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Finance Bill
Schedule 38 — Disclosure of tax avoidance schemes

379

 

Schedule 38

Section 111

 

Disclosure of tax avoidance schemes

Amendments of Part 7 of FA 2004

1          

Part 7 of FA 2004 (disclosure of tax avoidance schemes) is amended as

follows.

5

2     (1)  

Section 308 (duties of promoter) is amended as follows.

      (2)  

In subsection (1)—

(a)   

for “The promoter” substitute “A person who is a promoter in

relation to a notifiable proposal”, and

(b)   

for “any” substitute “the”.

10

      (3)  

In subsection (2)(a), for “a” substitute “the”.

      (4)  

In subsection (3)—

(a)   

for “The promoter” substitute “A person who is a promoter in

relation to notifiable arrangements”, and

(b)   

for “any notifiable” substitute “the notifiable”.

15

      (5)  

For subsection (4) substitute—

“(4)   

Subsection (4A) applies where a person complies with subsection (1)

in relation to a notifiable proposal for arrangements and another

person is—

(a)   

also a promoter in relation to the notifiable proposal or is a

20

promoter in relation to a notifiable proposal for

arrangements which are substantially the same as the

proposed arrangements (whether they relate to the same or

different parties), or

(b)   

a promoter in relation to notifiable arrangements

25

implementing the notifiable proposal or notifiable

arrangements which are substantially the same as notifiable

arrangements implementing the notifiable proposal

(whether they relate to the same or different parties).

(4A)   

Any duty of the other person under subsection (1) or (3) in relation

30

to the notifiable proposal or notifiable arrangements is discharged

if—

(a)   

the person who complied with subsection (1) has notified the

identity and address of the other person to HMRC or the

other person holds the reference number allocated to the

35

proposed notifiable arrangements under section 311, and

(b)   

the other person holds the information provided to HMRC in

compliance with subsection (1).

(4B)   

Subsection (4C) applies where a person complies with subsection (3)

in relation to notifiable arrangements and another person is—

40

(a)   

a promoter in relation to a notifiable proposal for

arrangements which are substantially the same as the

notifiable arrangements (whether they relate to the same or

different parties), or

 
 

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Schedule 38 — Disclosure of tax avoidance schemes

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(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).

(4C)   

Any duty of the other person under subsection (1) or (3) in relation

to the notifiable proposal or notifiable arrangements is discharged

5

if—

(a)   

the person who complied with subsection (3) 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 section 311, and

10

(b)   

the other person holds the information provided to HMRC in

compliance with subsection (3).”

3          

In section 311(1) (arrangements to be given reference number)—

(a)   

after “complies” insert “or purports to comply”,

(b)   

omit “may within 30 days”,

15

(c)   

before “allocate” insert “may within 30 days”, and

(d)   

for “notify the person of that number” substitute “must notify that

number to the person and (where the person is one who has

complied or purported to comply with section 308(1) or (3)) to any

other person—

20

(i)   

who is a promoter in relation to the notifiable

proposal (or arrangements implementing the

notifiable proposal) or the notifiable

arrangements (or proposal implemented by

the notifiable arrangements), and

25

(ii)   

whose identity and address has been notified

to HMRC by the person.”

4          

For section 312 substitute—

“312    

Duty of promoter to notify client of number

(1)   

This section applies where a person who is a promoter in relation to

30

notifiable arrangements is providing (or has provided) services to

any person (“the client”) in connection with the notifiable

arrangements.

(2)   

The promoter must, within 30 days after the relevant date, provide

the client with prescribed information relating to any reference

35

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)   

the notifiable arrangements, or

(b)   

any arrangements substantially the same as the notifiable

40

arrangements (whether involving the same or different

parties).

(3)   

In subsection (2) “the relevant date” means the later of—

(a)   

the date on which the promoter becomes aware of any

transaction involving the client which forms part of the

45

notifiable arrangements, and

(b)   

the date on which the reference number is notified to the

promoter.

