Finance Bill (HL Bill 123)

continued    Part 9 continued    

(ii)while the notice continues to have effect.

(8)If an old company referred to in sub-paragraph (4)(a) or (b) has a tax liability
on the day on which an individual is given a notice under sub-paragraph (1),
the individual is also jointly and severally liable with that company (and
5with any other individual who is given such a notice) for that liability.

(9)Sub-paragraphs (7) and (8) are subject to paragraph 9 (interaction with
penalties).

(10)For the purposes of this paragraph—

(a)an individual has a “relevant connection” with one of the old
10companies if the individual—

(i)is a director or shadow director of the company, or

(ii)is a participator in the company;

(b)an individual has a “relevant connection” with the new company if
the individual—

(i)15is a director or shadow director of the company,

(ii)is a participator in the company, or

(iii)is concerned, whether directly or indirectly, or takes part, in
the management of the company.

(11)A notice under sub-paragraph (1) must—

(a)20set out the reasons for which it appears to the officer giving the notice
that conditions A to D are met;

(b)state the effect of the notice;

(c)specify any amounts for which the individual is liable under sub-
paragraph (7)(a) or (8);

(d)25offer the individual a review of the decision to give the notice, and
explain the effect of paragraph 11 (right of review);

(e)explain the effect of paragraph 13 (right of appeal).

(12)The amount of the individual’s liability under sub-paragraph (7)(a) or (8) is
taken to be the amount specified under sub-paragraph (11)(c).

30For provision under which the amount so specified may be varied, see—

(a)paragraph 10 (modification etc),

(b)paragraphs 11 and 12 (review), and

(c)paragraphs 13 and 14 (appeal).

4(1)The Treasury may by regulations made by statutory instrument—

(a)35amend paragraph 3(6)(b)(i) by substituting a different amount for
the one that is for the time being specified there;

(b)amend paragraph 3(6)(b)(ii) by substituting a different percentage
for the one that is for the time being specified there.

(2)A statutory instrument containing regulations under this paragraph—

(a)40is subject to annulment in pursuance of a resolution of the House of
Commons, if the regulations increase the specified amount by no
more than is necessary to reflect changes in the value of money;

(b)otherwise, may not be made unless a draft of the instrument has been
laid before and approved by a resolution of the House of Commons.

Cases involving penalty for facilitating avoidance or evasion

5(1)An authorised HMRC officer may give a notice under this sub-paragraph to
an individual if it appears to the officer that conditions A to D are met.

(2)Condition A is that—

(a)5a penalty under any of the specified provisions (see sub-paragraph
(6)) has been imposed on a company by HMRC, or

(b)proceedings have been commenced before the First-tier Tribunal for
a penalty under any of those provisions to be imposed on a company.

(3)Condition B is that—

(a)10the company is subject to an insolvency procedure, or

(b)there is a serious possibility of the company becoming subject to an
insolvency procedure.

(4)Condition C is that the individual was a director or shadow director of the
company, or a participator in it, at the time of any act or omission in respect
15of which—

(a)the penalty was imposed, or

(b)the proceedings for the penalty were commenced.

(5)Condition D is that there is a serious possibility that some or all of the
penalty will not be paid.

(6)20The specified provisions are—

(a)section 98C(1) of the TMA 1970 (penalties for breach of certain
obligations relating to disclosure of tax avoidance schemes by
promoters etc of schemes);

(b)paragraphs 2 and 3 of Schedule 35 to FA 2014 (promoters of tax
25avoidance schemes: penalties);

(c)paragraph 1 of Schedule 20 to FA 2016 (penalties for enablers of
offshore tax evasion or non-compliance);

(d)Part 1 of Schedule 16 to F(No.2)A 2017 (penalties for enablers of
defeated tax avoidance);

(e)30Part 2 of Schedule 17 to that Act (penalties for breach of certain
obligations relating to disclosure of tax avoidance schemes by
promoters etc of schemes).

(7)A notice under sub-paragraph (1) must—

(a)specify the company to which the notice relates;

(b)35set out the reasons for which it appears to the officer that conditions
A to D are met;

(c)state the effect of the notice;

(d)offer the individual a review of the decision to give the notice, and
explain the effect of paragraph 11 (right of review);

(e)40explain the effect of paragraph 13 (right of appeal).

(8)It must also—

(a)specify the amount of the penalty, if sub-paragraph (2)(a) applies;

(b)if sub-paragraph (2)(b) applies, indicate that the amount will be
specified in a further notice.

