

(a) 10the day on which the client first becomes aware of any transaction
forming part of the notifiable arrangements or proposed notifiable
arrangements, and

(b) the day on which the prescribed information is notified to the client
by the promoter under paragraph 23.

(5) 15HMRC may give notice that, in relation to notifiable arrangements or a
notifiable proposal specified in the notice, persons are not under the duty
under sub-paragraph (3) after the date specified in the notice.

(6) The duty under sub-paragraph (3) does not apply in prescribed
circumstances.

(7) 20For the purposes of this paragraph a tax is a “relevant tax”, in relation to
arrangements or arrangements proposed in a proposal of any description, if
it is prescribed in relation to arrangements or proposals of that description
by regulations under paragraph 3(1).

Duty of client to provide information to promoter

25 (1) 25This paragraph applies where a person who is a promoter in relation to
notifiable arrangements has provided a person (“the client”) with the
information prescribed under paragraph 23(2).

(2) The client must, within the relevant period, provide the promoter with
prescribed information relating to the client.

(3) 30In sub-paragraph (2) “the relevant period” is the period of 11 days beginning
with the later of—

(a) the date the client receives the reference number for the
arrangements, and

(b) the date the client first enters into a transaction which forms part of
35the arrangements.

(4) The duty under sub-paragraph (2) is subject to any exceptions that may be
prescribed.

Duty of parties to notifiable arrangements to notify HMRC of number, etc

26 (1) Any person (P) who is a party to any notifiable arrangements must provide
40HMRC with prescribed information relating to—

(a) any reference number notified to P under paragraph 23 or 24, and

(b) the time when P obtains or expects to obtain by virtue of the
arrangements a tax advantage in relation to any relevant tax.

(2) For the purposes of sub-paragraph (1) a tax is a “relevant tax” in relation to
any notifiable arrangements if it is prescribed in relation to arrangements of
that description by regulations under paragraph 3(1).

(3) Regulations made by the Commissioners may—

(a) 5in prescribed cases, require the information prescribed under sub-
paragraph (1) to be given to HMRC—

(i) in the prescribed manner,

(ii) in the prescribed form,

(iii) at the prescribed time, and

(b) 10in prescribed cases, require the information prescribed under sub-
paragraph (1) and such other information as is prescribed to be
provided separately to HMRC at the prescribed time or times.

(4) In sub-paragraph (3) “prescribed” includes being prescribed in a document
made under a power conferred by regulations made by the Commissioners.

(5) 15HMRC may give notice that, in relation to notifiable arrangements specified
in the notice, persons are not under the duty under sub-paragraph (1) after
the date specified in the notice.

(6) The duty under sub-paragraph (1) does not apply in prescribed
circumstances.

20Duty of promoter to provide details of clients

27 (1) This paragraph applies where a person who is a promoter in relation to
notifiable arrangements is providing (or has provided) services to any
person (“the client”) in connection with the arrangements and either—

(a) the promoter is subject to the reference number information
25requirement, or

(b) the promoter has failed to comply with paragraph 11(1) or 12(1) in
relation to the arrangements (or the notifiable proposal for them) but
would be subject to the reference number information requirement if
a reference number had been allocated to the arrangements.

(2) 30For the purposes of this paragraph “the reference number information
requirement” is the requirement under paragraph 23(2) to provide to the
client prescribed information relating to the reference number allocated to
the notifiable arrangements.

(3) The promoter must, within the prescribed period after the end of the
35relevant period, provide HMRC with prescribed information in relation to
the client.

(4) In sub-paragraph (3) “the relevant period” means such period (during which
the promoter is or would be subject to the reference number information
requirement) as is prescribed.

(5) 40The promoter need not comply with sub-paragraph (3) in relation to any
notifiable arrangements at any time after HMRC have given notice under
paragraph 23(6) in relation to the arrangements.

Enquiry following disclosure of client details

28 (1) This paragraph applies where—

(a) a person who is a promoter in relation to notifiable arrangements has
provided HMRC with information in relation to a person (“the
client”) under paragraph 27(3) (duty to provide client details), and

(b) HMRC suspect that a person other than the client is or is likely to be
5a party to the arrangements.

