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Finance Act 2014

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.

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