Finance Act 2022

(3) Where the Commissioners receive an application under sub-paragraph (1), they must, by notice to the applicants or the body that is to be the representative member— (a) confirm whether they accept or refuse the application, and (b) if they accept the application, specify a date from which the applicants are to be treated as members of the same group. (4) The Commissioners must give the notice within the period of 90 days beginning with the day on which the application is received. (5) The date mentioned in sub-paragraph (3)(b) must be within that period.

;

• (b) in paragraph 5 (applications to modify group treatment)—

• (i) in sub-paragraph (1), omit the words after paragraph (d);

• (ii) for sub-paragraph (2) substitute—

(2) Where the Commissioners receive an application under sub-paragraph (1), they must, by notice to the applicant and, in a case within sub-paragraph (1)(b), the proposed new representative member— (a) confirm whether they accept or refuse the application, and (b) if they accept the application, specify a date from which the application is to be treated as having been accepted. (3) The Commissioners must give the notice within the period of 90 days beginning with the day on which the application is received. (4) The date mentioned in sub-paragraph (2)(b) must be within that period.

Secondary liability and assessment notices etc: acting in the course of a related business

7

In Schedule 9 (secondary liability and assessment notices and joint and several liability notices), in paragraph 21 (interpretation: related businesses), in paragraph (b)(ii)—

• (a) for “unincorporated association” substitute “unincorporated body (other than a partnership)”, and

• (b) for “the association” substitute “the body”.

SCHEDULE 13

Liability to penalty

1

• (1) Sub-paragraph (2) applies in relation to a person (“A”) if the person is liable to pay—

• (a) a penalty within sub-paragraph (3), or

• (b) one or more penalties within sub-paragraph (4), provided that the total amount that is payable under that penalty or those penalties is at least £100,000.

In this Schedule penalties by virtue of which sub-paragraph (2) applies in relation to a person are called “the original penalties”.

• (2) A is liable to a further penalty if—

• (a) the original penalties were incurred in respect of activities (the “original activities”) which A carried out as a member of the same promotion structure as a non-resident promoter (“P”), and

• (b) the original activities related to a relevant proposal or relevant arrangements in relation to which P was a promoter (the “facilitated proposal or arrangements”).

• (3) Penalties are within this paragraph if they are incurred under—

• (a) the entry relating to section 236B(1) of FA 2014 (effect of stop notices) in the table at paragraph 2(1) of Schedule 35 to that Act (promoters of tax avoidance schemes: penalties);

• (b) Schedule 16 to F(No.2)A 2017 (penalties for enablers of defeated tax avoidance).

• (4) Penalties are within this paragraph if they are incurred under any of the following—

• (a) section 98C of TMA 1970 (disclosure of tax avoidance schemes);

• (b) Part 5 of FA 2014 (promoters of tax avoidance schemes) (other than the provision mentioned in sub-paragraph (3)(a)), and Schedule 36 to FA 2008 (information and inspection powers) as it has effect in relation to that Part (see section of 272A of FA 2014);

• (c) Schedule 36 to FA 2008 as it has effect in relation to Schedule 16 to F(No.2)A 2017 (see Part 9 of Schedule 16 to F(No.2)A 2017);

• (d) Schedule 17 to F(No.2)A 2017 (disclosure of tax avoidance schemes: VAT and other indirect taxes).

• (5) For the purposes of this paragraph, a person is liable to pay a penalty within sub-paragraph (3) or (4) from the time at which—

• (a) notice of the penalty is given, in a case where the penalty is to be imposed by HMRC, or

• (b) the penalty is determined, in a case where the penalty is to be determined by the First-tier Tribunal,

regardless of any outstanding appeal relating to the original penalty.

• (6) In this paragraph, a “non-resident promoter” is a person who carries on a business as a promoter and is resident outside the United Kingdom.

Amount of penalty

2

• (1) The further penalty payable under paragraph 1(2) is—

• (a) an amount that is equal to the total value of all consideration received by all persons who, at the time of the original activities, were members of the promotion structure mentioned in paragraph 1(2)(a) in connection with—

• (i) the facilitated proposal or arrangements, and

• (ii) any other proposals or arrangements that are substantially the same as the facilitated proposal or arrangements, or

• (b) such lower amount as the person assessing the penalty considers just and reasonable.

• (2) For the purposes of this Schedule—

• (a) references to consideration—

• (i) include fees, remuneration and any other kind of consideration, however received,

• (ii) are to such fees, remuneration or other consideration as determined to the best of the information and belief of the person assessing them, and

• (iii) do not include any amount charged in respect of value added tax;

• (b) where consideration is, under arrangements with any member of the promotion structure mentioned in sub-paragraph (1)(a) (“the member”), paid to a person who is not a member of that promotion structure, it is to be taken to be received by the member;

• (c) consideration attributable to two or more transactions is to be apportioned on a just and reasonable basis;

• (d) consideration given for what is in substance one bargain is to be treated as attributable to all elements of the bargain, even though—

• (i) separate consideration is, or purports to be, given for different elements of the bargain, or

• (ii) there are, or purport to be, separate transactions in respect of different elements of the bargain.

Procedure for assessing penalty etc

3

• (1) Where a person is liable for a penalty under paragraph 1(2), an authorised officer of HMRC may assess the penalty.

• (2) Where an authorised officer assesses the penalty the authorised officer must notify the person who is liable for the penalty.

• (3) A penalty must be paid before the end of the period of 30 days beginning with the day on which notification of the penalty is issued.

• (4) An assessment of a penalty—

• (a) is to be treated for procedural purposes in the same way as an assessment to tax (except in respect of a matter expressly provided for by this Schedule), and

• (b) may be enforced as if it were an assessment to tax.

• (5) An authorised officer may make a supplementary assessment in respect of a penalty where—

• (a) consideration is received after the penalty was first assessed by any person who, at the time of the original activities, was a member of the promotion structure mentioned in paragraph 1(2)(a), or

• (b) the officer considers it just and reasonable to make a supplementary assessment on the basis of information received after the penalty was first assessed.

• (6) Sub-paragraph (7) applies if a penalty is assessed on the basis of an assessment of consideration received by a person that HMRC subsequently find to have been excessive.

• (7) HMRC may amend the assessment so that it is based upon the correct amount.

• (8) An amendment under sub-paragraph (7)—

• (a) does not affect when the penalty must be paid, and

• (b) may be made after the last day on which the assessment in question could have been made under sub-paragraph (9).

• (9) An assessment of a person as liable to pay an amount in respect of a penalty under paragraph 1(2) may not take place more than 2 years after information sufficient to enable the assessment first came to the attention of HMRC.

Appeals

4

• (1) A person may appeal against—

• (a) a decision of an authorised officer to impose a penalty under paragraph 1(2) on the person, or

• (b) a decision of an authorised officer as to the amount of the penalty.

• (2) An appeal under sub-paragraph (1) must be made within the period of 30 days beginning with the day on which notification of the penalty is given under paragraph 3(2).