(9)Once the existence and amount of the penalty have been established in a case
where sub-paragraph (2)(b) applies, an authorised HMRC officer must give
a further notice specifying that amount.

(10)A notice under sub-paragraph (9) must—

(a)5be given to the individual to whom the notice under sub-paragraph
(1) was given;

(b)offer the individual a review of the decision to give the notice, and
explain the effect of paragraph 11 (right of review);

(c)explain the effect of paragraph 13 (right of appeal).

(11)10An individual who is given a notice under sub-paragraph (1) is jointly and
severally liable with the company (and with any other individual who is
given such a notice) for the amount of the penalty.

(12)The amount of the individual’s liability under sub-paragraph (11) is taken to
be the amount specified under sub-paragraph (8)(a) or (9).

15For provision under which the amount so specified may be varied, see—

(a)paragraph 10 (modification etc),

(b)paragraphs 11 and 12 (review), and

(c)paragraphs 13 and 14 (appeal).

“Tax-avoidance arrangements”

6(1)20In this Schedule “tax-avoidance arrangements” means—

(a)arrangements in respect of which a notice has been given under
paragraph 12 of Schedule 43 to FA 2013, paragraph 8 or 9 of Schedule
43A to that Act or paragraph 8 of Schedule 43B to that Act (notice of
final decision after considering opinion of GAAR Advisory Panel)
25stating that a tax advantage is to be counteracted under the general
anti-abuse rule;

(b)arrangements in respect of which a notice has been given under
section 204 of FA 2014 (follower notice) and not withdrawn;

(c)DOTAS arrangements within the meaning given by subsection (5) of
30section 219 of that Act (circumstances in which an accelerated
payment notice may be given);

(d)arrangements to which HMRC have allocated a reference number
under paragraph 22 of Schedule 17 to F(No.2)A 2017 (disclosure of
tax avoidance schemes: VAT and other indirect taxes) or in respect of
35which the promoter must provide prescribed information under
paragraph 23 of that Schedule;

(e)arrangements in relation to which a relevant tribunal order has been
made;

(f)arrangements that—

(i)40are substantially the same as arrangements in relation to
which a relevant tribunal order has been made (whether
involving the same or different parties), and

(ii)have as their promoter the person specified as the promoter
in the application for the order.

(2)45For the purposes of sub-paragraph (1)(e) and (f) a relevant tribunal order is
made in relation to arrangements if the tribunal—

(a)makes an order under—

(i)subsection (1)(a) of section 314A of FA 2004 (order to
disclose), or

(ii)paragraph 4(1)(a) of Schedule 17 to F(No.2)A 2017
(corresponding provision for indirect taxes),

5that a proposal for the arrangements is notifiable;

(b)makes an order under—

(i)subsection (1)(b) of that section, or

(ii)paragraph 4(1)(b) of that Schedule,

that the arrangements are notifiable;

(c)10makes an order under—

(i)subsection (1)(a) of section 306A of FA 2004 (doubt as to
notifiability), or

(ii)paragraph 5(1)(a) of Schedule 17 to F(No.2)A 2017,

that a proposal for the arrangements is to be treated as notifiable;

(d)15makes an order under—

(i)subsection (1)(b) of that section, or

(ii)paragraph 5(1)(b) of that Schedule,

that the arrangements are to be treated as notifiable.

(3)Section 307 of FA 2004 (meaning of “promoter”) applies for the purposes of
20sub-paragraph (1)(f)(ii).

In that section as it so applies—

(a)references to a notifiable proposal are to be read as references to the
proposal mentioned in sub-paragraph (2)(a) or (c);

(b)references to notifiable arrangements are to be read as references to
25the arrangements mentioned in sub-paragraph (2)(b) or (d).

“Tax-evasive conduct”

7In this Schedule “tax-evasive conduct” means—

(a)giving to HMRC any deliberately inaccurate return, claim, document
or information, or

(b)30deliberately failing to comply with an obligation specified in the
Table in paragraph 1 of Schedule 41 to FA 2008 (obligations to notify
liability to tax, etc).

“Insolvency procedure” etc

8(1)For the purposes of this Schedule a company is “subject to an insolvency
35procedure” if—

(a)it is undergoing, or has undergone, a relevant winding up (see sub-
paragraphs (2) and (3));

(b)it is in administration (see sub-paragraph (4)) or is a company to
which sub-paragraph (5) applies,

(c)40it is in receivership (see sub-paragraph (6)),

(d)a relevant scheme (see sub-paragraph (7)) has effect in relation to it,
or

(e)its name has been struck off the register under section 1000 or 1003
of the Companies Act 2006.

