Finance Bill (HC Bill 116)

(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 BillPage 632

• 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) 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), 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) In the case of a failure to comply with paragraph 11(1), 12(1), 17(2), 18(2) or
19, the amount of the 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
35level which appears appropriate for deterring the person, or other persons,
from 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
40likely to have been received, by the promoter in connection with the
notifiable 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 all relevant considerations, the
penalty is to be of such amount not exceeding £1 million as appears
10appropriate having regard to those considerations.

41 (1) This paragraph applies where a failure to comply with a provision
mentioned in paragraph 39(2) concerns a proposal or arrangements in
respect of which an order has been made under paragraph 4 or 5.

(2) The amounts specified in paragraph 39(1)(a)(i) and (b) are increased to
15£5,000 in relation to days falling after the end of the period of 11 days
beginning with the day on which the order is made.

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);

(c) 20the period for the time being specified in paragraph 41(2);

(d) the sum for the time being specified in paragraph 41(2).

(2) Regulations under this paragraph may include incidental or transitional
provision.

43 Where it appears to an officer of Revenue and Customs that—

(a) 25a penalty under paragraph 39(1)(a) has been imposed in a case where
the maximum penalty is set by paragraph 39(1)(a)(i), and

(b) the maximum penalty was calculated on the basis that the initial
period began with a day later than that which the officer considers to
be the relevant day,

30an 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) paragraph 26(1), or

(b) 35regulations 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) If the person has previously failed to comply with paragraph 26(1) or
40regulations 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
previous 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

Part 3 40Consequential amendments

VATA 1994

51 In section 77(4A) of VATA 1994 (cases in which the time allowed for
assessment is 20 years), in paragraph (d) after “11A” insert “or an obligation
under paragraph 17(2) or 18(2) of Schedule 17 to FA 2017”.

Promoters of tax avoidance schemes

52 Part 5 of FA 2014 (promoters of tax avoidance schemes) is amended as
follows.

53 (1) Section 281A (VAT: meaning of “tax advantage”) is amended as follows.

(2) 5In the heading after “VAT” insert “and other indirect taxes”.

(3) In subsection (1)—

(a) in paragraph (a) after “VAT” insert “and other indirect taxes”, and

(b) in paragraph (b) for the words from “in paragraph 1” to the end
substitute “for VAT in paragraph 6, and for other indirect taxes in
10paragraph 7, of Schedule 17 to FA 2017 (disclosure of tax avoidance
schemes: VAT and other indirect taxes).”

(4) In subsection (3) after “value added tax” (in both places) insert “or other
indirect taxes”.

(5) After subsection (3) insert—

“(4) 15In this section “indirect tax” has the same meaning as in Schedule 17
to FA 2017.””

54 (1) Schedule 34A (defeated arrangements) is amended as follows.

(2) In paragraph 2(4) after “”schemes)” insert “or paragraph 22 of Schedule 17
to FA 2017 (disclosure of avoidance schemes: VAT and other indirect taxes).

(3) 20In paragraph 14—

(a) in sub-paragraph (1)(a) after “VAT” insert “or other indirect tax”, and

(b) in sub-paragraphs (1)(a) and (b), (2) and (3) omit “taxable”.

(4) After paragraph 26 insert—

““Disclosable VAT or other indirect tax arrangements”

26A (1) 25For the purposes of this Schedule arrangements are “disclosable
VAT or other indirect tax arrangements” at any time if at that
time—

(a) the arrangements are disclosable Schedule 11A
arrangements, or

(b) 30sub-paragraph (2) applies.

(2) This sub-paragraph applies if a person—

(a) has provided information in relation to the arrangements
under paragraph 12(1), 17(2) or 18(2) of Schedule 17 to FA
2017, or

(b) 35has failed to comply with any of those provisions in
relation to the arrangements.

(3) But for the purposes of this Schedule arrangements in respect of
which HMRC have given notice under paragraph 23(6) of that
Schedule (notice that promoters not under duty to notify client of
40reference number) are not to be regarded as disclosable VAT or
other indirect tax arrangements.

