Search Legislation

Finance Act 2014

Details of the Sections


2.Section 234 is the first of a series of sections defining terms in the legislation.  It defines the tax avoidance schemes classed as “relevant arrangements” and “relevant proposals” in relation to which a person may be a promoter.  “Relevant arrangements” enable, or might be expected to enable, someone to obtain a tax advantage.  Obtaining the tax advantage must be the main benefit or one of the main benefits of entering into the arrangements.  “Tax advantage” is defined in subsection (3).  “Arrangements” is widely defined to include agreements, schemes, arrangements and understanding, whether or not they are legally enforceable.  “Relevant proposal” is a proposal for something which, if entered into, would be relevant arrangements and may relate to a single person or to a number of people.

3.Section 235 defines “promoter” in similar terms to sections 306 and 308 Finance Act 2004 (Disclosure of Tax Avoidance Schemes), but is not restricted to providers of tax or banking services.  A person is a promoter only in respect of relevant proposals and relevant arrangements.  Subsection (2) provides that a person is a promoter in respect of a relevant proposal if, at any time, the person is responsible for the design of the proposed arrangements, makes a “firm approach” to someone with a view to making the proposal available for implementation by that person or another, or makes the relevant proposal available for implementation by others.  Subsection (3) of section 235 defines a promoter in relation to relevant arrangements as a person who at any time is a promoter for a relevant proposal which becomes the relevant arrangements, or is responsible for the design, organisation or management of the arrangements.

4.Subsections (4) and (5) of section 235 define “firm approach”.  This is concerned with communicating information about the relevant proposal, at a stage when it has been “substantially designed” and includes an explanation of the expected tax advantage, to another person with a view to that person entering into the arrangements.  Subsection (5) of section 235 explains when proposed arrangements have been “substantially designed”.  This is when the transactions forming part of the proposed arrangements have been sufficiently developed, so that someone wanting to obtain the tax advantage could enter into those or similar transactions.

5.Subsections (6) and (7) contain a power to allow the definition of promoter to be amended to exclude persons from being a promoter in prescribed circumstances with retrospective effect.  Regulations to exclude from the definition of promoter those providing advice on the commercial aspects of a proposal or arrangement are planned for later in 2014 with retrospective effect to Royal Assent.

6.Section 236 defines intermediary for the purposes of these provisions.  There are three differences between the definition of promoter and intermediary. The first two are that the promoter definition includes the design of the proposed arrangements and making the relevant proposal available for implementation by others.  The third difference is that a person who explains about the tax advantage is a promoter; an intermediary for the purposes of this legislation does not.  Instead an intermediary is defined as a person who communicates information about the relevant proposal to another person with a view to that other person entering into the proposed arrangements.  Anyone who does this is an intermediary unless they are also a promoter.

Conduct notices

7.Section 237 describes the circumstances under which an authorised officer can issue a conduct notice and introduces Schedule 34 which includes the threshold conditions.  A conduct notice can be issued if the promoter has, within the previous three years, triggered a threshold condition, and there is not an extant conduct notice or monitoring notice.   The threshold conditions are described in the related Schedule. Subsections (2), (4) and (5) allow the authorised officer to ignore insignificant breaches of threshold conditions or cases where little tax is at risk. However a breach of a threshold condition cannot be considered “insignificant” if it is one of those listed in subsection (6).

8.Section 238 is concerned with the contents of the conduct notice.  When a conduct notice is issued the recipient must comply with the conditions specified in the notice (subsection (1)).  Subsection (2) allows the potential recipient an opportunity to comment on the proposed terms of the notice before it is issued.  Subsection (3) lists the purposes for which issues can be included as conditions in the conduct notice.  Each conduct notice will be tailored to the promoter. For example, if the promoter does not provide sufficient information about its proposals and arrangements to its clients there may be a condition in the conduct notice that it does so.  If the promoter requires clients to enter into confidentiality agreements or contribute to a fighting fund while preventing them from settling their cases independently with HMRC, then a condition to address that may be included in the conduct notice.

9.Subsections (4) and (5) provide further explanation of the terms “adequate information” and “specified disclosure provision” in subsection (3).  Subsection (6) enables a conduct notice to be issued to a promoter in a personal capacity or on a partnership.  Subsection (8) includes a power to amend the definition of disclosure provisions for subsection (5) by regulation.

10.Section 239 provides definitions of “adequate”, “client” and “promotes”.

