Finance Bill (HC Bill 102)

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arrangements in relation to which a GAAR final decision notice has
been given (“the GAAR decision arrangements”), and

(c) accordingly, the opinion of the GAAR Advisory Panel which was
considered by HMRC in preparing that GAAR final decision notice
5is relevant to the arrangements concerned.

(2) A designated HMRC officer must give the person mentioned in sub-
paragraph (1) a notice in writing—

(a) explaining that the officer is of the view mentioned there,

(b) specifying the arrangements concerned,

(c) 10describing the material characteristics of the GAAR decision
arrangements,

(d) setting out a report prepared by HMRC of the opinion of the GAAR
Advisory Panel which was considered by HMRC in preparing the
GAAR final decision notice, and

(e) 15explaining the effect of sub-paragraphs (3) and (4).

(3) A person to whom a notice under this paragraph is given has 30 days,
beginning with the day on which the notice is given, to send to the
designated HMRC officer (in writing) any representations that that person
wishes to make as to why the arrangements concerned are not equivalent to
20the GAAR decision arrangements.

(4) A designated HMRC officer may, on a written request by that person, extend
the period during which representations may be made by that person.

(5) Paragraph 24 contains definitions of the following terms used in this
paragraph—

  • 25“GAAR final decision notice”;

  • “equivalent”, in relation to arrangements.

Referral to GAAR Advisory Panel

26 (1) A designated HMRC officer may make a referral under this paragraph if—

(a) the officer considers that a person is liable to a penalty under
30paragraph 1 in relation to particular arrangements (“the
arrangements in question”), and

(b) the requirements of paragraph 28 (procedure before making of
referral) have been complied with.

(2) But a referral may not be made under this paragraph if a GAAR final
35decision notice (within the meaning of paragraph 24(1)) has already been
given in relation to—

(a) the arrangements in question, or

(b) arrangements that are equivalent to those arrangements.

(3) A referral under this paragraph is a referral to the GAAR Advisory Panel of
40the question whether the entering into and carrying out of tax arrangements
such as are described in the referral statement (see paragraph 27) is a
reasonable course of action in relation to the relevant tax provisions.

27 (1) In this Part of this Schedule “the referral statement”, in relation to a referral
under paragraph 26, means a statement made by a designated HMRC officer
45which—

(a) accompanies the referral,

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(b) is a general statement of the material characteristics of the
arrangements in question (within the meaning given by paragraph
26(1)), and

(c) complies with sub-paragraph (2).

(2) 5A statement under this paragraph must—

(a) contain a factual description of the arrangements in question,

(b) set out HMRC’s view as to whether those arrangements accord with
established practice (as it stood when those arrangements were
entered into),

(c) 10explain why it is the designated HMRC officer’s view that a tax
advantage of the nature described in the statement and arising from
tax arrangements having the characteristics described in the
statement would be a tax advantage arising from arrangements that
are abusive,

(d) 15set out any matters the designated HMRC officer is aware of which
may suggest that any view of HMRC or the designated HMRC
officer expressed in the statement is not correct, and

(e) set out any other matters which the designated HMRC officer
considers are required for the purposes of the exercise of the GAAR
20Advisory Panel’s functions under paragraphs 33 and 34.

Notice before decision whether to refer

28 (1) A referral must not be made under paragraph 26 unless—

(a) a designated HMRC officer has given each relevant person a notice
under this paragraph,

(b) 25in the case of each relevant person, the time allowed for making
representations has expired, and

(c) in deciding whether to make the referral, a designated HMRC officer
has considered any representations made by a relevant person
within the time allowed.

(2) 30In this paragraph a “relevant person” means any person who at the time of
the referral is considered by the officer making the referral to be liable to a
penalty under paragraph 1 in relation to the arrangements in question
(within the meaning given by paragraph 26(1)).

(3) A notice under this paragraph is a notice in writing which—

(a) 35explains that the officer giving the notice considers that the person to
whom the notice is given is liable to a penalty under paragraph 1 in
relation to the arrangements in question (specifying those
arrangements),

(b) explains why the officer considers those arrangements to be abusive
40tax arrangements,

(c) explains that HMRC are proposing to make a referral under
paragraph 26 of the question whether the entering into and carrying
out of tax arrangements that have the characteristics of the
arrangements in question is a reasonable course of action in relation
45to the relevant tax provisions, and

(d) explains the effect of sub-paragraphs (4) and (5).