• (3) An appeal under sub-paragraph (1) is to be treated in the same way as an appeal against an assessment to the tax to which the facilitated proposal or arrangements relate (including by the application of any provision about bringing the appeal by notice to HMRC, about HMRC review of the decision or about determination of the appeal by the First-tier Tribunal or Upper Tribunal).

• (4) Sub-paragraph (3) does not apply—

• (a) so as to require the person bringing the appeal to pay a penalty before an appeal against the assessment of the penalty is determined;

• (b) in respect of any other matter expressly provided for by this Schedule.

• (5) On an appeal under sub-paragraph (1)(a) that is notified to the tribunal, the tribunal may affirm or cancel the authorised officer’s decision.

• (6) On an appeal under sub-paragraph (1)(b) that is notified to the tribunal, the tribunal may—

• (a) affirm the authorised officer’s decision, or

• (b) substitute for that decision another decision that the authorised officer had power to make.

Application of provisions of TMA 1970

5

Subject to the provisions of this Schedule, the following provisions of TMA 1970 apply for the purposes of this Part of this Schedule as they apply for the purposes of the Taxes Acts—

• (a) section 108 (responsibility of company officers);

• (b) section 114 (want of form);

• (c) section 115 (delivery and service of documents).

Application of information and inspection powers

6

• (1) Schedule 36 to FA 2008 (information and inspection powers) applies for the purpose of checking a relevant person’s position as regards liability for a penalty under paragraph 1(2) as it applies for checking a person’s tax position, subject to the modifications set out in this paragraph.

• (2) In this paragraph, “relevant person” means a person an officer of Revenue and Customs has reason to suspect is or may be liable to a penalty under paragraph 1(2) (including if the person would or may be so liable if found liable to pay one or more penalties within paragraph 1(3) or (4)).

• (3) In its application for the purpose mentioned in sub-paragraph (1), Schedule 36 to FA 2008 has effect as if—

• (a) any provisions which can have no application for that purpose were omitted;

• (b) references to “the (or a) taxpayer” were to “the (or a) relevant person”;

• (c) references to a person’s “tax position” were to the relevant person’s position as regards liability for a penalty under paragraph 1(2);

• (d) references to “business documents” included any documents (or copies of documents) in connection with any relevant proposal or relevant arrangements;

• (e) references to prejudice to the assessment or collection of tax included a reference to prejudice to the investigation of a relevant person’s position as regards liability for a penalty under paragraph 1(2);

• (f) references to a pending appeal relating to tax were to a pending appeal by a relevant person under this Schedule;

• (g) in paragraph 10A (power to inspect business premises of involved third parties) the reference in sub-paragraph (1) to the position of any person or class of persons as regards a relevant tax were a reference to the position of a relevant person as regards liability to a penalty under paragraph 1(2);

• (h) paragraphs 21 to 21B (certain taxpayer notices) were omitted;

• (i) paragraph 25 (tax advisers) were omitted;

• (j) paragraphs 50 and 51 (tax-related penalty) were omitted.

Application

7

A is liable to a further penalty under paragraph 1(2) only where the original penalties imposed on A relate only to activities carried out after this Schedule comes into force.

Interpretation

8

• (1) Expressions used in Part 5 of FA 2014 have the same meaning in this Schedule as in that Part, unless the contrary intention appears (and, in particular, see sections 234 and 235 of FA 2014 for the meanings of “relevant proposal”, “relevant arrangements”, “promoter” and “as a promoter” and Schedule 33A to that Act for the meaning of “promotion structure”).

• (2) In this Schedule, references to an “authorised officer” are to an officer of Revenue and Customs who is, or is a member of a class of officers who are, authorised by the Commissioners to exercise functions conferred by this Schedule.

• (3) In this Schedule—

• “facilitated proposal or arrangements” has the meaning given by paragraph 1(2)(b);

• “the original penalties” has the meaning given by paragraph 1(1);

• “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate in light of paragraph 4(3)).

SCHEDULE 14

PART 1 — Introductory

Meaning of “electronic sales suppression tool” etc

1

• (1) This paragraph defines “electronic sales suppression tool” and related terms for the purposes of this Schedule.

• (2) An “electronic sales suppression tool” is a tool which meets both of the following conditions—

• (a) the first condition is that the tool must be capable (whether by itself or in combination with, or as part of, any other thing) of suppressing relevant electronic sales records;

• (b) the second condition is that it must be reasonable to assume that the main function of the tool, or one of its main functions, is to suppress relevant electronic sales records.

• (3) A “relevant electronic sales record” is a record which—

• (a) is required by or under any legislation relating to tax to be kept, and

• (b) comprises or includes information that is or would be (but for the use of a tool that meets the first condition in sub-paragraph (2)) recorded by an electronic point of sale system.

• (4) An “electronic point of sale system” is any tool or combination of tools used to record information in electronic form about transactions involving the sale of goods or services.

• (5) A relevant electronic sales record is suppressed if any information it comprises or includes is dealt with in such a way (whether by being falsified, manipulated, hidden, obfuscated, destroyed or prevented from being created) as to fail to record a matter accurately.

• (6) References in this Schedule to a “tool” include a physical device, software, computer code or other data in digital form (wherever held), or any other thing.

• (7) An “electronic sales suppression penalty” is a penalty under this Schedule.

PART 2 — Liability to a penalty

Penalty for making an electronic sales suppression tool

2

A person who makes an electronic sales suppression tool (including modifying a tool that is not an electronic sales suppression tool so that it becomes an electronic sales suppression tool) is liable to a penalty.

Penalty for supplying an electronic sales suppression tool

3

• (1) A person (“P”) who supplies an electronic sales suppression tool to another person or other persons is liable to a penalty.

• (2) Liability to a penalty under this paragraph does not arise if P satisfies HMRC or (on appeal) the tribunal that P was unaware that the tool P supplied to the other person or persons was an electronic sales suppression tool.

Penalty for promoting use of a tool to suppress an electronic sales record

4

• (1) A person is liable to a penalty for each occasion on which the person promotes the use of a tool to suppress a relevant electronic sales record (whether or not the suppression of relevant electronic sales records is the main function, or one of the main functions, of the tool).

• (2) A person promotes the use of a tool to suppress a relevant electronic sales record if the person communicates information about the tool to another person with a view to that other person, or any other person, using the tool to suppress a relevant electronic sales record.

Amount of a penalty under paragraph 2, 3 or 4

5

• (1) The amount of a penalty to which a person is liable under paragraph 2, 3 or 4 is such amount, not exceeding £50,000, as an authorised HMRC officer considers appropriate.

• (2) In determining the amount of a penalty under paragraph 2, 3 or 4, the officer—

• (a) must take into account any matter specified in a notice published by HMRC, so far as that matter is relevant, and

• (b) may take into account any other matter, so far as the officer considers it appropriate to do so.

• (3) “Authorised HMRC officer” means an officer of Revenue and Customs who is, or is a member of a class of officers who are, authorised by the Commissioners for Her Majesty’s Revenue and Customs for the purposes of this paragraph.

Penalty for possession etc of an electronic sales suppression tool

6

• (1) A person (“P”) is liable to a penalty not exceeding £1,000 if—

• (a) P is in possession of, or has otherwise obtained access to, an electronic sales suppression tool, and

• (b) condition 1 or 2 applies.