(2) HMRC may by written notice require the promoter to provide prescribed
information in relation to any person other than the client who the promoter
might reasonably be expected to know is or is likely to be a party to the
arrangements.

(3) 10The promoter must comply with a requirement under or by virtue of sub-
paragraph (2) within—

(a) the relevant period, or

(b) such longer period as HMRC may direct.

(4) In sub-paragraph (3) “the relevant period” is the period of 11 days beginning
15with the day on which the promoter receives the notice under sub-
paragraph (2).

Pre-disclosure enquiry

29 (1) Where HMRC suspect that a person (P) is the promoter or introducer of a
proposal, or the promoter of arrangements, which may be notifiable, they
20may by written notice require P to state—

(a) whether in P’s opinion the proposal or arrangements are notifiable
by P, and

(b) if not, the reasons for P’s opinion.

(2) The notice must specify the proposal or arrangements to which it relates.

(3) 25 For the purposes of sub-paragraph (1)(b)—

(a) it is not sufficient to refer to the fact that a lawyer or other
professional has given an opinion,

(b) the reasons must show, by reference to this Part of this Schedule and
regulations under it, why P thinks the proposal or arrangements are
30not notifiable by P, and

(c) in particular, if P asserts that the arrangements do not fall within any
description prescribed under paragraph 3(1)(a), the reasons must
provide sufficient information to enable HMRC to confirm the
assertion.

(4) 35P must comply with a requirement under or by virtue of sub-paragraph (1)
within—

(a) the relevant period, or

(b) such longer period as HMRC may direct.

(5) In sub-paragraph (4) “the relevant period” is the period of 11 days beginning
40with the day on which the notice under sub-paragraph (1) is issued.

Reasons for non-disclosure: supporting information

30 (1) Where HMRC receive from a person (P) a statement of reasons why a
proposal or arrangements are not notifiable by P, HMRC may apply to the
tribunal for an order requiring P to provide specified information or
45documents in support of the reasons.

(2) P must comply with a requirement under or by virtue of sub-paragraph (1)
within—

(a) the relevant period, or

(b) such longer period as HMRC may direct.

(3) 5In sub-paragraph (2) “the relevant period” is the period of 15 days beginning
with the day on which the order concerned is made.

(4) The power under sub-paragraph (1)—

(a) may be exercised more than once, and

(b) applies whether or not the statement of reasons was received under
10paragraph 29(1)(b).

Provision of information to HMRC by introducers

31 (1) This paragraph applies where HMRC suspect—

(a) that a person (P) is an introducer in relation to a proposal, and

(b) that the proposal may be notifiable.

(2) 15HMRC may by written notice require P to provide HMRC with one or both
of the following—

(a) prescribed information in relation to each person who has provided
P with any information relating to the proposal,

(b) prescribed information in relation to each person with whom P has
20made a marketing contact in relation to the proposal.

(3) A notice must specify the proposal to which it relates.

(4) P must comply with a requirement under or sub-paragraph(2) within—

(a) the relevant period, or

(b) such longer period as HMRC may direct.

(5) 25In sub-paragraph (4) “the relevant period” is the period of 11 days beginning
with the day on which the notice under sub-paragraph (2) is given.

Legal professional privilege

32 (1) Nothing in this Part of this Schedule requires any person to disclose to
HMRC any privileged information.

(2) 30In this Part of this Schedule “privileged information” means information
with respect to which a claim to legal professional privilege, or, in Scotland,
to confidentiality of communications, could be maintained in legal
proceedings.

Information

33 (1) 35This paragraph applies where a person is required to provide information
under paragraph 23(2) or 24(3).

(2) HMRC may specify additional information which must be provided by that
person to the recipients under paragraph 23(2) or 24(3) at the same time as
the information referred to in sub-paragraph (1).

(3) 40HMRC may specify the form and manner in which the additional
information is to be provided.

(4) For the purposes of this paragraph “additional information” means
information supplied by HMRC which relates to notifiable proposals or
notifiable arrangements in general.

34 (1) HMRC may specify the form and manner in which information required to
5be provided by or under any of the information provisions must be provided
if the provision is to be complied with.