11.If a promoter abides by its conduct notice so that some conditions are no longer required or there is evidence that the underlying reason for the conduct notice has been addressed Section 240 allows an authorised officer of HMRC to amend or withdraw the conduct notice.  Section 241 provides that the maximum length for a conduct notice is two years and provides that a conduct notice ceases to have effect once the promoter is subject to a monitoring notice.

Monitoring notices: procedure and publication

12.If a promoter fails to comply with a conduct notice then section 242 requires the authorised officer to apply to the Tribunal for approval to give a monitoring notice. A monitoring notice can only be issued if approval is granted by the Tribunal.  The promoter must be given notice of the application.  If the breach of the conduct notice related to the provision of information to customers or intermediaries, or to the promoter’s duty to supply information to HMRC, is insignificant then the authorised officer is not under a duty to apply to the Tribunal for approval and consequently a monitoring notice is not issued (subsection (3)).  The monitoring notice will state the reasons for its issue, in particular the condition in the conduct notice that the promoter breached.  An effect of a monitoring notice is that the promoter may be subject to specific information notices with penalties for non-compliance.

13.Section 243 provides that the Tribunal may only approve a monitoring notice if it is satisfied that it is justified.  The promoter has the opportunity to make representations to the Tribunal including representations about the reasonableness of the conditions in the conduct notice which HMRC considers it to have breached.  The Tribunal may amend the proposed monitoring notice. Subsection (3) allows the monitored promoter to include in its representations to the Tribunal about the proposed monitoring notice its view that a condition in the conduct notice was unreasonable.  If the Tribunal decides that a condition in the conduct notice is unreasonable subsections (3) and (4) operate so that the Tribunal will not approve the giving of a monitoring notice for a breach of only that condition.  If the proposed monitoring notice identifies a breach of more than one condition of the conduct notice then the Tribunal will only refuse to approve the giving of a monitoring notice if it holds that all of the conditions were unreasonably imposed (assuming it is accepted that there was a breach on the facts and that the giving of the monitoring notice would be a justified response to that breach).

14.Section 244 describes the content of the monitoring notice and how it is issued.  The monitoring notice is issue by an authorised officer of HMRC.  All monitoring notices must explain the effect of the monitoring notice (including the date it takes effect) and the right of the recipient to request the withdrawal of the monitoring notice.  In addition a monitoring notice being issued for the first time must include the condition or conditions of the conduct notice that it is has been determined that the promoter has breached.  If them monitoring notice is a replacement monitoring notice then it must refer to the original monitoring notice.  A promoter who is subject to a monitoring notice is referred to as a monitored promoter.

15.Section 245 provides the monitored promoter with the right to request that the monitoring notice should be withdrawn. For example the promoter may consider that it has complied with all of its obligations as a monitored promoter and has satisfied all the conditions of the preceding conduct notice, so that the monitoring notice is no longer necessary.  Subsection (2) ensures that all the consequences of a monitoring notice runs for at least 12 months.  An authorised officer has 30 days to respond to the request and when considering whether or not to reject the request, takes into account the behaviour of the promoter while it was being monitored (subsection (5)), the promoter’s likely future behaviour and its compliance with this Part.  In addition the authorised officer can, when deciding to withdraw the notice, decide to issue a follow-on conduct notice so that the promoter continues to be subject to some supervision.

16.The notification of the authorised officer’s decision on withdrawal of the monitoring notice is made under section 246.  The authorised officer may decide to accept or reject the request for withdrawal, but if they do the latter they must give their reasons.  A right to appeal against a refusal to withdraw a monitoring notice is in section 247.

17.Section 248 allows an authorised officer to publish the fact that a person is a monitored promoter.  Publication can include the promoter’s name, address, the nature of its business and other appropriate information, including the conditions in the conduct notice that were breached.  A promoter’s details cannot be published until their right to appeal against the Tribunal’s approval has been exhausted (subsections (5) and (6)).  Additionally if a monitoring notice is withdrawn it is incumbent on the authorised officer to publish the fact of the withdrawal in the same way.

18.Section 249 complements section 248 by requiring a promoter to publish to its clients that it is a monitored promoter and which of the conditions in the conduct notice have been breached.  For existing clients the promoter must publish that it is monitored within 10 days of its right to appeal the Tribunal’s approval being exhausted (subsections (4) and (5)).  For new clients the ten day period applies from the date that they became new clients (subsection (9)).  HMRC may make regulations requiring a promoter to publish on the Internet or in other publications or correspondence, such as marketing material and communications with clients, that it is a monitored promoter, the conditions in the conduct notice that it has breached and its promoter reference number (subsections (3) and (10)).  The form and manner of the publication is to be prescribed in regulations.

