Finance (No. 2) Act 2017

PART 7 GAAR Advisory Panel opinion, and representations

Requirement for opinion of GAAR Advisory Panel

23 (1) A penalty under paragraph 1 may not be assessed unless—

(a) the decision that it should be assessed is taken by a designated HMRC officer, and

(b) either the condition in sub-paragraph (2) or the condition in sub-paragraph (3) is met.

(2) The condition in this sub-paragraph is that, when the assessment is made—

(a) a GAAR final decision notice has been given in relation to—

(i) the arrangements to which the penalty relates (“the relevant arrangements”), or

(ii) arrangements that are equivalent to the relevant arrangements,

(b) where a notice is required by paragraph 25 to be given to the person liable to the penalty, that notice has been given and the time allowed for making representations under that paragraph has expired, and

(c) a designated HMRC officer has, in deciding whether the penalty should be assessed, considered—

(i) the opinion of the GAAR Advisory Panel which was considered by HMRC in preparing that GAAR final decision notice, and

(ii) any representations made under paragraph 25.

(3) The condition in this sub-paragraph is that, when the assessment is made—

(a) an opinion of the GAAR Advisory Panel which applies to the relevant arrangements has been given on a referral under paragraph 26,

(b) where a notice is required by paragraph 35 to be given to the person liable to the penalty, that notice has been given and the time allowed for making representations under that paragraph has expired, and

(c) a designated HMRC officer has, in deciding whether the penalty should be assessed, considered—

(i) that opinion of the GAAR Advisory Panel, and

(ii) any representations made under paragraph 35.

(4) Where a notification of a penalty under paragraph 1 is given, the notification must be accompanied by a report prepared by HMRC of—

(a) if the condition in sub-paragraph (2) is met, the opinion of the GAAR Advisory Panel which was considered by HMRC in preparing the GAAR final decision notice;

(b) if the condition in sub-paragraph (3) is met, the opinion of the GAAR advisory panel mentioned in that sub-paragraph.

(5) Paragraph 24 contains definitions of terms used in this paragraph.

24 (1) In this Schedule a “GAAR final decision notice” means a notice under—

(a) paragraph 12 of Schedule 43 to FA 2013 (notice of final decision after considering opinion of GAAR Advisory Panel on referral under Schedule 43),

(b) paragraph 8 or 9 of Schedule 43A to FA 2013 (notice of final decision after considering opinion of GAAR Advisory Panel), or

(c) paragraph 8 of Schedule 43B to FA 2013 (notice of final decision after considering opinion of GAAR Advisory Panel on referral under Schedule 43B).

(2) For the purposes of this Part of this Schedule, where the GAAR Advisory Panel gives an opinion on a referral under paragraph 26 the arrangements to which the opinion “applies” are—

(a) the arrangements in respect of which the referral was made (that is, “the arrangements in question” within the meaning given by paragraph 26(1)), and

(b) any arrangements that are equivalent to those arrangements.

(3) For the purposes of this Part of this Schedule, arrangements are “equivalent” to one another if they are substantially the same as one another having regard to—

(a) their substantive results or intended substantive results,

(b) the means of achieving those results, and

(c) the characteristics on the basis of which it could reasonably be argued, in each case, that the arrangements are abusive tax arrangements.

Notice where Panel opinion already obtained in relation to equivalent arrangements

25 (1) This paragraph applies where a designated HMRC officer is of the view that—

(a) a person is liable to a penalty under paragraph 1 in relation to particular arrangements (“the arrangements concerned”),

(b) no GAAR final decision notice has been given in relation to those arrangements, but those arrangements are equivalent to arrangements in relation to which a GAAR final decision notice has been given (“the GAAR decision arrangements”), and

(c) accordingly, the opinion of the GAAR Advisory Panel which was considered by HMRC in preparing that GAAR final decision notice is relevant to the arrangements concerned.

(2) A designated HMRC officer must give the person mentioned in sub-paragraph (1) a notice in writing—

(a) explaining that the officer is of the view mentioned there,

(b) specifying the arrangements concerned,

(c) describing the material characteristics of the GAAR decision arrangements,

(d) setting out a report prepared by HMRC of the opinion of the GAAR Advisory Panel which was considered by HMRC in preparing the GAAR final decision notice, and

(e) explaining the effect of sub-paragraphs (3) and (4).

(3) A person to whom a notice under this paragraph is given has 30 days, beginning with the day on which the notice is given, to send to the designated HMRC officer (in writing) any representations that that person wishes to make as to why the arrangements concerned are not equivalent to the GAAR decision arrangements.

(4) A designated HMRC officer may, on a written request by that person, extend the period during which representations may be made by that person.

(5) Paragraph 24 contains definitions of the following terms used in this paragraph—

• “GAAR final decision notice”;

• “equivalent”, in relation to arrangements.

Referral to GAAR Advisory Panel

26 (1) A designated HMRC officer may make a referral under this paragraph if—

(a) the officer considers that a person is liable to a penalty under paragraph 1 in relation to particular arrangements (“the arrangements in question”), and

(b) the requirements of paragraph 28 (procedure before making of referral) have been complied with.