• (2) Condition 1 is that—

• (a) HMRC has notified P in writing that an officer of Revenue and Customs has reason to believe that P is in possession of, or has otherwise obtained access to, an electronic sales suppression tool, and

• (b) P has not, within the period of 30 days beginning with the day on which the notice is given, satisfied an officer of Revenue and Customs that P is not (or is no longer) in possession of, and does not otherwise have access to, an electronic sales suppression tool.

• (3) Condition 2 is that P has been assessed to an electronic sales suppression penalty within the period of five years ending with the first day on which an officer of Revenue and Customs has reason to believe that P may be liable to a penalty under this paragraph.

• (4) For the purposes of this paragraph and paragraph 7—

• (a) a person is in possession of an electronic sales suppression tool if the person possesses the tool in any manner;

• (b) a person has access to an electronic sales suppression tool if the tool is available to the person to use to suppress a relevant electronic sales record;

• (c) a person obtains access to an electronic sales suppression tool if the person takes any steps to have access to the tool.

• (5) Accordingly, a person may be in possession of, or otherwise have access to, an electronic sales suppression tool whether or not—

• (a) the person owns the tool,

• (b) the person only has access to the tool remotely, or

• (c) other persons also have access to the tool.

• (6) Liability to a penalty under this paragraph does not arise if P has been assessed to a penalty under paragraph 2 or 3 in respect of the electronic sales suppression tool that P is in possession of, or has otherwise obtained access to.

• (7) Liability to a penalty under this paragraph does not arise if P satisfies HMRC or (on appeal) the tribunal that P was unaware that the tool that P was in possession of, or had otherwise obtained access to, was an electronic sales suppression tool.

Daily default penalties

7

• (1) This paragraph applies if—

• (a) a person (“P”) is assessed to a penalty under paragraph 6 in respect of an electronic sales suppression tool, and

• (b) after being notified of the assessment (see paragraph 11(1)(b)), P continues to be in possession of, or otherwise have access to, the tool.

• (2) P is liable to a further penalty of an amount not exceeding £75 for each subsequent day on which P continues to be in possession of, or otherwise have access to, the tool.

• (3) The total amount of the penalties to which a person may be liable under this paragraph may not exceed £50,000.

PART 3 — Supplementary provision

Legitimate activity

8

Liability to an electronic sales suppression penalty does not arise where the activity that would otherwise give rise to such liability is undertaken—

• (a) by, or on behalf of or with the approval of, a public authority, and

• (b) for a purpose connected with avoiding prejudice to the assessment or collection of tax.

Double jeopardy

9

A person is not liable to an electronic sales suppression penalty in respect of anything in respect of which the person has been convicted of an offence.

Special reduction

10

• (1) If HMRC think it right because of special circumstances, they may reduce an electronic sales suppression penalty.

• (2) In sub-paragraph (1), “special circumstances” does not include ability to pay.

• (3) In sub-paragraph (1), the reference to reducing a penalty includes a reference to—

• (a) staying a penalty, and

• (b) agreeing a compromise in relation to proceedings in respect of a penalty.

Assessment

11

• (1) Where a person becomes liable to an electronic sales suppression penalty—

• (a) HMRC may assess the penalty, and

• (b) if they do so, HMRC must notify the person.

• (2) No electronic sales suppression penalty may be notified under sub-paragraph (1)(b) later than the end of the period of two years beginning with the day on which evidence of facts, sufficient in the opinion of HMRC to indicate liability to the penalty, comes to HMRC’s knowledge.

Appeal

12

• (1) A person may appeal against—

• (a) a decision of HMRC that an electronic sales suppression penalty is payable by the person, or

• (b) a decision of HMRC as to the amount of any such penalty.

• (2) Notice of an appeal must be given to HMRC in writing before the end of the period of 30 days beginning with the date on which notification of the penalty was given under paragraph 11(1)(b).

• (3) The notice must state the grounds of appeal.

• (4) On an appeal under sub-paragraph (1)(a) that is notified to the tribunal, the tribunal may affirm or cancel HMRC’s decision.

• (5) On an appeal under sub-paragraph (1)(b) that is notified to the tribunal, the tribunal may—

• (a) affirm HMRC’s decision, or

• (b) substitute for that decision another decision that HMRC had power to make.

• (6) If the tribunal substitutes its decision for HMRC’s, the tribunal may rely on paragraph 10—

• (a) to the same extent as HMRC (which may mean applying the same percentage reduction as HMRC to a different starting point), or

• (b) to a different extent, but only if the tribunal thinks that HMRC’s decision in respect of the application of that paragraph was flawed.

• (7) In sub-paragraph (6)(b), “flawed” means flawed when considered in the light of the principles applicable in proceedings for judicial review.

• (8) Subject to this paragraph and paragraph 13, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation to appeals under this Schedule as they have effect in relation to an appeal against an assessment to income tax or, if the person is a company within the charge to corporation tax, corporation tax.

Enforcement

13

• (1) An electronic sales suppression penalty must be paid—

• (a) before the end of the period of 30 days beginning with the date on which notification of the penalty was given under paragraph 11(1)(b), or

• (b) if notice of an appeal is given, before the end of the period of 30 days beginning with the date on which the appeal is determined or withdrawn.

• (2) An electronic sales suppression penalty is recoverable as a debt due to the Crown.

Application of provisions of TMA 1970

14

Subject to the provisions of this Schedule, the following provisions of TMA 1970 apply for the purposes of this Part of this Schedule as they apply for the purposes of the Taxes Acts—

• (a) section 108 (responsibility of company officers);

• (b) section 114 (want of form);

• (c) section 115 (delivery and service of documents).

Power to change amount of penalty

15

• (1) If it appears to the Treasury that there has been a change in the value of money since the last relevant date, they may by regulations made by statutory instrument substitute for the sum for the time being specified in paragraph 5(1), 6(1), 7(2) or 7(3) such other sum as seems to them to be justified by the change.

• (2) In sub-paragraph (1), “relevant date” means—

• (a) the date on which this Act is passed, and

• (b) each date on which the power conferred by sub-paragraph (1) has been exercised in relation to the sum in question.

• (3) Regulations under sub-paragraph (1) are subject to annulment in pursuance of a resolution of the House of Commons.

• (4) Regulations under sub-paragraph (1) do not apply in relation to an electronic sales suppression penalty to which liability arose before the date on which the regulations come into force.

Interpretation

16

In this Schedule—

• “HMRC” means Her Majesty’s Revenue and Customs;

• “tribunal” means the First-tier Tribunal or, where determined by or under the Tribunal Procedure Rules, the Upper Tribunal.

PART 4 — Information

Application of Schedule 36 to FA 2008 (information and inspection powers)

17

• (1) Schedule 36 to FA 2008 (information and inspection powers) applies for a relevant purpose in relation to a relevant person as it applies for the purpose of checking a person’s tax position.

• (2) This is subject to—

• (a) the general modifications in paragraph 18, and

• (b) the specific modifications in paragraph 19.