(2)45A company is “undergoing a relevant winding up” for the purposes of this
paragraph if—

(a)it is being wound up under—

(i)the Insolvency Act 1986 (“the 1986 Act”), or

(ii)the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405
(N.I. 19)) (“the 1989 Order”),

5otherwise than by way of a members’ voluntary winding up,

(b)it is being wound up by way of a members’ voluntary winding up
under the 1986 Act, or the 1989 Order, and the period of 12 months
beginning with the day on which that winding up commenced has
expired without the company having paid its debts in full together
10with interest at the official rate, or

(c)a corresponding situation to a winding up under the 1986 Act or the
1989 Order exists in relation to the company under the law of a
country or territory outside the United Kingdom.

(3)A company has “undergone a relevant winding up” for the purposes of this
15paragraph if—

(a)it has been wound up under the 1986 Act, or the 1989 Order,
otherwise than by way of a members’ voluntary winding up,

(b)it has been wound up by way of a members’ voluntary winding up
under the 1986 Act, or the 1989 Order, without having paid its debts
20in full together with interest at the official rate, or

(c)it has been wound up or dissolved under the law of a country or
territory outside the United Kingdom.

(4)A company is “in administration” for the purposes of this paragraph if—

(a)it is in administration within the meaning given by paragraph 1 of
25Schedule B1 to the 1986 Act or paragraph 2 of Schedule B1 to the 1989
Order, or

(b)there is in force in relation to it under the law of a country or territory
outside the United Kingdom any appointment corresponding to the
appointment of an administrator under either of those Schedules.

(5)30This sub-paragraph applies to a company in respect of which—

(a)a notice under sub-paragraph (1) of paragraph 84 of Schedule B1 to
the 1986 Act (moving from administration to dissolution) has been
registered under sub-paragraph (3) of that paragraph, or

(b)a notice under sub-paragraph (1) of paragraph 85 of Schedule B1 to
35the 1989 Order (corresponding provision for Northern Ireland) has
been registered under sub-paragraph (3) of that paragraph,

unless an order has been made in relation to that notice under sub-
paragraph (7)(c) of that paragraph.

(6)A company is “in receivership” for the purposes of this paragraph if—

(a)40there is (or, but for a temporary vacancy, would be) a person who in
relation to the company—

(i)is acting as administrative receiver in accordance with
Chapter 1 of Part 3 of the 1986 Act or Part 4 of the 1989 Order,
or

(ii)45is acting as receiver by virtue of section 51 of the 1986 Act, or

(b)a corresponding situation under the law of a country or territory
outside the United Kingdom exists in relation to the company.

(7)In this paragraph “relevant scheme” means a compromise or arrangement—

(a)under Part 1 of the 1986 Act or Part 2 of the 1989 Order (company
voluntary arrangements),

(b)under Part 26 of the Companies Act 2006 (arrangements and
reconstructions), or

(c)5under any corresponding provision of a country or territory outside
the United Kingdom.

Interaction with penalties

9The amount for which an individual is jointly and severally liable under
paragraph 2 or 3 in respect of a company’s tax liability is reduced by the
10amount of any penalty that the individual has paid in relation to that liability
under any of the following provisions—

(a)section 61 of VATA 1994 (VAT evasion: liability of directors etc);

(b)section 28 of FA 2003 (liability of directors etc where body corporate
liable to penalty for evasion of customs duty etc);

(c)15paragraph 19 of Schedule 24 to FA 2007 (liability of company officer
where company liable to penalty under that Schedule);

(d)paragraph 22 of Schedule 41 to FA 2008 (liability of company officer
where company liable to penalty under that Schedule).

Withdrawal or modification of notice

10(1)20HMRC must withdraw a joint liability notice given to an individual, by
giving a further notice to the individual, if—

(a)any of the relevant conditions were not met when the joint liability
notice was given, or

(b)it is not necessary for the protection of the revenue for the notice to
25continue to have effect.

(2)In this Schedule “relevant conditions” means—

(a)conditions A to E in paragraph 2, in the case of a notice under
paragraph 2(1);

(b)conditions A to D in paragraph 3, in the case of a notice under
30paragraph 3(1);

(c)conditions A to D in paragraph 5, in the case of a notice under
paragraph 5(1).