(2) The “information provisions” are paragraphs 11(1), 12(1), 17(2), 18(2), 19(2),
21(3), 23(2), 24(3), 26(1) and (3), 27(3), 28(2), 29(1), 31(2) and 33(2).

35 No duty of confidentiality or other restriction on disclosure (however
10imposed) prevents the voluntary disclosure by any person to HMRC of
information or documents which the person has reasonable grounds for
suspecting will assist HMRC in determining whether there has been a
breach of any requirement imposed by or under this Part of this Schedule.

36 (1) HMRC may publish information about—

(a) 15any notifiable arrangements, or proposed notifiable arrangements,
to which a reference number is allocated under paragraph 22;

(b) any person who is a promoter in relation to the notifiable
arrangements or, in the case of proposed notifiable arrangements,
the notifiable proposal.

(2) 20The information that may be published is (subject to sub-paragraph (4))—

(a) any information relating to arrangements within sub-paragraph
(1)(a), or a person within sub-paragraph (1)(b), that is prescribed
information for the purposes of section 11, 12, 17 or 18;

(b) any ruling of a court or tribunal relating to any such arrangements or
25person (in that person‘s capacity as a promoter in relation to a
notifiable proposal or arrangements);

(c) the number of persons in any period who enter into transactions
forming part of notifiable arrangements within sub-paragraph (1)(a);

(d) any other information that HMRC considers it appropriate to
30publish for the purpose of identifying arrangements within sub-
paragraph (1)(a) or a person within sub-paragraph (1)(b).

(3) The information may be published in any manner that HMRC considers
appropriate.

(4) No information may be published under this paragraph that identifies a
35person who enters into a transaction forming part of notifiable arrangements
within sub-paragraph (1)(a).

(5) But where a person who is a promoter within sub-paragraph (1)(b) is also a
person mentioned in sub-paragraph (4), nothing in sub-paragraph (4) is to
be taken as preventing the publication under this paragraph of information
40so far as relating to the person‘s activities as a promoter.

(6) Before publishing any information under this paragraph that identifies a
person as a promoter within sub-paragraph (1)(b), HMRC must—

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

(b) give the person reasonable opportunity to make representations
45about whether it should be published.

37 (1) This paragraph applies if—

(a) information about notifiable arrangements, or proposed notifiable
arrangements, is published under paragraph 36,

(b) at any time after the information is published, a ruling of a court or
tribunal is made in relation to tax arrangements, and

(c) 5HMRC is of the opinion that the ruling is relevant to the
arrangements mentioned in paragraph (a)

(2) A ruling is “relevant” to the arrangements if—

(a) the principles laid down, or reasoning given, in the ruling would, if
applied to the arrangements, allow the purported advantage arising
10from the arrangements in relation to tax, and

(b) the ruling is final.

(3) HMRC must publish information about the ruling.

(4) The information must be published in the same manner as HMRC published
the information mentioned in sub-paragraph (1)(a) (and may also be
15published in any other manner that HMRC considers appropriate).

(5) A ruling is “final” if it is—

(a) a ruling of the Supreme Court, or

(b) a ruling of any other court or tribunal in circumstances where—

(i) no appeal may be made against the ruling,

(ii) 20if an appeal may be made against the ruling with permission,
the time limit for applications has expired and either no
application has been made or permission has been refused,

(iii) if such permission to appeal against the ruling has been
granted or is not required, no appeal has been made within
25the time limit for appeals, or

(iv) if an appeal was made, it was abandoned or otherwise
disposed of before it was determined by the court or tribunal
to which it was addressed.

(6) Where a ruling is final by virtue of sub-paragraph (ii), (iii) or (iv) of sub-
30paragraph (5)(b), the ruling is to be treated as made at the time when the sub-
paragraph in question is first satisfied.

(7)
In this paragraph “tax arrangements” means arrangements in respect of
which it would be reasonable to conclude (having regard to all the
circumstances) that the main purpose, or one of the main purposes, was the
35obtaining of a tax advantage.