• (3) For the purposes of this Part, a person is “relevant” if an officer of Revenue and Customs has reason to suspect that the person is or may be liable to an electronic sales suppression penalty.

• (4) For the purposes of this Part, the following are “relevant purposes” in relation to a relevant person—

• (a) determining whether the relevant person is liable to an electronic sales suppression penalty;

• (b) enabling HMRC to understand the operation of a tool in relation to which the relevant person’s suspected liability to an electronic sales suppression penalty arises;

• (c) identifying any other person whose activity in relation to a tool mentioned in paragraph (b) may give rise to liability to an electronic sales suppression penalty.

General modifications of Schedule 36 to FA 2008 as applied

18

In its application for a relevant purpose in relation to a relevant person, Schedule 36 to FA 2008 has effect as if—

• (a) any provision which can have no application for that purpose were omitted;

• (b) references to “the taxpayer” were to “the relevant person”;

• (c) references to prejudice to the assessment or collection of tax included prejudice to the fulfilment of a relevant purpose;

• (d) references to a pending appeal relating to tax were to a pending appeal by the relevant person under paragraph 12 of this Schedule.

Specific modifications of Schedule 36 to FA 2008 as applied

19

In a case where the relevant purpose is that mentioned in paragraph 17(4)(c) above, paragraph 5 of Schedule 36 to FA 2008 applies as if sub-paragraphs (3) to (4) were omitted.

SCHEDULE 15

1

VATA 1994 is amended as follows.

2

In section 6(1) (time of supply), for “and 18C” substitute “, 18C and 57A”.

3

In section 7(1) (place of supply of goods), for “and 18B” substitute “, 18B and 57A”.

4

In section 7A(1) (place of supply of services), after “applies” insert “, subject to section 57A,”.

5

In section 17 (free zone regulations) omit subsection (2).

6

In section 18 (goods subject to a warehousing regime: place and time of supply), in subsection (6)—

• (a) at the appropriate place insert—

• “free zone procedure” has the meaning given by the Customs (Special Procedures and Outward Processing) (EU Exit) Regulations 2018 (S.I. 2018/1249) (see regulation 2(3)(b) of those Regulations);

;

• (b) in the definition of “warehouse”, after paragraph (d) insert “,

but does not include a warehouse so far as it is used for the storage of goods declared for a free zone procedure.”

7

At the end of Part 3 (application of VATA 1994 in particular cases) insert—

(57A) (1) This section applies where— (a) a person (“P”) receives— (i) a zero-rated free zone supply of goods, or (ii) a zero-rated free zone supply of services, and (b) Condition A or B is met. (2) Condition A is met where, after the supply mentioned in subsection (1)(a), there is, in respect of the goods supplied or the goods on or in relation to which the service is performed (as the case may be), a breach of a requirement relating to the free zone procedure without there having been a zero-rated free zone supply by P of the goods after receiving the supply mentioned in that subsection. (3) Condition B is met where, after the supply mentioned in subsection (1)(a)— (a) the goods supplied or the goods on or in relation to which the service is performed (as the case may be) are imported (other than by virtue of Condition A being met) without there having been a zero-rated free zone supply by P of those goods after receiving the supply mentioned in that subsection, and (b) within the period of three months beginning with the day on which the goods are imported, P does not make a taxable supply of the goods to another person in the course or furtherance of P’s business. (4) For the purposes of this Act— (a) a supply of goods identical to the zero-rated free zone supply of goods or a supply of services identical to the zero-rated free zone supply of services (as the case may be) is to be treated as having been made— (i) by P in the course or furtherance of a business carried on by P, and (ii) to P for the purposes of that business, and (b) that supply is to be treated— (i) as taking place on the relevant day, (ii) as being made in the United Kingdom, (iii) as having the same value as the zero-rated free zone supply of goods or the zero-rated free zone supply of services (as the case may be), and (iv) as a taxable (and not a zero-rated) supply. (5) For the purposes of Condition A, the reference to a breach of a requirement relating to a free zone procedure is to— (a) a breach, occurring while the procedure has effect, of the terms of the declaration for the procedure or of any other requirement imposed in relation to the procedure by or under Schedule 2 to TCTA 2018, or (b) a breach, occurring at any time after the declaration was made, of any other requirement imposed by an officer of Revenue and Customs in relation to the goods for which the declaration was made. (6) The Commissioners may by regulations make provision— (a) modifying the application or effect of this section, or (b) applying this section, with or without modification, in relation to cases set out in the regulations. (7) In this section— - “free zone procedure” has the same meaning as in Group 22 of Schedule 8 (free zones); - “relevant day” means—in a case where this section applies by virtue of Condition A being met, the day on which the breach mentioned in that Condition occurred;in a case where this section applies by virtue of Condition B being met, the day after the end of the period mentioned in that Condition; - “zero-rated free zone supply of goods” means a supply of goods within Item 1(a) of Group 22 to Schedule 8 (free zone procedure goods); - “zero-rated free zone supply of services” means a supply of services within Item 1(b) of that Group (free zone services).

8

This Schedule is treated as having come into force on 3 November 2021.

SCHEDULE 16

PART 1 — First-year allowance for plant and machinery

1

Part 2 of CAA 2001 (plant and machinery allowances) is amended in accordance with paragraphs 2 and 3.

2

In section 45O (expenditure on plant and machinery for use in freeport tax sites), in subsection (7), for the entry relating to section 45R substitute “section 45R (effect of failing to comply with ongoing requirements) and regulations under that section, and”.

3

• (1) Section 45R (effect of plant or machinery subsequently being primarily for use outside freeport tax sites) is amended as follows.

• (2) In the heading, for the words from “plant” to the end substitute “failing to comply with ongoing requirements”.

• (3) After subsection (3) insert—

(3A) The Treasury may by regulations make provision adding, removing or altering, or otherwise about, circumstances in which expenditure on the provision of plant or machinery is to be treated as never having been first-year qualifying expenditure under section 45O. (3B) The power to make regulations under subsection (3A) may be exercised only in relation to expenditure incurred on or after the date on which the regulations come into force. (3C) Subsections (3) and (4) of section 45P apply in relation to regulations under subsection (3A) as they apply in relation to regulations under that section.

• (4) In subsection (4), at the end insert “or regulations under subsection (3A)”.

• (5) In subsection (5), after “this section” insert “or of regulations under subsection (3A)”.

• (6) In subsection (6), at the end insert “or of regulations under subsection (3A)”.

4

• (1) Section 570B of CAA 2001 (orders and regulations made by Treasury or Commissioners) is amended as follows.

• (2) In subsection (3), after “section 45P,” insert “45R,”.

• (3) In subsection (4), after “section 45P” insert “, 45R”.

PART 2 — Structures and buildings allowances

5

• (1) Section 270BNC of CAA 2001 (structures and buildings allowances: power to amend meaning of “freeport qualifying expenditure”) is amended as follows.

• (2) In the heading, at the end insert “etc”.