(4) Each person to whom a notice under this paragraph is given has 45 days,
beginning with the day on which the notice is given to that person, to send

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written representations to the designated HMRC officer in response to the
notice.

(5) A designated HMRC officer may, on a written request by a person to whom
a notice is given, extend the period during which representations may be
5made by that person.

Notice of decision whether to refer

29 Where a designated HMRC officer decides whether to make a referral under
paragraph 26, the officer must, as soon as reasonably practicable, give
written notice of that decision to each person to whom notice under
10paragraph 28 was given.

Information to accompany referral

30 A referral under paragraph 26 must (as well as being accompanied by the
referral statement under paragraph 27) be accompanied by—

(a) a declaration that, as far as HMRC are aware, nothing which is
15material to the GAAR Advisory Panel’s consideration of the matter
has been omitted from that statement,

(b) a copy of each notice given under paragraph 28 by HMRC in relation
to the referral,

(c) a copy of any representations received under paragraph 28 and any
20comments that HMRC wish to make in respect of those
representations, and

(d) a copy of each notice given under paragraph 31 by HMRC.

Notice on making of referral

31 (1) Where a referral is made under paragraph 26, a designated HMRC officer
25must at the same time give to each relevant person a notice in writing
which—

(a) notifies the person of the referral,

(b) is accompanied by a copy of the referral statement,

(c) is accompanied by a copy of any comments provided to the GAAR
30Advisory Panel under paragraph 30(c) in respect of representations
made by the person,

(d) notifies the person of the period under paragraph 32 for making
representations, and

(e) notifies the person of the requirement under that paragraph to send
35any representations to the officer.

(2) In this paragraph “relevant person” has the same meaning as in paragraph
28 (see sub-paragraph (2) of that paragraph).

Right to make representations to GAAR Advisory Panel

32 (1) A person who has received a notice under paragraph 31 has 21 days,
40beginning with the day on which that notice is given, to send to the GAAR
Advisory Panel written representations about—

(a) the notice given to the person under paragraph 28, or

(b) any comments provided to the GAAR Advisory Panel under
paragraph 30(c) in respect of representations made by the person.

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(2) The GAAR Advisory Panel may, on a written request made by the person,
extend the period during which representations may be made.

(3) If a person sends representations to the GAAR Advisory Panel under this
paragraph, the person must at the same time send a copy of the
5representations to the designated HMRC officer.

(4) If a person sends representations to the GAAR Advisory Panel under this
paragraph and that person made no representations under paragraph 28, a
designated HMRC officer—

(a) may provide the GAAR Advisory Panel with comments on that
10person’s representations under this paragraph, and

(b) if such comments are provided, must at the same time send a copy of
them to that person.

Decision of GAAR Advisory Panel and opinion notices

33 (1) Where a referral is made to the GAAR Advisory Panel under paragraph 26,
15the Chair must arrange for a sub-panel consisting of 3 members of the GAAR
Advisory Panel (one of whom may be the Chair) to consider it.

(2) The sub-panel may invite—

(a) any person to whom notice under paragraph 28 was given, or

(b) the designated HMRC officer,

20(or both) to supply the sub-panel with further information within a period
specified in the invitation.

(3) Invitations must explain the effect of sub-paragraph (4) or (5) (as
appropriate).

(4) If a person invited under sub-paragraph (2)(a) supplies information to the
25sub-panel under this paragraph, that person must at the same time send a
copy of the information to the designated HMRC officer.

(5) If a designated HMRC officer supplies information to the sub-panel under
this paragraph, the officer must at the same time send a copy of the
information to each person to whom notice under paragraph 28 was given.

34 (1) 30The sub-panel must produce—

(a) one opinion notice stating the joint opinion of all the members of the
sub-panel, or

(b) two or three opinion notices which taken together state the opinions
of all the members.

(2) 35The sub-panel must give a copy of the opinion notice or notices to the
designated HMRC officer.

(3) An opinion notice is a notice which states that in the opinion of the members
of the sub-panel, or one or more of those members—

(a) the entering into and carrying out of tax arrangements such as are
40described in the referral statement is a reasonable course of action in
relation to the relevant tax provisions,

(b) the entering into or carrying out of such tax arrangements is not a
reasonable course of action in relation to the relevant tax provisions,
or

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(c) it is not possible, on the information available, to reach a view on that
matter,

and the reasons for that opinion.

