Details of the Schedules
Schedule 30: Section 208 Penalty: Value of the denied advantage
89.Paragraph 2(1) defines the value of the denied advantage as the additional amount of tax due or payable resulting from the advantage being counteracted.
90.Paragraph 2(3) excludes two specific items from the calculation of the denied advantage in respect of Corporation Tax. These are group relief and relief under section 458 of CTA 2010 in respect of repayment of loans, where that relief is deferred under section 458(5) of CTA 2010.
91.Paragraph 3(2)(b) provides that 10 per cent of any part of a loss not used to reduce the amount of tax due and payable shall be included in the value of the denied advantage.
92.Paragraph 3(4) provides that where a group of companies has an aggregate loss (for Corporation Tax) group relief is not disregarded when quantifying the relevant denied advantage.
93.Paragraph 3(5) provides that where the nature of the loss is, or the person’s circumstances are, such that there is no reasonable prospect of the loss being used to reduce a tax liability of any person, there will be no penalty.
94.Paragraph 4 provides a special rule for quantifying a tax advantage which comprises the deferral of tax.
Schedule 31: Follower notices and partnerships
95.Paragraph 3(3) states that in respect of partnership returns, a tax advantage arises from tax arrangements if the arrangements increase or reduce any of the items required to be included in a partnership return, and result in a tax advantage for at least one of the partners.
96.Paragraph 3(4)(a) provides that any follower notice given to a representative partner or his successor is not treated as a notice given to that person in any other capacity.
97.Paragraph 3(4)(b) provides that a representative partner and his successor are to be treated as the same person in respect of any follower notice given to them in that capacity.
98.Paragraph 4(2) provides that a penalty for not taking corrective action within the specified time is payable by each relevant partner.
99.Paragraph 5(2)(b) provides that each partner’s share of the total penalty is the appropriate share.
100.Paragraph 5(3) defines the appropriate share as the same share of profits or losses apportioned to that partner in the accounting period, but if that information is not available to HMRC, any such share as an officer of HMRC may determine.
101.Paragraph 5(4) provides that any reduction to the penalty for co-operation under section 210 is calculated and applied to the total amount of penalties issued to the partners.
102.Paragraph 5(6) provides that for the purposes of applying the maximum sum of aggregated penalties under section 212, a penalty charged to a relevant partner is to be treated as if it were calculated by reference to the amount of tax due from the partner and so be subject to the aggregation limits.
103.Paragraph 5(7) states that an appeal may be made against a decision that the partners are liable to penalties or against the sum total of those penalties.
104.Paragraphs 5(11) and 5(12) provide for the Treasury to make an order using the negative procedure to vary the rates applied under this paragraph.
Schedule 32: Accelerated payments and partnerships
105.Paragraphs 2 to 8 provide rules on when an accelerated payment notice can be sent to partners in a partnership, in a case where there is an open enquiry, or a live appeal, which relates to the partnership return given under section 12AA of TMA 1970 (but not to any other partnership circumstance, such as SDLT or ATED – for which, see sections 223 and 224 respectively). These rules mirror the general position, but adapted as appropriate for this special case.
106.Paragraph 2(2) makes clear that an accelerated payment notice may not be given to the representative partner in that capacity. An accelerated payment notice may be given to that person if they are also a relevant partner (defined in paragraph 1(4)).
107.Paragraph 3 makes clear that although the open enquiry or appeal relates to the partnership return, an accelerated payment will be required from each of the partners individually, in the same way as the tax that they each pay on their share of the partnership profits. As a result, all other provisions and consequences, such as the right to make representations and the provision for a late payment penalty, apply to each partner individually.
108.Paragraph 4 sets out the necessary modifications for the contents of a ‘partner payment notice’, and sets out the meaning of ‘understated partner tax’.
109.Paragraph 5 makes clear that the right to make representations applies to each partner individually.
110.Paragraph 6 makes clear that it is each partner individually who must make the accelerated payment.
111.Paragraph 7 makes clear that the late payment penalty rules of section 226 apply in respect of each partner individually, and applies section 226 with appropriate modifications.
112.Paragraph 8 applies, with appropriate modifications, the provisions of section 227 concerning withdrawal or modification of an accelerated payment notice to partner payment notices.
Schedule 33 Consequential amendments
113.Paragraph 1 extends the ability of a taxpayer under section 9B of TMA 1970 to amend their return during an enquiry to enable an amendment to be made for the purposes of this Part.
114.Paragraph 2 disapplies the assessment provisions for penalties in sections 100 to 103 of TMA 1970 as the penalties under this Part either have their own assessing provision (see section 211) or adopt other provisions (see section 226(7), adopting provisions in Schedule 56 to FA 2009).
115.Paragraph 3 disapplies the interaction provision in Schedule 24 to FA 2007 (penalties for errors) so that a penalty under that Schedule is not reduced by the amount of a penalty charged under this Part, calculated by reference to the same amount of tax.
116.Paragraph 4 disapplies the interaction provision in Schedule 41 to FA 2008 (penalties for failure to notify and certain VAT and excise offences) so that a penalty under that schedule is not reduced by the amount of a penalty charged under this Part, calculated by reference to the same amount of tax.
117.Paragraph 5 disapplies the interaction provision in Schedule 55 to FA 2009 (penalties for failure to make returns) so that a penalty under that schedule is not reduced by the amount of a penalty charged under this Part, calculated by reference to the same amount of tax.