Power to vary certain relevant periods

38 The Commissioners may by regulations amend this Part of this Schedule
with a view to altering the definition of “the relevant period” for the
purposes of—

• 40paragraph 5(6)

• paragraph 11(1)

• paragraph 12(1)

• paragraph 16(5)

• paragraph 17(2)

• 45paragraph 24(3)

• paragraph 25(2)

Finance (No. 2) BillPage 730

• paragraph 27(3)

• paragraph 28(3)

• paragraph 29(4)

• paragraph 30(2))

• 5paragraph 31(4).

Part 2 Penalties

Penalty for failure to comply with duties under Part 1 (apart from paragraph 26)

39 (1) A person who fails to comply with any of the provisions of Part 1 of this
10Schedule mentioned in sub-paragraph (2) below is liable—

(a) to a penalty not exceeding—

(i) in the case of a failure to comply with paragraph 11(1), 12(1),
17(2), 18(2) or 19, £600 for each day during the initial period
for which the failure continues (but see also paragraphs 40(4)
15and 41(1) and (2)), and

(ii) in any other case, £5,000, and

(b) if the failure continues after a penalty is imposed under paragraph
(a), to a further penalty or penalties not exceeding £600 for each day
on which the failure continues after the day on which the penalty
20under paragraph (a) was imposed (but excluding any day for which
a penalty under this paragraph has already been imposed).

(2) Those provisions are—

(a) paragraph 11(1) (duty of promoter in relation to notifiable proposal),

(b) paragraph 12(1) (duty of promoter in relation to notifiable
25arrangements),

(c) paragraph 17(2) (duty of person dealing with promoter outside
United Kingdom),

(d) paragraph 18(2) (duty of parties to notifiable arrangements not
involving promoter),

(e) 30paragraph 19 (duty to provide further information requested by
HMRC),

(f) paragraph 21 (duty of promoters to provide updated information),

(g) paragraph 23(2) (duty of promoter to notify client of reference
number),

(h) 35paragraph 24(3) (duty of client to notify parties of reference number),

(i) paragraph 25(2) (duty of client to provide information to promoter),

(j) paragraph 27(3) (duty of promoter to provide details of clients),

(k) paragraph 28(3) (enquiry following disclosure of client details),

(l) paragraphs 29(4) and 30(2) (duty of promoter to respond to inquiry)

(m) 40paragraph 31(4) (duty of introducer to give details of persons who
have provided information or have been provided with information,
and

(n) paragraph 33 (duty to provide additional information).

(3) In this paragraph “the initial period” means the period—

(a) 45beginning with the relevant day, and

(b) ending with the earlier of the day on which the penalty under sub-
paragraph (1)(a)(i) is determined and the last day before the failure
ceases.

(4) For the purposes of sub-paragraph (3)(a) “the relevant day” is the day
5specified in relation to the failure in the following table—

40 (1) The amount of a penalty under paragraph 39(1)(a)(i) is to be arrived at after
taking account of all relevant considerations.

(2) Those considerations include the desirability of the penalty being set at a
level which appears appropriate for deterring the person, or other persons,
35from similar failures to comply on future occasions having regard (in
particular)—

(a) in the case of a penalty for a promoter’s failure to comply with
paragraph 11(1), 12(1) or 19, to the amount of any fees received, or
likely to have been received, by the promoter in connection with the
40notifiable proposal (or arrangements implementing the notifiable
proposal), or with the notifiable arrangements, and

(b) in the case of a penalty for a relevant person’s failure to comply with
paragraph 17(2), 18(2) or 19, to the amount of any advantage gained,
or sought to be gained, by the person in relation to any tax prescribed
under paragraph 3(1)(b) in relation to the notifiable arrangements

(3) 5In sub-paragraph (2)(b) “relevant person” means a person who enters into
any transaction forming part of notifiable arrangements.

(4) If the maximum penalty under paragraph 39(1)(a)(i) appears
inappropriately low after taking account of those considerations, the penalty
is to be of such amount not exceeding £1 million as appears appropriate
10having regard to those considerations.

41 (1) This paragraph applies where a failure to comply with a provision
mentioned in paragraph 39(2) concerns—

(a) a proposal or arrangements in respect of which an order has been
made under paragraph 4

(b) 15a proposal or arrangements in respect of which an order has been
made under paragraph 5.