(4) In forming their opinions for the purposes of sub-paragraph (3) members of
5the sub-panel must—

(a) have regard to all the matters set out in the referral statement,

(b) have regard to the matters mentioned in paragraphs (a) to (c) of
paragraph 3(3) and paragraph 3(4), and

(c) take account of paragraph 3(5) to (7).

(5) 10For the purposes of the giving of an opinion under this paragraph, the
arrangements are to be assumed to be tax arrangements.

(6) For the purposes of this Schedule—

(a) an opinion of the GAAR Advisory Panel is to be treated as having
been given on a referral under paragraph 26 when an opinion notice
15(or notices) has been given under this paragraph in respect of the
referral, and

(b) any requirement to consider the opinion of the GAAR Advisory
Panel given on such a referral is a requirement to consider the
contents of the opinion notice (or notices) given on the referral.

20Notice before deciding that arrangements are ones to which Panel opinion applies

35 (1) This paragraph applies where—

(a) an opinion of the GAAR Advisory Panel has been given on a referral
under paragraph 26,

(b) a designated HMRC officer is of the view that a person is liable to a
25penalty under paragraph 1 in relation to particular arrangements
(“the arrangements concerned”) and that that opinion of the GAAR
Advisory Panel applies to those arrangements, and

(c) that person is not a person to whom notice under paragraph 28 was
given in connection with the referral.

(2) 30A designated HMRC officer must give the person mentioned in sub-
paragraph (1)(b) a notice in writing—

(a) explaining that the officer is of the view mentioned in that
paragraph,

(b) specifying the arrangements concerned,

(c) 35setting out a report prepared by HMRC of the opinion mentioned in
sub-paragraph (1)(a), and

(d) explaining the effect of sub-paragraphs (3) and (4).

(3) A person to whom a notice under this paragraph is given has 30 days,
beginning with the day on which the notice is given, to send the designated
40HMRC officer (in writing) any representations as to why the opinion does
not apply to the arrangements concerned.

(4) A designated HMRC officer may, on a written request by that person, extend
the period during which representations may be made by that person.

(5) Paragraph 24(2) defines the arrangements that an opinion given on a referral
45under paragraph 26 “applies to”.

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Requirement for court or tribunal to take Panel opinion into account

36 (1) In this paragraph “enabler penalty proceedings” means proceedings before
a court or tribunal in connection with a penalty under paragraph 1.

(2) In determining in enabler penalty proceedings any question whether tax
5arrangements to which the penalty relates were abusive, the court or
tribunal—

(a) must take into account the relevant Panel opinion, and

(b) may also take into account any matter mentioned in sub-paragraph
(4).

(3) 10In sub-paragraph (2)(a) “the relevant Panel opinion” means the opinion of
the GAAR Advisory Panel which under this Part of this Schedule was
required to be considered by a designated HMRC officer in deciding
whether the penalty should be assessed.

(4) The matters mentioned in sub-paragraph (2)(b) are—

(a) 15guidance, statements or other material (whether of HMRC, a
Minister of the Crown or anyone else) that was in the public domain
at the time the arrangements were entered into, and

(b) evidence of established practice at that time.

Part 8 20Appeals

37 A person may appeal against—

(a) a decision of HMRC that a penalty under paragraph 1 is payable by
that person, or

(b) a decision of HMRC as to the amount of a penalty under paragraph
251 payable by the person.

38 (1) An appeal under paragraph 37 is to be treated in the same way as an appeal
against an assessment to the tax to which the arrangements concerned relate
(including by the application of any provision about bringing the appeal by
notice to HMRC, about HMRC review of the decision or about
30determination of the appeal by the First-tier Tribunal or Upper Tribunal).

(2) Sub-paragraph (1) does not apply—

(a) so as to require a person to pay a penalty under paragraph 1 before
an appeal against the assessment of the penalty is determined;

(b) in respect of any other matter expressly provided for by this
35Schedule.

(3) In this paragraph “the arrangements concerned” means the arrangements to
which the penalty relates.

39 (1) On an appeal under paragraph 37(a) that is notified to the tribunal, the
tribunal may affirm or cancel HMRC’s decision.

(2) 40On an appeal under paragraph 37(b) that is notified to the tribunal, the
tribunal may—

(a) affirm HMRC’s decision, or

(b) substitute for that decision another decision that HMRC had power
to make.