• (3) In subsection (1)—

• (a) the words from “change” to the end become paragraph (a);

• (b) after that paragraph insert

, or (b) make provision adding, removing or altering, or otherwise about, circumstances in which qualifying expenditure is to be treated as if it were— (i) freeport qualifying expenditure, or (ii) other qualifying expenditure, including provision about assessments, adjustments to assessments, returns, amendments of returns and penalties.

• (4) In subsection (4)(b), after “subsection” insert “(1)(b) or”.

• (5) At the end insert—

(5) The power to make regulations under subsection (1)(b) may be exercised only in relation to qualifying expenditure incurred on or after the date on which the regulations come into force.

PART 3 — Stamp duty land tax

6

• (1) In Schedule 6C to FA 2003 (stamp duty land tax: relief for freeport tax sites), paragraph 12 (power to change the cases in which relief is available) is amended as follows.

• (2) In sub-paragraph (1)—

• (a) at the end of paragraph (a) insert “or”;

• (b) for paragraphs (b) and (c) substitute—

(b) make other provision about the availability of relief under this Schedule, including provision— (i) adding, removing or altering, or otherwise about, conditions that must be met in order for relief to be available, (ii) about the withdrawal of relief, or (iii) about returns where relief is withdrawn.

• (3) In sub-paragraph (4)(b), after “on” insert “sub-paragraph (1)(b) of this paragraph or on”.

• (4) At the end insert—

(5) The power to make regulations under this paragraph may be exercised only in relation to transactions with an effective date that is on or after the date on which the regulations come into force.

SCHEDULE 17

PART 1 — Key definitions

1

This Part applies for the purposes of this Schedule.

“Company” and “qualifying company”

2

• (1) “Company” means a body corporate (wherever incorporated) but does not include—

• (a) a limited liability partnership that is a partnership for the purposes of this Schedule (see paragraph 4);

• (b) a public authority as defined by the Freedom of Information Act 2000 or a Scottish public authority as defined by the Freedom of Information (Scotland) Act 2002 (asp 13);

• (c) an open-ended investment company within the meaning of section 613 of CTA 2010;

• (d) a registered society within the meaning of—

• (i) the Co-operative and Community Benefit Societies Act 2014, or

• (ii) the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969 (c. 24 (N.I.)).

• (2) A company is a “qualifying company” in any financial year if, in the previous financial year, the company had either or both of the following—

• (a) relevant UK turnover of more than £200 million;

• (b) a relevant UK balance sheet total of more than £2 billion.

• (3) If the company was not a member of a group at the end of the previous financial year—

• (a) “relevant UK turnover” means the company’s UK turnover;

• (b) “relevant UK balance sheet total” means the company’s UK balance sheet total.

• (4) If the company was a member of a group at the end of the previous financial year—

• (a) “relevant UK turnover” means the aggregate UK turnover of the company (“C”) and each other company that was—

• (i) a member of the same group as C at the end of C’s previous financial year, and

• (ii) within the charge to corporation tax on income at any time during C’s previous financial year;

• (b) “relevant UK balance sheet total” means the aggregate UK balance sheet totals of C and each other such company.

• (5) If the financial year of a company that was a member of the same group as C does not end on the same day as C’s previous financial year, the figures for that company that are to be included in the aggregate figures are the figures for that company’s financial year ending last before the end of C’s previous financial year.

• (6) The Treasury may by regulations provide that a company of a description specified in the regulations is not a qualifying company for the purposes of this Schedule (or any such purpose specified in the regulations).

“Group”

3

• (1) A company is a member of a group if—

• (a) another company is its 51% subsidiary, or

• (b) it is a 51% subsidiary of another company.

• (2) Two companies are members of the same group if—

• (a) one is a 51% subsidiary of the other, or

• (b) both are 51% subsidiaries of another company.

• (3) Sub-paragraph (4) applies where a company (“Q”)—

• (a) is a qualifying asset holding company for the purposes of Schedule 2 to this Act, and

• (b) is a member of a worldwide group, within the meaning given by section 473 of TIOPA 2010.

• (4) Another company is not a member of the same group as Q for the purposes of this Schedule if, by virtue of paragraph 42(2)(a) of Schedule 2 to this Act, that other company is not a member of the same worldwide group as Q for the purposes of Part 10 of TIOPA 2010 (corporate interest restriction).

• (5) Chapter 3 of Part 24 of CTA 2010 (meaning of 51% subsidiary) applies for the purposes of this Schedule as it applies for the purposes of the Corporation Tax Acts.

“Partnership” and “qualifying partnership”

4

• (1) “Partnership” means a partnership (wherever formed) or a limited liability partnership incorporated in the United Kingdom that is carrying on a trade, business or profession with a view to profit.

• (2) A partnership is not a partnership for the purposes of this Schedule if it is—

• (a) a collective investment scheme, within the meaning of Part 17 of FISMA 2000, or

• (b) an AIF, as defined by regulation 3 of the Alternative Investment Fund Managers Regulations 2013 (S.I. 2013/1773).

• (3) A partnership is a “qualifying partnership” in any financial year if, in the previous financial year, the partnership had either or both of the following—

• (a) UK turnover of more than £200 million;

• (b) a UK balance sheet total of more than £2 billion.

• (4) The Treasury may by regulations provide that a partnership of a description specified in the regulations is not a qualifying partnership for the purposes of this Schedule (or any such purpose specified in the regulations).

“Relevant tax” and “relevant return”

5

• (1) A tax that is listed in the first column of the following table is a “relevant tax” and a return which appears in the corresponding entry in the second column of the table is, in relation to the relevant tax concerned, a “relevant return”.

Tax to which return relates	Return
Corporation tax	Company tax return
Income tax or corporation tax	Partnership return
Income tax	PAYE return
VAT	VAT return

• (2) In this Schedule—

• “company tax return” means a return under paragraph 3 of Schedule 18 to FA 1998;

• “corporation tax” includes any amount chargeable under section 330(1), 455 or 464A of CTA 2010 as if it were corporation tax but does not include—an amount chargeable under section 269DA of CTA 2010 (surcharge on banking companies);an amount chargeable under Part 9A of TIOPA 2010 (controlled foreign companies);an amount of the bank levy (see Schedule 19 to FA 2011);

• “partnership return” has the same meaning as in TMA 1970;

• “PAYE return” means a return under PAYE regulations;

• “VAT” means value added tax charged in accordance with VATA 1994;

• “VAT return” means a return under regulations under paragraph 2 of Schedule 11 to VATA 1994.

• (3) A relevant return is delivered to HMRC “for” a financial year if it relates to—

• (a) the whole of that financial year, or

• (b) a part of that financial year.

• (4) References to a return being required to be made include a requirement to file, deliver or submit a return (however expressed).