 
 

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Schedule 38 — Disclosure of tax avoidance schemes

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(4)   

But where the conditions in subsection (5) are met the duty imposed

on the promoter under subsection (2) to provide the client with

information in relation to notifiable arrangements is discharged.

(5)   

Those conditions are—

(a)   

that the promoter is also a promoter in relation to a notifiable

5

proposal and provides services to the client in connection

with them both,

(b)   

the notifiable proposal and the notifiable arrangements are

substantially the same, and

(c)   

the promoter has provided to the client, in a form and

10

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)   

HMRC may give notice that, in relation to notifiable arrangements

15

specified in the notice, promoters are not under the duty under

subsection (2) after the date specified in the notice.

312A    

Duty of client to notify parties of number

(1)   

This section applies where a person (a “client”) to whom a person

who is a promoter in relation to notifiable arrangements or a

20

notifiable proposal is providing (or has provided) services in

connection with the notifiable arrangements or notifiable proposal

receives prescribed information relating to the reference number

allocated to the notifiable arrangements or proposed notifiable

arrangements.

25

(2)   

The client must, within the prescribed 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

30

(b)   

who might reasonably be expected to gain a tax advantage in

relation to any relevant tax by reason of the arrangements or

proposed arrangements.

(3)   

For the purposes of subsection (1) a tax is a “relevant tax” in relation

to arrangements or arrangements proposed in a proposal of any

35

description if it is prescribed in relation to arrangements or proposals

of that description by regulations under section 306.

(4)   

HMRC may give notice that, in relation to notifiable arrangements or

a notifiable proposal specified in the notice, persons are not under

the duty under subsection (2) after the date specified in the notice.

40

(5)   

The duty under subsection (2) does not apply in prescribed

circumstances.”

5     (1)  

Section 313 (duty of parties to notifiable arrangements to notify HMRC of

number etc) is amended as follows.

      (2)  

In subsection (1)(a), omit “under section 311 by the Board or under section

45

312 by the promoter”.

      (3)  

In subsection (3)—

 
 

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(a)   

for “under subsection (1)” substitute “made by HMRC”,

(b)   

in paragraph (a), for “number and other information” substitute

“information prescribed under subsection (1)”, and

(c)   

in paragraph (b), for “number and other information” substitute

“information prescribed under subsection (1) and such other

5

information as is prescribed”.

      (4)  

Insert at the end—

“(5)   

HMRC may give notice that, in relation to notifiable arrangements

specified in the notice, persons are not under the duty under

subsection (1) after the date specified in the notice.”

10

6          

For section 316 substitute—

“316    

Information to be provided in form and manner specified by HMRC

(1)   

HMRC may specify the form and manner in which information

required to be provided by any of the information provisions must

be provided if the provision is to be complied with.

15

(2)   

The “information provisions” are sections 308(1) and (3), 309(1), 310,

312(2), 312A(2) and 313(1) and (3).”

Amendments of TMA 1970

7     (1)  

Section 98C of TMA 1970 (penalties for failure to comply with duties under

Part 7 of FA 2004) is amended as follows.

20

      (2)  

In subsection (2)—

(a)   

in paragraph (d), for “312(1)” substitute “312(2)”, and

(b)   

after that paragraph (but before the “and”) insert—

“(da)   

section 312A(2) (duty of client to notify parties of

reference number),”.

25

      (3)  

In subsection (3)—

(a)   

for “section 313(1)” substitute “subsection (1) of section 313”, and

(b)   

after “etc.)” insert “or regulations under subsection (3) of that

section”.

      (4)  

In subsection (4), for “313(1)” (in both places) substitute “subsection (1) of

30

section 313 or regulations under subsection (3) of that section”.

Schedule 39

Section 113

 

Time limits for assessments, claims etc.

TMA 1970

1          

TMA 1970 is amended as follows.