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(3) If the tribunal substitutes its decision for HMRC’s, the tribunal may rely on
paragraph 18—

(a) to the same extent as HMRC (which may mean applying the same
percentage reduction as HMRC to a different starting point), or

(b) 5to a different extent, but only if the tribunal thinks that HMRC’s
decision in respect of the application of paragraph 18 was flawed.

(4) In sub-paragraph (3)(b) “flawed” means flawed when considered in the light
of the principles applicable in proceedings for judicial review.

(5) In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal
10(as appropriate by virtue of paragraph 38(1)).

Part 9 Information

Information and inspection powers: application of Schedule 36 to FA 2008

40 (1) Schedule 36 to FA 2008 (information and inspection powers) applies for the
15purpose of checking a relevant person’s position as regards liability for a
penalty under paragraph 1 as it applies for checking a person’s tax position,
subject to the modifications in paragraphs 41 to 43.

(2) In this paragraph and paragraphs 41 to 43—

  • “relevant person” means a person an officer of Revenue and Customs
    20has reason to suspect is or may be liable to a penalty under
    paragraph 1;

  • “the Schedule” means Schedule 36 to FA 2008.

General modifications of Schedule 36 to FA 2008 as applied

41 In its application for the purpose mentioned in paragraph 40(1) above, the
25Schedule has effect as if—

(a) any provisions which can have no application for that purpose were
omitted,

(b) references to “the taxpayer” were references to the relevant person
whose position as regards liability for a penalty under paragraph 1
30is to be checked, and references to “a taxpayer” were references to a
relevant person,

(c) references to a person’s “tax position” were to the relevant person’s
position as regards liability for a penalty under paragraph 1,

(d) references to prejudice to the assessment or collection of tax included
35prejudice to the investigation of the relevant person’s position as
regards liability for a penalty under paragraph 1, and

(e) references to a pending appeal relating to tax were to a pending
appeal relating to an assessment of liability for a penalty under
paragraph 1.

40Specific modifications of Schedule 36 to FA 2008 as applied

42 (1) The Schedule as it applies for the purpose mentioned in paragraph 40(1)
above has effect with the modifications in sub-paragraphs (2) to (6).

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(2) Paragraph 10A (power to inspect business premises of involved third
parties) has effect as if the reference in sub-paragraph (1) to the position of
any person or class of persons as regards a relevant tax were to the position
of a relevant person as regards liability for a penalty under paragraph 1.

(3) 5Paragraph 47 (right to appeal against penalties under the Schedule) has
effect as if after paragraph (b) (but not as part of that paragraph) there were
inserted the words “but paragraph (b) does not give a right of appeal against
the amount of an increased daily penalty payable by virtue of paragraph
49A.”

(4) 10Paragraph 49A (increased daily default penalty) has effect as if—

(a) in sub-paragraphs (1)(c) and (2) for “imposed” there were
substituted “assessable”;

(b) for sub-paragraphs (3) and (4) there were substituted—

(3) If the tribunal decides that an increased daily penalty
15should be assessable—

(a) the tribunal must determine the day from which
the increased daily penalty is to apply and the
maximum amount of that penalty (“the new
maximum amount”);

(b) 20from that day, paragraph 40 has effect in the
person’s case as if “the new maximum amount”
were substituted for “£60”.

(4) The new maximum amount may not be more than £1,000.”;

(c) in sub-paragraph (5) for “the amount” there were substituted “the
25new maximum amount”.

(5) Paragraph 49B (notification of increased daily default penalty) has effect as
if—

(a) in sub-paragraph (1) for “a person becomes liable to a penalty” there
were substituted “the tribunal makes a determination”;

(b) 30in sub-paragraph (2) for “the day from which the increased penalty
is to apply” there were substituted “the new maximum amount and
the day from which it applies”;

(c) sub-paragraph (3) were omitted.

(6) Paragraph 49C is treated as omitted.

43 35Paragraphs 50 and 51 are excluded from the application of the Schedule for
the purpose mentioned in paragraph 40(1) above.

Declarations about contents of legally privileged communications

44 (1) Subject to sub-paragraph (5), a declaration under this paragraph is to be
treated by—

(a) 40HMRC, or

(b) in any proceedings before a court or tribunal in connection with a
penalty under paragraph 1, the court or tribunal,

as conclusive evidence of the things stated in the declaration.