(2) The amounts specified in paragraph 39(1)(a)(i) and (b) are increased to the
prescribed sum in relation to days falling after the end of the period of 11
days beginning with the day on which the order is made.

(3) 20In sub-paragraph (1) “the prescribed sum” means a sum prescribed by the
Treasury by regulations.

42 (1) The Treasury may by regulations vary—

(a) any of the sums for the time being specified in paragraph 39(1),

(b) the sum for the time being specified in paragraph 40(4), and

(c) 25the period for the time being specified in paragraph 41(2).

(2) Regulations under paragraph 41(3) or sub-paragraph (1) above may include
incidental or transitional provision.

43 Where it appears to an officer of Revenue and Customs that a penalty under
paragraph 39(1)(a)(i) has been determined on the basis that the initial period
30begins with a day later than that which the officer considers to be the
relevant day, an officer of Revenue and Customs may commence
proceedings for a re-determination of the penalty.

Penalty for failure to comply with duties under paragraph 26

44 (1) A person who fails to comply with—

(a) 35paragraph 26(1), or

(b) regulations under paragraph 26(3),

is liable to a penalty not exceeding the relevant sum.

(2) The relevant sum is £5,000 in respect of each scheme to which the failure
relates unless the person falls within sub-paragraph (3) or (4).

(3) 40If the person has previously failed to comply with paragraph 26(1) or
regulations under paragraph 26(3) on one (and only one) occasion during
the period of 36 months ending with the date on which the current failure
began, the relevant sum is £7,500 in respect of each scheme to which the
current failure relates (whether or not the same as any scheme to which the
45previous failure relates).

(4) If the person has previously failed to comply with paragraph 26(1) or
regulations under paragraph 26(3) on two or more occasions during the
period of 36 months ending with the date on which the current failure began,
the relevant sum is £10,000 in respect of each scheme to which the current
5failure relates (whether or not the same as any scheme to which any of the
previous failures relates).

(5) In this paragraph “scheme” means any notifiable arrangements.

Penalty proceedings before First-tier tribunal

45 (1) An authorised officer may commence proceedings before the First-tier
10Tribunal for any penalty under paragraph 39(1)(a).

(2) In sub-paragraph (1) “authorised officer” means an officer of Revenue and
Customs authorised by HMRC for the purposes of this paragraph.

(3) Proceedings for a penalty may not be commenced more than 12 months after
evidence of facts sufficient to justify the bringing of proceedings comes to
15the knowledge of HMRC.

(4) If the First-tier Tribunal decide that the penalty is payable by the person—

(a) the penalty is for all purposes to be treated as if it were tax charged
in an assessment and due and payable,

(b) the person may appeal to the Upper Tribunal against the decision
20that the penalty is payable, and

(c) the person may appeal to the Upper Tribunal against the decision as
to the amount of the penalty.

(5) On an appeal under sub-paragraph (4)(b) the Upper Tribunal may, if it
appears that no penalty has been incurred, cancel the decision of the First-
25tier Tribunal.

(6) On an appeal under sub-paragraph (4)(c) the Upper Tribunal may—

(a) affirm the decision of the First-tier Tribunal as to the amount of the
penalty, or

(b) substitute for that decision a decision that the First-tier Tribunal had
30power to make.

Assessment of penalties under paragraph 39(1)(b) or 44

46 (1) Where a person is liable to a penalty under paragraph 39(1)(b) or 44 an
authorised officer may assess the amount due by way of a penalty.

(2) An assessment may not be made more than 12 months after evidence of facts
35sufficient to justify the making of the assessment first comes to the
knowledge of HMRC.

(3) A notice of an assessment under sub-paragraph (1) stating—

(a) the date on which it is issued, and

(b) the time within which an appeal against the assessment may be
40made,

must be served on the person liable to the penalty.

(4) After the notice has been served the assessment may not be altered except in
accordance with this paragraph or on appeal.