(4) For the purposes of sub-paragraph (2) a person who would be
required to provide information under paragraph 12(1) of that
Schedule—

(a) but for the fact that the arrangements implement a
5proposal in respect of which notice has been given under
paragraph 11(1) of that Schedule, or

(b) but for paragraph 13, 14 or 15 of that Schedule,

is treated as providing the information at the end of the period
referred to in paragraph 12(1).””

(5) 10In the heading before paragraph 27, after ““disclosable” insert “Schedule
11A”.

(6) In paragraph 27—

(a) for “this Schedule” substitute “paragraph 26A”, and

(b) after ““disclosable” insert “Schedule 11A”.

(7) 15In the heading before paragraph 28 for “and 27” substitute “to 27”.

(8) In paragraph 28(1) after “26(1)(a)” insert “26A(2)(a)

Serial tax avoidance

55 (1) Schedule 18 to FA 2016 (serial tax avoidance) is amended as follows.

(2) In paragraph 4 (meaning of “tax”)—

(a) 20number the current text as sub-paragraph (1) of that paragraph,

(b) in that sub-paragraph (1), in paragraph (j) after “VAT” insert” “and
indirect taxes”, and

(c) after that sub-paragraph (1) insert—

“(2) For the purposes of this Schedule “indirect tax” means any
25of the following—

• insurance premium tax

• general betting duty

• pool betting duty

• remote gaming duty

• 30machine games duty

• gaming duty

• lottery duty

• bingo duty

• air passenger duty

• 35hydrocarbon oils duty

• tobacco products duty

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

• soft drinks industry levy

• aggregates levy

• 40landfill tax

• climate change levy

• customs duties.”

(3) Before paragraph 9 (meaning of “disclosable VAT arrangements”) insert—

“8A (1) For the purposes of this Schedule arrangements are “disclosable
VAT arrangements” at any time if at that time sub-paragraph (2)
or (3) applies.

(2) 5This sub-paragraph applies if the arrangements are disclosable
Schedule 11A VAT arrangements (see paragraph 9).

(3) This paragraph applies if—

(a) the arrangements are notifiable arrangements for the
purposes of Schedule 17 to FA 2017,

(b) 10the main benefit, or one of the main benefits that might be
expected to arise from the arrangements is the obtaining of
a tax advantage in relation to VAT (within the meaning of
paragraph 6 of that Schedule), and

(c) a person—

(i) 15has provided information about the arrangements
under paragraph 12(1), 17(2) or 18(2) of that
Schedule, or

(ii) has failed to comply with any of those provisions in
relation to the arrangements.

(4) 20But for the purposes of this Schedule arrangements in respect of
which HMRC have given notice under paragraph 23(6) of
Schedule 17 (notice that promoters not under duty to notify client
of reference number) are not to be regarded as “disclosable VAT
arrangements”.

(5) 25For the purposes of sub-paragraph (3)(c) a person who would be
required to provide information under paragraph 12(1) of
Schedule 17 to FA 2017—

(a) but for the fact that the arrangements implement a
proposal in respect of which notice has been given under
30paragraph 11(1) of that Schedule, or

(b) but for paragraph 13, 14 or 15 of that Schedule,

is treated as providing the information at the end of the period
referred to in paragraph 12(1).””

(4) In the heading before paragraph 9 after ““Disclosable” insert “Schedule
3511A”.

(5) In paragraph 9—

(a) for “this Schedule” substitute “paragraph 8A”, and

(b) after ““disclosable” insert “Schedule 11A”.

(6) After paragraph 9 insert—

40““Disclosable indirect tax arrangements”

9A (1) For the purposes of this Schedule arrangements are “disclosable
indirect tax arrangements” at any time if at that time—

(a) the arrangements are notifiable arrangements for the
purposes of Schedule 17 to FA 2017,

(b) 45the main benefit, or one of the main benefits that might be
expected to arise from the arrangements is the obtaining of