(3)HMRC must withdraw a notice given to an individual under paragraph 3(1),
by giving a further notice to the individual, if—

(a)35at least one of the old companies (see paragraph 3(3)) is a company
that—

(i)became subject to an insolvency procedure on the basis that
it was being wound up by way of a members’ voluntary
winding up, and

(ii)40pays its debts in full, together with interest at the official rate,
after the end of the period of 12 months beginning with the
day on which the members’ voluntary winding up
commenced but before the end of that winding up, and

(b)condition A in paragraph 3 would not have been met if that
45company, or each of them (if more than one), had not been subject to
an insolvency procedure.

(4)For the purposes of sub-paragraph (3)(a)(ii), the end of a members’
voluntary winding up of a company happens when—

(a)the company is dissolved in pursuance of the members’ voluntary
winding up, or

(b)5the members’ voluntary winding up becomes a creditors’ voluntary
winding up.

(5)HMRC may withdraw a notice given to an individual under this Schedule,
by giving a further notice to the individual, if they think it appropriate to do
so even though sub-paragraph (1) or (3) does not apply.

(6)10Where an individual has been given a joint liability notice, HMRC may by
further notice to the individual vary an amount specified—

(a)under paragraph 2(9)(a) or (10), paragraph 3(11)(c) or paragraph
5(8)(a) or (9), or

(b)under this sub-paragraph,

15if it seems to them that the amount so specified is, or has become, too much
or not enough.

(7)Subject to sub-paragraph (8), a joint liability notice that is withdrawn under
this paragraph is of no effect.

(8)Where a joint liability notice is withdrawn under sub-paragraph (1)(b) or (3),
20the withdrawal of the notice does not give the individual a right to recover
any amount that the individual has already paid to HMRC in response to the
notice.

Right of review

11(1)Where—

(a)25an individual is given a joint liability notice or a notice under
paragraph 2(10) or 5(9), and

(b)before the end of the permitted period the individual communicates
to HMRC written acceptance of the offer of a review contained in the
notice,

30HMRC must review the decision to give the notice.

(2)For the purposes of this paragraph “the permitted period” begins with the
day on which the notice mentioned in sub-paragraph (1)(a) is given, and
ends—

(a)with the 30th day after that day, or

(b)35if HMRC give the individual a further notice specifying a later day
(an “extension notice”), with that day.

(3)An extension notice—

(a)must be given before the permitted period would (but for the notice)
have expired;

(b)40must specify a day that is at least 30 days after the date of the
extension notice;

(c)may be given even if one or more extension notices have already
been given.

(4)If the individual does not accept the offer of a review within the permitted
45period, HMRC must nevertheless review the decision in question if—

(a)after the end of the permitted period, the individual gives HMRC a
notice requesting a review out of time, and

(b)HMRC are satisfied that the individual had a reasonable excuse for
not accepting the offer within the permitted period, and that the
5individual made the request without unreasonable delay after the
excuse ceased to apply.

(5)HMRC are not required to undertake or continue a review under this
paragraph if the individual appeals under paragraph 13 against the notice in
question.

10Reviews under paragraph 11

12(1)This paragraph applies where HMRC are required to undertake a review
under paragraph 11.

(2)The nature and extent of the review are to be such as appear appropriate to
HMRC in the circumstances.

(3)15HMRC must, in particular, have regard to steps taken before the beginning
of the review—

(a)by HMRC in reaching the decision, and

(b)by any person in seeking to resolve disagreement about the decision.

(4)The review must take account of any representations made by the individual
20at a stage which gives HMRC a reasonable opportunity to consider them.

(5)But it is not open to the individual to challenge the existence or amount of
any tax liability of a company to which the joint liability notice in question
relates.

(6)At the conclusion of the review—

(a)25HMRC must set aside the notice to which the review relates if it
appears to them that—

(i)any of the relevant conditions were not met when the notice
was given, or

(ii)it is not necessary for the protection of the revenue for the
30notice to continue to have effect;

(b)HMRC must set aside the notice or vary an amount specified under
paragraph 2(9)(a), 3(11)(c) or 5(8)(a), or (as the case may be)
paragraph 2(10) or 5(9), if it appears to HMRC that the amount
specified is incorrect;

(c)35otherwise, HMRC must uphold the notice.

(7)HMRC must give the individual notice of the conclusions of the review and
their reasoning—

(a)within the period of 45 days beginning with the relevant date, or

(b)within any other period that HMRC and the individual may agree.

(8)40In sub-paragraph (7) “relevant date” means—

(a)the date on which HMRC received the individual’s notification
accepting the offer of a review (in a case falling within paragraph
11(1)), or

(b)the date on which HMRC decided to undertake the review (in a case
45falling within paragraph 11(4)).