35

2          

In section 28C(5)(a) (time limit for determination of tax where no return

delivered and self-assessment superseding determination), for “five years”

substitute “3 years”.

 
 

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Schedule 39 — Time limits for assessments, claims etc.

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3          

In section 29(4) (assessment where loss of tax discovered), for “is attributable

to fraudulent or negligent conduct on the part of” substitute “was brought

about carelessly or deliberately by”.

4          

In section 30B(5) (amendment of partnership statement where loss of tax

discovered), for “is attributable to fraudulent or negligent conduct on the

5

part of” substitute “was brought about carelessly or deliberately by”.

5          

In section 33(1) (claim for error or mistake), for “not later than five years after

the 31st January next following” substitute “not more than 4 years after the

end of”.

6          

In section 33A(2) (error or mistake in partnership return), for “not later than

10

31st January of Year 6” substitute “not more than 4 years after the end of the

year of assessment in question, or in which the relevant period ends,”.

7     (1)  

Section 34 (ordinary time limit for assessments) is amended as follows.

      (2)  

In subsection (1), for “not later than five years after the 31st January next

following” substitute “not more than 4 years after the end of”.

15

      (3)  

Accordingly, in the heading, for “six years” substitute “4 years”.

8          

In section 35 (time limit: income received after year for which it is

assessable), for “within six years after” substitute “not more than 4 years

after the end of”.

9     (1)  

Section 36 (fraudulent or negligent conduct) is amended as follows.

20

      (2)  

For subsection (1) substitute—

“(1)   

An assessment on a person in a case involving a loss of income tax or

capital gains tax brought about carelessly by the person may be

made at any time not more than 6 years after the end of the year of

assessment to which it relates (subject to subsection (1A) and any

25

other provision of the Taxes Acts allowing a longer period).

(1A)   

An assessment on a person in a case involving a loss of income tax or

capital gains tax —

(a)   

brought about deliberately by the person,

(b)   

attributable to a failure by the person to comply with an

30

obligation under section 7, or

(c)   

attributable to arrangements in respect of which the person

has failed to comply with an obligation under section 309, 310

or 313 of the Finance Act 2004 (obligation of parties to tax

avoidance schemes to provide information to Her Majesty’s

35

Revenue and Customs),

   

may be made at any time not more than 20 years after the end of the

year of assessment to which it relates (subject to any provision of the

Taxes Acts allowing a longer period).

(1B)   

In subsections (1) and (1A), references to a loss brought about by the

40

person who is the subject of the assessment include a loss brought

about by another person acting on behalf of that person.”

      (3)  

In subsection (2)—

(a)   

for “Where the person in default” substitute “Where the person

mentioned in subsection (1) or (1A) (“the person in default”)”, and

45

 
 

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Schedule 39 — Time limits for assessments, claims etc.

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(b)   

for “subsection (1) above” substitute “subsection (1A) or (1B)”.

      (4)  

In subsection (3), after “(1)” insert “or (1A)”.

      (5)  

In subsection (4), for “subsection (1)” substitute “subsections (1) and (1A)”.

      (6)  

Accordingly, for the heading substitute “Loss of tax brought about

carelessly or deliberately etc”.

5

10         

In section 37A (effect of assessment where allowances transferred), for the

words from “for the purpose” to “conduct” substitute “in a case falling

within section 36(1) or (1A)”.

11    (1)  

Section 40 (assessment on personal representatives) is amended as follows.

      (2)  

In subsection (1) for “beyond the end of the period of three years beginning

10

with the 31st January next following” substitute “more than 4 years after the

end of”.

      (3)  

In subsection (2)—

(a)   

for the words from the beginning to “died” substitute “In a case

involving a loss of tax brought about carelessly or deliberately by a

15

person who has died (or another person acting on that person’s

behalf before that person’s death)”, and

(b)   

for “before the end of the period of three years beginning with the

31st January next following” substitute “not more than 4 years after

the end of”.