Allocation and distribution of promoter reference number

19.Section 250 requires HMRC to issue the monitored promoter with a promoter reference number.  This can only be done after the promoter’s right to appeal against the Tribunal’s approval decision on an original monitoring notice is exhausted or if later the date that a replacement monitoring notice takes effect. The promoter reference number will enable HMRC to identify the monitored promoter’s clients so that its compliance efforts can be suitably directed.  If the monitored promoter is offshore HMRC must issue the promoter reference number to intermediaries of the monitored promoter.

20.Within thirty days of receipt of the promoter reference number from HMRC,    section 251 requires the promoter to pass on the promoter reference number to their clients and relevant intermediaries.  If the monitoring notice is an original monitoring notice then the definition of clients also includes those who, from the date that the conduct notice took effect, have entered into transactions which enable or are likely to enable the person to obtain a tax advantage during the time that the monitoring notice has effect.  There are two time limits for passing on the promoter reference number to the client depending on whether or not the client is a current client or a new client of the promoter.  The time limit for providing the promoter reference number to relevant intermediaries is 30 days beginning with the later of the date that the promoter is notified by HMRC of the promoter reference number and the date that monitored promoter could reasonably be expected to know that the person was a relevant intermediary.

21.Section 252 requires clients of a promoter, within thirty days of receiving the promoter reference number, to pass on the promoter reference number to anyone who they know, or might reasonably be expected to know, is likely to be a client of the monitored promoter.  This obligation also applies to intermediaries. This requirement will ensure that as many clients or people likely to be clients as possible are given the promoter reference number.

22.Section 253 requires the person notified of the promoter reference number to report the number to HMRC if they expect to obtain a tax advantage from the monitored promoter’s relevant arrangements.  If the person makes a tax return then the promoter reference number should be included on the return. If the person does not make a tax return or the tax advantage arises in respect of stamp duty land tax, stamp duty reserve tax, inheritance tax or petroleum revenue tax then the promoter’s reference number should be notified to HMRC in the form and manner prescribed in regulations.  Notification of the promoter reference number will enable HMRC to track taxpayers who have used the monitored promoter’s products and to target their compliance efforts accordingly.

Obtaining information and documents

23.Section 254 defines “monitored proposals” and “monitored arrangements” for the purposes of the information requirements that apply to monitored promoters. Monitored proposals and arrangements are those where certain actions take place after the date that the monitoring notice comes into effect.  For example subsection (1) (a) defines monitored proposals as proposals for which the promoter makes a firm approach to another person after the date that the monitoring notice took effect.  Subsection (2) defines monitored arrangements and includes arrangements which may have been entered into before the date that the monitoring notice takes effect but where the tax advantage generated arises on or after the date that the monitoring notice took effect (subsection (2) (c)).

24.Section 255 is the targeted information power for monitored promoters and relevant intermediaries.  It is to be operated by, or with the approval of, authorised HMRC officers only and applies only if the information or documents are requested in writing.  The information or documents requested must be reasonably required to meet certain purposes, specified in subsection (3), which includes considering the tax consequences of implementing a monitored proposal and to check the “tax position” of any person who is reasonably believed to have implemented monitored proposals or monitored arrangements.  Only intermediaries who, having been notified of the promoter’s reference number, continue to communicate the promoter’s proposals are subject to the information requirement (subsection (4)). “Tax position” is widely defined in subsections (6) and (7).  The time limit for providing the information or documents is a minimum of ten days but may be longer as directed by the officer giving the notice (subsection (10)).

25.If an HMRC officer wishes to use section 255 to obtain information which relates to a person other than a monitored promoter, their intermediary, or a subsidiary undertaking of either, section 256 requires the officer to obtain prior approval of the Tribunal. This is similar to paragraph 3 of Schedule 36 to Finance Act 2008.

26.Section 257 provides for the ongoing duty of the monitored promoter to provide information to HMRC.  It takes effect once HMRC has notified the monitored promoter.  This enables HMRC to obtain information about all monitored proposals and monitored arrangements that were in existence at the time the monitoring notice comes into effect and throughout the period that the promoter is monitored. Unlike DOTAS, which relies on identifying proposals or arrangements using hallmarks, this power is not limited to specific proposals or arrangements.  The time limit for provision of the information and documents is variable and will be specified in the notification from HMRC.  The information and documents to be provided under this duty will be detailed in secondary legislation.