(2) But a referral may not be made under this paragraph if a GAAR final decision notice (within the meaning of paragraph 24(1)) has already been given in relation to—

(a) the arrangements in question, or

(b) arrangements that are equivalent to those arrangements.

(3) A referral under this paragraph is a referral to the GAAR Advisory Panel of the question whether the entering into and carrying out of tax arrangements such as are described in the referral statement (see paragraph 27) is a reasonable course of action in relation to the relevant tax provisions.

27 (1) In this Part of this Schedule “the referral statement”, in relation to a referral under paragraph 26, means a statement made by a designated HMRC officer which—

(a) accompanies the referral,

(b) is a general statement of the material characteristics of the arrangements in question (within the meaning given by paragraph 26(1)), and

(c) complies with sub-paragraph (2).

(2) A statement under this paragraph must—

(a) contain a factual description of the arrangements in question,

(b) set out HMRC’s view as to whether those arrangements accord with established practice (as it stood when those arrangements were entered into),

(c) explain why it is the designated HMRC officer’s view that a tax advantage of the nature described in the statement and arising from tax arrangements having the characteristics described in the statement would be a tax advantage arising from arrangements that are abusive,

(d) set out any matters the designated HMRC officer is aware of which may suggest that any view of HMRC or the designated HMRC officer expressed in the statement is not correct, and

(e) set out any other matters which the designated HMRC officer considers are required for the purposes of the exercise of the GAAR Advisory Panel’s functions under paragraphs 33 and 34.

Notice before decision whether to refer

28 (1) A referral must not be made under paragraph 26 unless—

(a) a designated HMRC officer has given each relevant person a notice under this paragraph,

(b) in the case of each relevant person, the time allowed for making representations has expired, and

(c) in deciding whether to make the referral, a designated HMRC officer has considered any representations made by a relevant person within the time allowed.

(2) In this paragraph a “relevant person” means any person who at the time of the referral is considered by the officer making the referral to be liable to a penalty under paragraph 1 in relation to the arrangements in question (within the meaning given by paragraph 26(1)).

(3) A notice under this paragraph is a notice in writing which—

(a) explains that the officer giving the notice considers that the person to whom the notice is given is liable to a penalty under paragraph 1 in relation to the arrangements in question (specifying those arrangements),

(b) explains why the officer considers those arrangements to be abusive tax arrangements,

(c) explains that HMRC are proposing to make a referral under paragraph 26 of the question whether the entering into and carrying out of tax arrangements that have the characteristics of the arrangements in question is a reasonable course of action in relation to the relevant tax provisions, and

(d) explains the effect of sub-paragraphs (4) and (5).

(4) Each person to whom a notice under this paragraph is given has 45 days, beginning with the day on which the notice is given to that person, to send written representations to the designated HMRC officer in response to the notice.

(5) A designated HMRC officer may, on a written request by a person to whom a notice is given, extend the period during which representations may be made by that person.

Notice of decision whether to refer

29 Where a designated HMRC officer decides whether to make a referral under paragraph 26, the officer must, as soon as reasonably practicable, give written notice of that decision to each person to whom notice under paragraph 28 was given.

Information to accompany referral

30 A referral under paragraph 26 must (as well as being accompanied by the referral statement under paragraph 27) be accompanied by—

(a) a declaration that, as far as HMRC are aware, nothing which is material to the GAAR Advisory Panel’s consideration of the matter has been omitted from that statement,

(b) a copy of each notice given under paragraph 28 by HMRC in relation to the referral,

(c) a copy of any representations received under paragraph 28 and any comments that HMRC wish to make in respect of those representations, and

(d) a copy of each notice given under paragraph 31 by HMRC.

Notice on making of referral

31 (1) Where a referral is made under paragraph 26, a designated HMRC officer must at the same time give to each relevant person a notice in writing which—

(a) notifies the person of the referral,

(b) is accompanied by a copy of the referral statement,

(c) is accompanied by a copy of any comments provided to the GAAR Advisory Panel under paragraph 30(c) in respect of representations made by the person,

(d) notifies the person of the period under paragraph 32 for making representations, and

(e) notifies the person of the requirement under that paragraph to send any representations to the officer.

(2) In this paragraph “relevant person” has the same meaning as in paragraph 28 (see sub-paragraph (2) of that paragraph).

Right to make representations to GAAR Advisory Panel

32 (1) A person who has received a notice under paragraph 31 has 21 days, beginning with the day on which that notice is given, to send to the GAAR Advisory Panel written representations about—

(a) the notice given to the person under paragraph 28, or

(b) any comments provided to the GAAR Advisory Panel under paragraph 30(c) in respect of representations made by the person.

(2) The GAAR Advisory Panel may, on a written request made by the person, extend the period during which representations may be made.

(3) If a person sends representations to the GAAR Advisory Panel under this paragraph, the person must at the same time send a copy of the representations to the designated HMRC officer.