(9)Where HMRC do not give notice of the conclusions within the time period
specified in sub-paragraph (7)—

(a)the notice to which the review relates is treated as upheld, and

(b)HMRC must notify the individual accordingly.

(10)5Where a joint liability notice is set aside under sub-paragraph (6)(a)(ii), the
setting aside of the notice does not give the individual a right to recover any
amount that the individual has already paid to HMRC in response to the
notice.

Right of appeal

13(1)10An individual who has been given—

(a)a joint liability notice, or

(b)a notice under paragraph 2(10) or 5(9),

may appeal against the notice to the First-tier Tribunal.

(2)An appeal under this paragraph must be made before—

(a)15the end of the period of 30 days beginning with the day on which the
notice appealed against is given, or

(b)if later, the end of the permitted period (within the meaning given by
paragraph 11(2)).

This is subject to sub-paragraphs (3) to (5).

(3)20Where HMRC are required to undertake a review under paragraph 11 in
respect of a notice, any appeal in respect of that notice must be made within
the period of 30 days beginning with the date of the notice under paragraph
12(7) communicating the conclusions of the review (“the conclusion date”).

(4)Where HMRC are requested to undertake a review in accordance with
25paragraph 11(4)—

(a)no appeal may be made unless HMRC have notified the individual
as to whether or not a review will be undertaken;

(b)if HMRC have notified the individual that a review will be
undertaken, any appeal must be made within the period of 30 days
30beginning with the conclusion date;

(c)if HMRC have notified the individual that a review will not be
undertaken, an appeal may be made only if the tribunal gives
permission.

(5)Where paragraph 12(9) applies, any appeal must be made—

(a)35after the end of the period specified in paragraph 12(7), and

(b)before the end of the period of 30 days beginning with the date of the
notice under paragraph 12(9)(b).

(6)An appeal may be made after the end of the period specified in sub-
paragraph (2), (3), (4)(b) or (5)(b) if the tribunal gives permission.

40Appeals under paragraph 13

14(1)On an appeal under paragraph 13—

(a)the tribunal must set aside the notice appealed against if it appears
to the tribunal that—

(i)any of the relevant conditions were not met when the notice
45was given, or

(ii)it is not necessary for the protection of the revenue for the
notice to continue to have effect;

(b)the tribunal must set aside the notice or vary an amount specified
under paragraph 2(9)(a), 3(11)(c) or 5(8)(a), or (as the case may be)
5paragraph 2(10) or 5(9), if it appears to the tribunal that the amount
specified is incorrect;

(c)otherwise, the tribunal must uphold the notice.

(2)It is not open to an individual appealing under paragraph 13 to challenge the
existence or amount of any tax liability of a company to which the joint
10liability notice in question relates.

(But see paragraph 15, under which the individual may in certain
circumstances pursue an appeal in place of the company.)

(3)Where a notice is set aside under sub-paragraph (1)(a)(ii), the setting aside
of the notice does not give the individual a right to recover any amount that
15the individual has already paid to HMRC in response to the notice.

Appeal in respect of liability of company

15(1)Where—

(a)an individual is made jointly and severally liable by a joint liability
notice for a tax liability of a company,

(b)20an appeal by the company in respect of that liability has been
commenced (whether before or after the joint liability notice is given)
but has not been determined, and

(c)the company is subject to an insolvency procedure,

the individual is entitled to be a party to the proceedings, and may continue
25the appeal if the company is unable or unwilling to do so.

(2)Where—

(a)an individual is made jointly and severally liable by a joint liability
notice for a tax liability of a company, and

(b)the company is subject to an insolvency procedure and does not
30make an appeal in respect of that liability,

an appeal in respect of that liability may be made in the name of the
individual.

(3)An appeal made under sub-paragraph (2) may be commenced within the
period of 30 days beginning with the day on which the joint liability notice
35is given (even if a time limit for the company to appeal has expired).

Proceedings for determination of penalty to be imposed on company

16Where an individual is given a notice under paragraph 5(1) in a case where
paragraph 5(2)(b) applies (proceedings commenced before First-tier
Tribunal for penalty to be imposed on company), the individual is entitled
40to be a party to the proceedings referred to in that provision.

Cases where company has ceased to exist

17(1)Where a joint liability notice is given to an individual at a time when the
company to which the notice relates has ceased to exist, a reference in this
Schedule to the individual being jointly and severally liable with the
45company for an amount is to be read as—