“Financial year”

6

• (1) “Financial year”—

• (a) in relation to a company which is (or is treated as if it is) formed and registered under the Companies Act 2006, has the meaning given by that Act (see section 390 of the Companies Act 2006);

• (b) in relation to a company to which Chapter 3 of Part 5 of the Overseas Companies Regulations 2009 (S.I. 2009/1801) (companies not required to prepare and disclose accounts under parent law) applies, has the meaning given by regulation 37 of those regulations (which modifies the application of sections 390 to 392 of the Companies Act 2006);

• (c) in relation to a company to which Chapter 3 of Part 6 of the Overseas Companies Regulations 2009 (institutions not required to prepare and disclose accounts under parent law) applies, has the meaning given by regulation 52 of those regulations (which modifies the application of sections 390 to 392 of the Companies Act 2006);

• (d) in relation to any other company or a non-UK resident partnership, means any period in respect of which a profit and loss account for the company’s or (as the case may be) the partnership’s undertaking is required to be made up (whether by its constitution or by the law under which it is formed), whether that period is 12 months or not;

• (e) in relation to a UK resident partnership, means any period of account for which its representative partner has provided, or is required to provide, a partnership statement within the meaning of TMA 1970.

• (2) In this paragraph—

• “UK resident partnership” means a partnership which is resident in the United Kingdom;

• “non-UK resident partnership” means a partnership which is not resident in the United Kingdom;

• “representative partner”, in relation to a UK resident partnership, meansthe partner who is required by a notice served under or by virtue of section 12AA(2) or (3) of TMA 1970 to make and deliver returns to an officer of Revenue and Customs , or the nominated partner within the meaning of paragraph 5 of Schedule A1 to TMA 1970.

• (3) For the purposes of this paragraph a partnership is resident in the territory in which the control and management of the activities of the partnership take place.

“Turnover” and “balance sheet total”

7

• (1) “Turnover”—

• (a) in relation to a company which is (or is treated as if it is) formed and registered under the Companies Act 2006, has the same meaning as in Part 15 of that Act (see section 474 of the Companies Act 2006);

• (b) in relation to any other company or a partnership, has a corresponding meaning.

• (2) “UK turnover”—

• (a) in relation to a UK resident company, means all of its turnover;

• (b) in relation to a non-UK resident company, means so much of its turnover as, on a just and reasonable apportionment, is attributable to the activities in respect of which the company is within the charge to corporation tax on income;

• (c) in relation to a UK resident partnership, means all of its turnover;

• (d) in relation to a non-UK resident partnership, means so much of its turnover as, on a just and reasonable apportionment, is attributable to any permanent establishment that it has in the United Kingdom.

• (3) “Balance sheet total”, in relation to a company or partnership and a financial year, means the aggregate of the amounts shown as assets in its balance sheet at the end of the financial year.

• (4) “UK balance sheet total”—

• (a) in relation to a UK resident company, means its balance sheet total;

• (b) in relation to a non-UK resident company, means so much of its balance sheet total as, on a just and reasonable apportionment, is attributable to the activities in respect of which the company is within the charge to corporation tax on income;

• (c) in relation to a UK resident partnership, means its balance sheet total;

• (d) in relation to a non-UK resident partnership, means so much of its balance sheet total as, on a just and reasonable apportionment, is attributable to any permanent establishment that it has in the United Kingdom.

• (5) In this paragraph—

• “UK resident company” and “non-UK resident company” have the same meaning as in the Corporation Tax Acts;

• “UK resident partnership” means a partnership which is resident in the United Kingdom;

• “non-UK resident partnership” means a partnership which is not resident in the United Kingdom.

• (6) For the purposes of this paragraph—

• (a) a partnership is resident in the territory in which the control and management of the activities of the partnership take place;

• (b) a non-UK resident partnership is to be regarded as having a permanent establishment in the United Kingdom if, were it a company within the meaning of the Corporation Tax Acts, it would have a permanent establishment in the United Kingdom by virtue of Chapter 2 of Part 24 of CTA 2010.

PART 2 — Requirement to notify HMRC of uncertain tax treatment

Requirement to notify

8

• (1) Sub-paragraph (2) applies if—

• (a) a relevant return is delivered to HMRC for a financial year by, or in respect of, a company or partnership, and

• (b) the company or partnership is a qualifying company, or qualifying partnership, in that financial year.

• (2) The company or partnership must notify HMRC if the relevant return includes an amount (including nil) brought into account for the purposes of a relevant tax and—

• (a) at the time the return is delivered to HMRC, the amount is an uncertain amount (see paragraph 10), or

• (b) after the return is delivered to HMRC, the amount becomes an uncertain amount by virtue of paragraph 10(2) (accounting provision made to reflect the probability that a different tax treatment will be applied to a transaction to which the amount relates).

• (3) In sub-paragraph (2)—

• (a) the reference to an amount included in a relevant return includes the inclusion of that amount as a result of an amendment of the return (other than amendment made by HMRC), and

• (b) in such a case, references to the return being delivered to HMRC are to be read as references to HMRC being notified of the amendment.

• (4) The notification requirement in sub-paragraph (2)—

• (a) applies separately in relation to each relevant tax;

• (b) applies only if the threshold test in paragraph 11(2) is met;

• (c) is subject to the general exemption in paragraph 18;

• (d) is subject to the exemption in paragraph 19 for certain group transactions;

• (e) must be complied with on or before the date determined in accordance with paragraph 9.

• (5) Where, in relation to a relevant tax, a company or partnership is required by sub-paragraph (2)(a) to notify HMRC about more than one amount that is included in a relevant return delivered for the financial year in question (other than as a result of an amendment of the return after the notification is given), a single notification must be given that covers each such amount.

• (6) A notification under sub-paragraph (2) must be given by such means, and in such form, and include such information, as is specified in a notice published by HMRC.

Deadline for notification

9

• (1) The time by which a notification required by paragraph 8(2) must be given to HMRC is determined in accordance with the following table—

Case	Deadline for notification
Notification under paragraph 8(2)(a) of an amount included in a company tax return delivered to HMRC for a financial year	On or before the later of—the filing date for the return (within the meaning given by paragraph 14 of Schedule 18 to FA 1998), orif the period for which the return is required to be made is a period for which the company is required to deliver accounts under the Companies Act 2006, the last day for the delivery of those accounts to the registrar of companies
Notification under paragraph 8(2)(a) of an amount included in a partnership return delivered to HMRC for a financial year	On or before the date on which the return is required to be made
Notification under paragraph 8(2)(a) of an amount included in a PAYE return delivered to HMRC for a financial year	On or before the date on which the last PAYE return for the financial year is required to be made
Notification under paragraph 8(2)(a) of an amount included in a VAT return delivered to HMRC for a financial year	On or before the date on which the last VAT return for the financial year is required to be made
Notification under paragraph 8(2)(b) of an amount included in a company tax return or partnership return delivered to HMRC for a financial year	On or before the date (determined in accordance with this table) by which the notification would be required if—the notification were required by paragraph 8(2)(a), andthe return were delivered to HMRC for the financial year in which the accounting provision is recognised in the accounts of the company or partnership (see paragraph 10(2)).
Notification under paragraph 8(2)(b) of an amount included in a PAYE return or VAT return delivered to HMRC for a financial year	On or before the date (determined in accordance with this table) by which the notification would be required if—the notification were required by paragraph 8(2)(a), andthe return were delivered to HMRC for the financial year following the financial year in which the accounting provision is recognised in the accounts of the company or partnership.