27.If the monitored promoter is offshore and has failed to provide the information required under sections 255 and 257 about monitored proposals or monitored arrangements then HMRC may approach an intermediary to provide the information under section 258.  In the absence of an intermediary then HMRC may require the person who has implemented the monitored proposal or all or part of the monitored arrangements to provide the information.  The minimum period for the provision of the information is ten days.

28.Section 259 is concerned with the provision of information about the clients of the monitored promoter.  HMRC may serve a notice under this section, after which time the monitored promoter has to make returns supplying names and addresses for its clients (as well as other prescribed information) on a calendar quarterly basis.  The first return must contain details about current clients, and thereafter there is an on-going duty to file returns with details of new clients.  The clients are those to whom the promoter has made a firm approach, made a relevant proposal available for implementation or those in relation to whom the promoter has taken part in the organisation or management of relevant arrangements. Clients that are entering into transactions for arrangements that the promoter has previously promoted are included in the information requirement if the tax advantage arises in a relevant period (subsection (8)).  The information provided by the monitored promoter can be cross-checked against its client’s returns and notifications to HMRC for compliance purposes.  Once the HMRC notice has been issued the duty to make returns continues until the promoter is no longer monitored.

29.Section 260 is the equivalent provision for intermediaries.  HMRC may issue a notice to the intermediary requesting details of its clients in relation to a monitored proposal of the monitored promoter for a relevant period. The relevant period cannot begin before the intermediary received the promoter reference number (subsection (3)) and comes to an end once the monitoring notice ceases to have effect for that promoter.  The intermediary has to provide the names and addresses (and other prescribed information) of the clients to whom it communicated information about the monitored proposal on an ongoing basis for each relevant period.

30.Section 261 only applies where a client return has been provided under section 259 or 260 and an authorised officer suspects that a person not included in the return is party to transactions implementing a proposal or arrangement. In these circumstances the officer can require the monitored promoter to provide prescribed information about that person.  This will allow the officer to confirm or dismiss relevant suspicions. The minimum time for the provision of the information is ten days.

31.Section 262 applies to promoters who are subject to a conduct notice.  The section allows HMRC to request information or documents that are reasonably required to enable HMRC to monitor the conduct notice.  Any information or documents provided under section 262 may provide evidence to support the amendment or withdrawal of the conduct notice.

32.Section 263 places an obligation on the monitored promoter to inform an authorised officer of its current address within 30 days of the end of each calendar quarter for the period that the monitoring notice has effect.

33.If a promoter provides information under sections 255, or 257 to 262, but an authorised officer suspects that not all of the information or documents have been provided then section 264 enables the authorised officer to apply to the Tribunal for an order requiring the promoter to provide specified information or documents.  The Tribunal needs to be satisfied that the authorised officer has reasonable grounds for suspecting that the information or documents are reasonably required or will support or explain information already required.  The time limit for the provision of the information or documents is ten days or any longer period as the authorised officer directs.

34.Section 265 is equivalent to a similar DOTAS provision requiring a client to provide the promoter with their national insurance number and unique taxpayer reference.  This will enable the promoter to provide this information to an authorised officer if required to do so under section 259 and will assist HMRC in tracking the promoter’s clients.

Obtaining information and documents: appeals

35.Appeal rights against the information notices are provided for in section 266.  The time limit for an appeal is thirty days and the Tribunal can confirm or vary the notice or its requirement or set it aside.

Obtaining information and documents: supplementary

36.Sections 267 to 271 are administrative provisions for the information notice sections 255 to 264.  They are equivalent to similar provisions in Schedule 36 Finance Act 2008. Section 267 allows the Commissioners to specify the form and manner in which information and documents are to be provided. Section 268 allows the person who has received the notice to provide a copy of a document unless required to provide the original. Section 269 exempts certain documents from the information notice and section 270 limits the production of documents to those in the person’s possession or power and excludes certain old documents.  Section 271 exempts from disclosure any privileged information.  This is information subject to legal professional privilege, or for Scotland, confidentiality of communications.

37.Section 272 only applies to notices under section 258 – the duty of a person dealing with a monitored promoter outside the UK.  It provides an exemption where the person to whom the authorised officer serves the information notice under section 258 is a tax adviser.  The exemption applies to information and documents about or which are relevant communications between the tax adviser and its clients or another tax adviser of that client (subsections (2) and (5)).

38.Section 273 enables clients and intermediaries to ignore a non-disclosure agreement they have with the monitored promoter if they want to provide information or documents to HMRC.  The information can be about the monitored promoter itself or its relevant proposals and relevant arrangements.  The information is not restricted to proposals and arrangements that the client or intermediary has used or communicated about; it can be information about other proposals or arrangements of the monitored promoter.