20

12         

In section 43(1) (time limit for making claims), for “five years after the 31st

January next following” substitute “4 years after the end of”.

13         

In section 43A(1)(b) (further assessments: claims etc), for the words from

“attributable” to the end substitute “brought about carelessly or deliberately

by that person or by someone acting on behalf of that person.”

25

14         

In section 43C(1)(b) (consequential claims etc), for “attributable to

fraudulent or negligent conduct on the part of” substitute “brought about

carelessly or deliberately by”.

15         

In section 118 (interpretation), insert at the end—

“(5)   

For the purposes of this Act a loss of tax or a situation is brought

30

about carelessly by a person if the person fails to take reasonable care

to avoid bringing about that loss or situation.

(6)   

Where—

(a)   

information is provided to Her Majesty’s Revenue and

Customs,

35

(b)   

the person who provided the information, or the person on

whose behalf the information was provided, discovers some

time later that the information was inaccurate, and

(c)   

that person fails to take reasonable steps to inform Her

Majesty’s Revenue and Customs,

40

   

any loss of tax or situation brought about by the inaccuracy shall be

treated for the purposes of this Act as having been brought about

carelessly by that person.

(7)   

In this Act, references to a loss of tax or a situation brought about

deliberately by a person include a loss of tax or a situation that arises

45

 
 

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Schedule 39 — Time limits for assessments, claims etc.

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as a result of a deliberate inaccuracy in a document given to Her

Majesty’s Revenue and Customs by or on behalf of that person.”

ICTA

16         

ICTA is amended as follows.

17         

In section 36(2)(b) (claims for repayment of tax on sale of land with right to

5

reconveyance), for “six years” substitute “4 years”.

18         

In section 257AB(9) (elections in respect of married couple’s allowance

(post-5th December 2005 marriages and civil partnerships)), for “on or

before the 5th anniversary of the 31st January next following” substitute “not

more than 4 years after”.

10

19         

In section 257BB(5)(a) (notices in respect of transfer of relief under section

257A or 257AB), for “on or before the fifth anniversary of the 31st January

next following” substitute “not more than 4 years after”.

20         

In section 265(5) (notices in respect of transfer of blind person’s allowance),

for “on or before the fifth anniversary of the 31st January next following”

15

substitute “not more than 4 years after”.

21         

In section 270(4) (claims for repayment of excess paid on surrender etc of life

insurance policy), for “six years” substitute “4 years”.

22         

In section 419(4) (claims for relief from tax where loan surrendered etc), for

“six years” substitute “4 years”.

20

23         

In section 500(4) (additional assessment to corporation tax where petroleum

revenue tax repaid), for “six years” substitute “4 years”.

24         

In section 806(1) (time limit for claims for allowance under arrangements by

way of credit for foreign tax) is amended as follows—

(a)   

in paragraph (a)(i), for “the fifth anniversary of the 31st January next

25

following” substitute “the 4th anniversary of the end of”, and

(b)   

in paragraph (b)(i), for “six years” substitute “4 years”.

25         

In section 806G(3)(a) (claims for the purposes of utilisation of eligible

unrelieved foreign tax), for “six years” substitute “4 years”.

26         

In section 806M(7)(a) (claims for the purpose of carry forward or carry back

30

of unrelieved foreign tax), for “six years” substitute “4 years”.

TCGA 1992

27         

TCGA 1992 is amended as follows.

28         

In section 203(2) (claims in respect of certain capital losses), for “6 years”

substitute “4 years”.

35

29         

In section 253(4A) (claims for relief for loans to traders)—

(a)   

in paragraph (a), for “on or before the fifth anniversary of the 31st

January next following” substitute “not more than 4 years after the

end of”, and

(b)   

in paragraph (b), for “6 years” substitute “4 years”.

40

30         

In section 279(5) (claims in respect of delayed remittance of gain from

disposal of foreign assets)—

 
 

 
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