(4) If a person sends representations to the GAAR Advisory Panel under this paragraph and that person made no representations under paragraph 28, a designated HMRC officer—

(a) may provide the GAAR Advisory Panel with comments on that person’s representations under this paragraph, and

(b) if such comments are provided, must at the same time send a copy of them to that person.

Decision of GAAR Advisory Panel and opinion notices

33 (1) Where a referral is made to the GAAR Advisory Panel under paragraph 26, the Chair must arrange for a sub-panel consisting of 3 members of the GAAR Advisory Panel (one of whom may be the Chair) to consider it.

(2) The sub-panel may invite—

(a) any person to whom notice under paragraph 28 was given, or

(b) the designated HMRC officer,

(or both) to supply the sub-panel with further information within a period specified in the invitation.

(3) Invitations must explain the effect of sub-paragraph (4) or (5) (as appropriate).

(4) If a person invited under sub-paragraph (2)(a) supplies information to the sub-panel under this paragraph, that person must at the same time send a copy of the information to the designated HMRC officer.

(5) If a designated HMRC officer supplies information to the sub-panel under this paragraph, the officer must at the same time send a copy of the information to each person to whom notice under paragraph 28 was given.

34 (1) The sub-panel must produce—

(a) one opinion notice stating the joint opinion of all the members of the sub-panel, or

(b) two or three opinion notices which taken together state the opinions of all the members.

(2) The sub-panel must give a copy of the opinion notice or notices to the designated HMRC officer.

(3) An opinion notice is a notice which states that in the opinion of the members of the sub-panel, or one or more of those members—

(a) the entering into and carrying out of tax arrangements such as are described in the referral statement is a reasonable course of action in relation to the relevant tax provisions,

(b) the entering into or carrying out of such tax arrangements is not a reasonable course of action in relation to the relevant tax provisions, or

(c) it is not possible, on the information available, to reach a view on that matter,

and the reasons for that opinion.

(4) In forming their opinions for the purposes of sub-paragraph (3) members of the sub-panel must—

(a) have regard to all the matters set out in the referral statement,

(b) have regard to the matters mentioned in paragraphs (a) to (c) of paragraph 3(3) and paragraph 3(4), and

(c) take account of paragraph 3(5) to (7).

(5) For the purposes of the giving of an opinion under this paragraph, the arrangements are to be assumed to be tax arrangements.

(6) For the purposes of this Schedule—

(a) an opinion of the GAAR Advisory Panel is to be treated as having been given on a referral under paragraph 26 when an opinion notice (or notices) has been given under this paragraph in respect of the referral, and

(b) any requirement to consider the opinion of the GAAR Advisory Panel given on such a referral is a requirement to consider the contents of the opinion notice (or notices) given on the referral.

Notice before deciding that arrangements are ones to which Panel opinion applies

35 (1) This paragraph applies where—

(a) an opinion of the GAAR Advisory Panel has been given on a referral under paragraph 26,

(b) a designated HMRC officer is of the view that a person is liable to a penalty under paragraph 1 in relation to particular arrangements (“the arrangements concerned”) and that that opinion of the GAAR Advisory Panel applies to those arrangements, and

(c) that person is not a person to whom notice under paragraph 28 was given in connection with the referral.

(2) A designated HMRC officer must give the person mentioned in sub-paragraph (1)(b) a notice in writing—

(a) explaining that the officer is of the view mentioned in that paragraph,

(b) specifying the arrangements concerned,

(c) setting out a report prepared by HMRC of the opinion mentioned in sub-paragraph (1)(a), and

(d) explaining the effect of sub-paragraphs (3) and (4).

(3) A person to whom a notice under this paragraph is given has 30 days, beginning with the day on which the notice is given, to send the designated HMRC officer (in writing) any representations as to why the opinion does not apply to the arrangements concerned.

(4) A designated HMRC officer may, on a written request by that person, extend the period during which representations may be made by that person.

(5) Paragraph 24(2) defines the arrangements that an opinion given on a referral under paragraph 26 “applies to”.

Requirement for court or tribunal to take Panel opinion into account

36 (1) In this paragraph “enabler penalty proceedings” means proceedings before a court or tribunal in connection with a penalty under paragraph 1.

(2) In determining in enabler penalty proceedings any question whether tax arrangements to which the penalty relates were abusive, the court or tribunal—

(a) must take into account the relevant Panel opinion, and

(b) may also take into account any matter mentioned in sub-paragraph (4).

(3) In sub-paragraph (2)(a) “the relevant Panel opinion” means the opinion of the GAAR Advisory Panel which under this Part of this Schedule was required to be considered by a designated HMRC officer in deciding whether the penalty should be assessed.

(4) The matters mentioned in sub-paragraph (2)(b) are—

(a) guidance, statements or other material (whether of HMRC, a Minister of the Crown or anyone else) that was in the public domain at the time the arrangements were entered into, and

(b) evidence of established practice at that time.