Finance Act 2020

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) a 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) the 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 of 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) The 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 avoidance 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) Part 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) set 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) explain 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) be 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) An 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).

For 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).