39.Section 274 introduces Schedule 35 which contains provisions about the penalties for this Part.

40.Section 275 introduces a higher standard of reasonable excuse and reasonable care for monitored promoters and their clients for certain obligations under the Disclosure of Tax Avoidance Schemes (DOTAS) rules. A reasonable excuse for failing to comply with an obligation under the Taxes Acts can be, for example an unforeseen event or illness that prevents the person from meeting that obligation.  What constitutes reasonable excuse in any particular case depends on the specific facts of that case. Sometimes a person will obtain professional advice about whether or not they are required to meet that obligation.  They may then want to rely on the existence of that advice to argue that they have a reasonable excuse for not meeting it.  Whether or not this advice is sufficient to provide a reasonable excuse will depend on such factors as the competency of the adviser and the relevance of the advice to the facts.  There is a requirement to take reasonable care when submitting returns and other information to HMRC. What is reasonable care for a person will vary according to the circumstances of the case; again someone may argue that they have taken reasonable care because they have obtained professional advice.  There is detailed guidance on reasonable excuse and reasonable care in HMRC’s Compliance Handbook.

41.The higher standard of reasonable excuse and reasonable care for clients in these sections ensures that the client cannot rely on legal advice provided to them by the monitored promoter in order to claim that they had a reasonable excuse or took reasonable care.  This does not meant that the person cannot have a reasonable excuse at all, there may be other circumstances or they may have obtained independent legal advice that will allow HMRC or the Tribunal to consider if they have a reasonable excuse.

42.The higher standard of reasonable excuse and reasonable care for promoters is different.  The higher standard is based on the relevance of the legal advice and it ensures that the monitored promoter cannot rely on legal advice for the defences of reasonable excuse and reasonable care if the advice was not based on a full and accurate description of the facts or if the conclusions in the advice were unreasonable.

43.Section 275 introduces the higher standard for reasonable excuse for a client by inserting new subsection (2EA) into section 98C Taxes Management Act 1970 (the DOTAS penalty provisions). It applies where the client of an offshore promoter has failed to comply with their obligation to provide information about notifiable arrangements either under section 309 or 310 Finance Act 2004. If the client wishes to argue that they have a reasonable excuse under section 118 Taxes Management Act 1970 then they cannot rely on legal advice given to them or obtained by the monitored promoter.

44.New subsection (2EB) introduces the higher standard of reasonable excuse for a monitored promoter’s DOTAS obligations. For example this applies to the monitored promoter’s duty to notify proposals and arrangements under DOTAS, to provide clients with scheme reference numbers and to provide details of clients.  Section 276 introduces the higher standard of reasonable care for clients’ tax returns and accounts (as listed in  paragraph 1 of Schedule 24 Finance Act 2007).  The higher standard is as described in paragraph 41 above and ensures that the client cannot rely on legal advice provided to them by the monitored promoter in order to claim that they had a reasonable excuse or took reasonable care.

45.Where tax is lost due to the client’s failure to notify HMRC of the monitored promoter’s reference number section 277 provides for an extended time limit of 20 years for raising assessments in respect of income tax, capital gains tax, corporation tax, inheritance tax, petroleum revenue tax, stamp duty land tax, and the annual tax on enveloped dwellings.


46.Sections 278 to 280 mirror the provisions in Part 8 Schedule 36 Finance Act 2008 for offences in relations to information notices.  Section 278 applies if a person conceals, destroys or disposes of or arranges for the concealment, destruction or disposal of a document that is subject to an information notice under section 255.  Section 279 contains a similar provision where the person has been informed by HMRC that they are likely to be given an information notice under section 255 and HMRC is going to apply to the Tribunal for permission to issue the information notice.  Section 280 provides that the penalties for such offences are a fine or imprisonment for a maximum of two years or both.


47.Section 281 introduces Schedule 36 which contains provisions for partnerships.

48.Section 282 allows regulations to be made for the purposes of the legislation. Apart from statutory instruments to make regulations to add new disclosure provisions, threshold conditions, to change the amount of a penalty or the definition of control which are made under the affirmative procedure, all other regulations are made under the negative procedure.  Finally section 283 provides a number of definitions to support the sections.

Back to top


Print Options


Explanatory Notes

Text created by the government department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. Explanatory Notes were introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts.


More Resources

Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • correction slips
  • links to related legislation and further information resources