• (2) In the table, references to a notification under paragraph 8(2)(a) in relation to a return do not include references to a notification required as a result of an amendment of the return (see instead sub-paragraph (3)).

• (3) Where the notification is required by paragraph 8(2)(a) and concerns an amount included in a relevant return as a result of an amendment of the return, the notification must be given before the end of the period of 30 days beginning with the day on which HMRC is notified of the amendment.

Uncertain tax treatment

10

• (1) For the purposes of this Part, an amount brought into account by a company or partnership for the purposes of a relevant tax is an “uncertain amount” if either or both of sub-paragraphs (2) and (3) apply in relation to the amount.

• (2) This sub-paragraph applies if provision has been recognised in the accounts of the company or partnership to reflect the probability that a different tax treatment will be applied to a transaction to which the amount relates.

• (3) This sub-paragraph applies if the tax treatment applied in arriving at the amount relies (wholly or in part) on an interpretation or application of the law that is not in accordance with the way in which it is known that HMRC would interpret or apply the law.

• (4) For the purposes of sub-paragraph (3), HMRC’s position on a matter is taken to be “known” by a company or partnership if it is apparent from—

• (a) guidance, statements or other material of HMRC that is of general application and in the public domain, or

• (b) dealings with HMRC by or in respect of the company or partnership (whether or not they concern the amount in question or the transaction to which the amount relates).

Threshold test

11

• (1) This paragraph and paragraphs 12 to 17 apply for determining, in relation to an uncertain amount included in a relevant return, whether the threshold test is met (see paragraph 8(4)(b)).

• (2) The threshold test is met if it is reasonable to conclude that, by bringing the uncertain amount into account for the purposes of a relevant tax—

• (a) the company or partnership would obtain a tax advantage it would not obtain if the uncertain amount were the expected amount, and

• (b) in the relevant period, the aggregate value of all such tax advantages that would be obtained by bringing the uncertain amount, and any related uncertain amounts, into account is more than £5 million.

• (3) For these purposes—

• (a) “tax advantage”—

• (i) in relation to income tax or corporation tax, has the meaning given by paragraph 12;

• (ii) in relation to VAT, has the meaning given by paragraph 13;

• (b) the value of the tax advantage is determined in accordance with paragraph 14;

• (c) the “expected amount”, in relation to an uncertain amount, is determined in accordance with paragraph 15;

• (d) the “relevant period” is determined in accordance with paragraph 16;

• (e) whether two or more uncertain amounts are “related” is determined in accordance with paragraph 17.

• (4) Where the relevant period is more than or less than 12 months, the sum specified in sub-paragraph (2)(b) is to be proportionately increased or reduced.

• (5) The Treasury may by regulations amend sub-paragraph (2)(b) by substituting a different sum for the sum that is for the time being specified.

“Tax advantage” in relation to income tax or corporation tax

12

For the purposes of this Part, a “tax advantage” in relation to income tax or corporation tax includes—

• (a) a relief or increased relief from tax;

• (b) repayment or increased repayment of tax;

• (c) avoidance or reduction of a charge to tax or an assessment to tax;

• (d) avoidance of a possible assessment to tax;

• (e) deferral of a payment of tax or advancement of a repayment of tax;

• (f) avoidance of an obligation to deduct or account for tax.

“Tax advantage” in relation to VAT

13

• (1) For the purposes of this Part, a company or partnership obtains a tax advantage in relation to VAT if—

• (a) in a prescribed accounting period, the amount by which the output tax accounted for by the company or partnership is less, or is accounted for later, than would otherwise be the case;

• (b) the company or partnership obtains a VAT credit when it would otherwise not do so, or obtains a larger credit or obtains a credit earlier than would otherwise be the case;

• (c) in a case where the company or partnership recovers input tax as a recipient of a supply before the supplier accounts for the output tax, the period between the time when the input tax is recovered and the time when the output tax is accounted for is greater than would otherwise be the case;

• (d) in a prescribed accounting period, the amount of the company’s or partnership’s non-deductible tax is less than it otherwise would be;

• (e) the company or partnership avoids an obligation to account for VAT.

• (2) In sub-paragraph (1)(d) “non-deductible tax”, in relation to a company or partnership, means—

• (a) input tax for which the company or partnership is not entitled to credit under section 25 of VATA 1994;

• (b) any VAT incurred by the company or partnership which is not input tax and in respect of which the company or partnership is not entitled to a refund from the Commissioners for Her Majesty’s Revenue and Customs by virtue of any provision of VATA 1994.

• (3) For the purposes of sub-paragraph (2)(b), the VAT “incurred” by a company or partnership is—

• (a) VAT on the supply to the company or partnership of any goods or services;

• (b) VAT paid or payable by the company or partnership on the importation of any goods.

• (4) Terms used in this paragraph which are defined in section 96 of VATA 1994 have the meanings given by that section.

Value of a tax advantage

14

• (1) The value of a tax advantage is the additional amount due or payable in respect of tax if the uncertain amount were the expected amount (subject to the following provisions of this paragraph).

• (2) The following are ignored in calculating the value of the tax advantage—

• (a) relief under Part 5 (group relief) or 5A (group relief for carried-forward losses) of CTA 2010, and

• (b) any relief under section 458 of CTA 2010 (relief in respect of repayment etc of loan) which is deferred under subsection (5) of that section.

• (3) To the extent that the tax advantage has the result that a loss is recorded for the purposes of corporation tax or income tax, and the loss has been wholly used to reduce the amount due or payable in respect of that tax, the value of the tax advantage is determined in accordance with sub-paragraph (1).

• (4) To the extent that the tax advantage has the result that a loss is recorded for the purposes of corporation tax or income tax, and the loss has not been wholly used to reduce the amount due or payable in respect of that tax, the value of the tax advantage is—

• (a) the value under sub-paragraph (1) of so much of the tax advantage as results from the part (if any) of the loss which is used to reduce the amount due or payable in respect of tax, and

• (b) 10% of the part of the loss not so used.

• (5) Sub-paragraphs (3) and (4) apply both—

• (a) to a case where no loss would have been recorded but for the tax advantage, and

• (b) to a case where a loss of a different amount would have been recorded (but in that case, sub-paragraphs (3) and (4) apply only to the difference between the amount of the loss recorded and the different amount that would have been recorded).

• (6) To the extent that a tax advantage results in a loss recorded for the purposes of corporation tax or income tax, the value of it is nil where, because of—

• (a) the nature of the loss, or

• (b) the circumstances of the company or partnership that has brought the uncertain amount into account for tax purposes,

there is no reasonable prospect of the loss being used to support a claim to reduce a tax liability (of any person).

The “expected amount”

15

• (1) For the purposes of the threshold test in paragraph 11(2), the “expected amount”, in relation to an uncertain amount, is the amount that it is reasonable to conclude the uncertain amount would be were the tax treatment applied in arriving at the amount—

• (a) where the uncertain amount is uncertain by virtue of paragraph 10(2), the different tax treatment for which provision has been recognised in the relevant accounts;

• (b) where the uncertain amount is uncertain by virtue of paragraph 10(3), a tax treatment that is wholly in accordance with HMRC’s known interpretation and application of the law.