(2) A declaration under this paragraph is a declaration which—

(a) 45is made by a relevant lawyer,

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(b) relates to one or more communications falling within sub-paragraph
(3), and

(c) meets such requirements as may be prescribed by regulations under
sub-paragraph (4).

(3) 5A communication falls within this sub-paragraph if—

(a) it was made by a relevant lawyer (whether or not the one making the
declaration),

(b) it is legally privileged, and

(c) if it were not legally privileged, it would be relied on by a person for
10the purpose of establishing that that person is not liable to a penalty
under paragraph 1 (whether or not that person is the person who
made the communication or is making the declaration).

(4) The Treasury may by regulations impose requirements as to the form and
contents of declarations under this paragraph.

(5) 15Sub-paragraph (1) does not apply where HMRC or (as the case may be) the
court or tribunal is satisfied that the declaration contains information which
is incorrect.

(6) In this paragraph “a relevant lawyer” means a barrister, advocate, solicitor
or other legal representative communications with whom may be the subject
20of a claim to legal professional privilege or, in Scotland, protected from
disclosure in legal proceedings on the grounds of confidentiality of
communication.

(7) For the purpose of this paragraph, a communication is “legally privileged”
if it is a communication in respect of which a claim to legal professional
25privilege, or (in Scotland) to confidentiality of communications as between
client and professional legal adviser, could be maintained in legal
proceedings.

45 (1) Where a person carelessly or deliberately gives any incorrect information in
a declaration under paragraph 44, the person is liable to a penalty not
30exceeding £5,000.

(2) For the purposes of this paragraph, incorrect information is carelessly given
by a person if the information is incorrect because of a failure by the person
to take reasonable care.

(3) Paragraphs 19(1), 20, 22(1), 37, 38 and 39(1), (2) and (5) apply in relation to a
35penalty under this paragraph as they apply in relation to a penalty under
paragraph 1, subject to the modifications in sub-paragraphs (4) and (5).

(4) In its application to a penalty under this paragraph, paragraph 22(1) has
effect as if for “the relevant time” there were substituted “the end of 12
months beginning with the date on which facts sufficient to indicate that the
40person is liable to the penalty came to the Commissioners’ knowledge”.

(5) In its application to a penalty under this paragraph, paragraph 38(3) has
effect as if the reference to the arrangements to which the penalty relates
were to the arrangements to which the declaration under paragraph 44
relates.

(6) 45In paragraph 44 any reference to a penalty under paragraph 1 includes a
reference to a penalty under this paragraph.

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Part 10 Publishing details of persons who have incurred penalties

Power to publish details

46 (1) The Commissioners may publish information about a person where—

(a) 5the person has incurred a penalty under paragraph 1,

(b) the penalty has become final, and

(c) either the condition in sub-paragraph (2) or the condition in sub-
paragraph (3) is met.

(2) The condition in this sub-paragraph is that, at the time when the penalty
10mentioned in sub-paragraph (1) becomes final, 50 or more other penalties
which are reckonable penalties have been incurred by the person.

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

(a) the amount of the penalty mentioned in sub-paragraph (1), or

(b) the total amount of that penalty and any other penalties incurred by
15that person which are reckonable penalties,

is more than £25,000.

(4) The information that may be published under this paragraph is—

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

(b) 20the person’s address (or registered office),

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

(d) the total number of the penalties in question (that is, the penalty
mentioned in sub-paragraph (1) and any penalties that are
reckonable penalties in relation to that penalty),

(e) 25the total amount of the penalties in question, and

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

(5) The information may be published in any way that the Commissioners
consider appropriate.

(6) 30For the purposes of this Part of this Schedule a penalty becomes “final”—

(a) if the penalty has been assessed and paragraph (b) does not apply, at
the time when the period for any appeal or further appeal relating to
the penalty expires or, if later, when any appeal or final appeal
relating to it is finally determined;

(b) 35if a contract settlement has been made in relation to the penalty, at
the time when the contract is made;

and “contract settlement” here means a contract between the Commissioners
and the person under which the Commissioners undertake not to assess the
penalty or (if it has been assessed) not to take proceedings to recover it.

(7) 40“Reckonable penalty” has the meaning given by paragraph 47.

(8) This paragraph is subject to paragraphs 48 to 50.

47 (1) A penalty is a “reckonable penalty” for the purposes of paragraph 46 if—

(a) it is a penalty under paragraph 1 which becomes final at the same
time as, or before, the penalty mentioned in paragraph 46(1),