(5) If it is discovered by an authorised officer that the amount of a penalty
assessed under this paragraph is or has become insufficient the officer may
make an assessment in a further amount so that the penalty is set at the
amount which, in the officer’s opinion, is correct or appropriate.

(6) 5 A penalty imposed by a decision under this paragraph—

(a) is due and payable at the end of the period of 30 days beginning with
the date of the issue of the notice of the decision, and

(b) is to be treated for all purposes as if it were tax charged in an
assessment and due and payable.

(7) 10In this paragraph “authorised officer” means an officer of Revenue and
Customs authorised by HMRC for the purposes of this paragraph.

47 (1) Where a person (P) is served with notice of an assessment under paragraph
46—

(a) P may appeal against the decision that  a penalty is payable by P, and

(b) 15P may appeal against the decision as to the amount of the penalty.

(2) An appeal under sub-paragraph (1) is to be treated for procedural purposes
in the same way as an appeal against an assessment to the relevant tax
(including by the application of any provision about the bringing of an
appeal by notice to HMRC, about HMRC review of the decision or about
20determination of the appeal by the First-tier Tribunal or Upper Tribunal)

(3) Sub-paragraph (2) does not apply—

(a) so as to require P to pay a penalty before an appeal under sub-
paragraph (1) is determined, or

(b) in respect of any other matter expressly provided for by this
25Schedule.

(4) On an appeal under sub-paragraph (1)(a) the tribunal may affirm or cancel
the decision that a penalty is payable by P.

(5) On an appeal under sub-paragraph (1)(b) the tribunal may—

(a) affirm the decision as to the amount of the penalty, or

(b) 30substitute for that decision another decision that the authorised
officer had power to make.

(6) In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal
(as appropriate by virtue of sub-paragraph (2)).

Reasonable excuse

48 (1) 35Liability to a penalty under this Part of this Schedule does not arise in
relation to a particular failure to comply if the person concerned (P) satisfies
HMRC or the relevant tribunal (as the case may be) that there is a reasonable
excuse for the failure.

(2) For this purpose—

(a) 40an insufficiency of funds is not a reasonable excuse, unless
attributable to events outside P’s control,

(b) where P relied on any other person to do anything, that cannot be a
reasonable excuse unless P took reasonable care to avoid the failure,

(c) where P had a reasonable excuse but the excuse has ceased, P is to be
treated as continuing to have the excuse if the failure is remedied
without unreasonable delay after the excuse ceased, and

(d) reliance on advice is to be taken automatically not to be a reasonable
5excuse if the advice was addressed to, or was given to, a person other
than P or takes no account of P’s individual circumstances.

49 (1) The making of an order under paragraph 4 or 5 against P does not of itself
mean that P either did or did not have a reasonable excuse for non-
compliance before the order was made.

(2) 10Where an order is made under paragraph 4 or 5 then for the purposes of
paragraph 48—

(a) the person identified in the order as the promoter of the proposal or
arrangements cannot, in respect of any time after the end of the
prescribed period mentioned in paragraph 41, rely on doubt as to
15notifiability as a reasonable excuse for failure to comply with
paragraph 11(1) or 12(1), and

(b) any delay in compliance with that provision after the end of that
period is not capable of being a reasonable excuse unless attributable
to something other than doubt as to notifiability.

50 (1) 20Where a person fails to comply with—

(a) paragraph 17(2) and the promoter for the purposes of paragraph 17
is a monitored promoter, or

(b) paragraph 18(2) and the arrangements for the purposes of paragraph
18 are arrangements of a monitored promoter,

25then for the purposes of paragraph 48 legal advice which the person took
into account is to be disregarded in determining whether the person had a
reasonable excuse, if the advice was given or procured by that monitored
promoter.

(2) In determining for the purpose of paragraph 48 whether or not a person who
30is a monitored promoter had a reasonable excuse for a failure to do
something, reliance on legal advice is to be taken automatically not to
constitute a reasonable excuse if either—

(a) the advice was not based on a full and accurate description of the
facts, or

(b) 35the conclusions in the advice that the person relied on were
unreasonable.

(3) In this paragraph “monitored promoter” means a person who is a monitored
promoter for the purposes of Part 5 of FA 2014