• (2) Where more than one tax treatment is wholly in accordance with HMRC’s known interpretation and application of the law, sub-paragraph (1)(b) applies by reference to whichever of those treatments would give the least amount of tax advantage for the purposes of the threshold test.

• (3) Where sub-paragraph (1) gives more than one expected amount, because the uncertain amount is uncertain by virtue of both of sub-paragraphs (2) and (3) of paragraph 10, the threshold test applies by reference to whichever of those expected amounts would give the most amount of tax advantage.

• (4) Paragraph 10(4) applies for the purposes of sub-paragraph (1)(b) as it applies for the purposes of paragraph 10(3).

Relevant period

16

• (1) For the purposes of the threshold test in paragraph 11(2), the “relevant period” in relation to an uncertain amount included in a relevant return is—

• (a) where the relevant return is a company tax return, the period for which the return is made (see paragraph 5 of Schedule 18 to FA 1998);

• (b) where the relevant return is a partnership return, the financial year for which the return is delivered to HMRC;

• (c) where the relevant return is a PAYE return, the period corresponding to the length of the financial year for which the return is delivered to HMRC, ending with the last day of the last period for which a PAYE return is required to be made that falls wholly within that financial year;

• (d) where the relevant return is a VAT return, the period corresponding to the length of the financial year for which the return is delivered to HMRC, ending with the last day of the last prescribed accounting period falling wholly within that financial year.

• (2) In sub-paragraph (1)(d), “prescribed accounting period” has the meaning given by section 25(1) of VATA 1994.

Related amounts

17

• (1) For the purposes of the threshold test in paragraph 11(2), two uncertain amounts are related if—

• (a) both amounts are included in the same relevant return, or a relevant return of the same description delivered to HMRC for the same financial year,

• (b) both amounts relate to the same relevant tax, and

• (c) the tax treatment applied in arriving at one amount is substantially the same as the tax treatment applied in arriving at the other amount.

• (2) Where the relevant return is a return under PAYE regulations, national insurance contributions are to be treated as income tax for the purposes of this paragraph (and accordingly, for the purposes of determining the aggregate value of the tax advantages mentioned in paragraph 11(2)(b)).

General exemption

18

• (1) A company or partnership is not required by paragraph 8(2) to notify HMRC about an amount included in a relevant return if it is reasonable for the company or partnership to conclude that HMRC already have available to them all, or substantially all, of the information relating to that amount that would have been included in the notification if it had been required to be given.

• (2) For these purposes, information is to be taken to be available to HMRC if it has become available by any means, including by virtue of—

• (a) information provided under any of the following provisions—

• (i) Schedule 11A to VATA 1994 (disclosure of avoidance schemes);

• (ii) Part 7 of FA 2004 (disclosure of tax avoidance schemes);

• (iii) Schedule 17 to FA 2009 (international movement of capital);

• (iv) Schedule 17 to F(No.2)A 2017 (disclosure of tax avoidance schemes: VAT and other indirect taxes);

• (v) regulations under section 84 of FA 2019 (international tax enforcement: disclosable arrangements), or

• (b) dealings with HMRC by or in respect of the company or partnership.

• (3) The Treasury may by regulations amend sub-paragraph (2)(a) to add to the provisions mentioned or to remove or modify a provision mentioned.

Exemption for certain group transactions

19

A company is not required by paragraph 8(2) to notify HMRC about an uncertain amount included in a relevant return if—

• (a) the relevant tax for the purposes of which the amount is brought into account is corporation tax,

• (b) the amount relates to a transaction between the company and one or more other companies at a time when all of the companies are members of the same group (see paragraph 3), and

• (c) the net effect of the transaction is that the value of the tax advantages (if any) that would be obtained by the group, taken as a whole, does not exceed the sum for the time being specified in paragraph 11(2)(b).

PART 3 — Penalties

Penalty for non-compliance with paragraph 8

20

• (1) A company or partnership that is required by paragraph 8(2)(a) to give a notification to HMRC is liable to a penalty if it fails to give the notification in accordance with that paragraph.

• (2) The amount of the penalty under sub-paragraph (1) is—

• (a) for a first failure in respect of a relevant tax, £5,000;

• (b) for a second failure in respect of a relevant tax, £25,000;

• (c) for a further failure in respect of a relevant tax, £50,000.

• (3) A company or partnership that is required by paragraph 8(2)(b) to give a notification to HMRC is liable to a penalty if it fails to give the notification in accordance with that paragraph.

• (4) The amount of the penalty under sub-paragraph (3) is £5,000.

First, second and further failures

21

• (1) This paragraph applies for determining whether a company’s or partnership’s failure to give a notification in accordance with paragraph 8(2)(a) is, in respect of a relevant tax—

• (a) a first failure,

• (b) a second failure, or

• (c) a further failure.

• (2) The failure is a first failure in respect of a relevant tax if, in the applicable three year period, the company or partnership has not been assessed to a penalty under paragraph 20(1) in respect of the same relevant tax.

• (3) The failure is a second failure in respect of a relevant tax if, in the applicable three year period, the company or partnership—

• (a) has been assessed to a penalty under paragraph 20(1) for a first failure in respect of the same relevant tax, but

• (b) has not been assessed to a penalty under paragraph 20(1) for a second or further failure in respect of the same relevant tax.

• (4) The failure is a further failure in respect of a relevant tax if, in the applicable three year period, the company or partnership has been assessed to a penalty under paragraph 20(1) for a second or further failure in respect of the same relevant tax.

• (5) The “applicable three year period” is the period comprising the three financial years of the company or partnership immediately preceding the financial year for which the relevant return, in relation to which the notification was required, was delivered to HMRC.

Reasonable excuse

22

• (1) Liability to a penalty under paragraph 20 does not arise if the person who would otherwise be liable to the penalty satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that the person had a reasonable excuse for that failure.

• (2) For the purposes of this paragraph—

• (a) an insufficiency of funds is not a reasonable excuse unless attributable to events outside the person’s control;

• (b) where the person relies on another person to do anything, that cannot be a reasonable excuse unless the first person took reasonable care to avoid the failure;

• (c) where the person had a reasonable excuse for the failure but the excuse has ceased, the person is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.

Assessment of penalties

23

• (1) Where a person becomes liable to a penalty under paragraph 20—

• (a) HMRC may assess the penalty, and

• (b) if they do so, HMRC must notify the person of the assessment.

• (2) An assessment of a penalty under paragraph 20 may not be made—

• (a) more than 6 months after the failure to give the notification in accordance with paragraph 8(2)(a) or (b) (as the case may be) first comes to the attention of an officer of Revenue and Customs, or

• (b) more than 6 years after the end of the financial year in which the notification should have been given.

Appeal

24

• (1) A person may appeal against—

• (a) a decision of HMRC that a penalty under paragraph 20 is payable by the person, or

• (b) a decision of HMRC as to the amount of a penalty under paragraph 20.

• (2) Notice of an appeal must be given—

• (a) in writing, and

• (b) before the end of the period of 30 days beginning with the date on which the notification by HMRC under paragraph 23(1)(b) was issued.