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The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2006

Type Statutory-Instrument

Publication 2006-06-15

Last updated 2017-12-21

State In force

Department King's Printer of Acts of Parliament

Source legislation.gov.uk

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Made: 15th June 2006

Laid before the House of Commons: 15th June 2006

Coming into force: 1st August 2006

The Treasury make the following Regulations in exercise of the powers conferred by section 306(1)(a) and (b) of the Finance Act 2004[^f00001].

PART 1 — Preliminary

Citation, commencement and effect

1

(1) These Regulations may be cited as the Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2006, and shall come into force on 1st August 2006.

(2) These Regulations do not have effect—

(a) for the purposes of section 308(1) of FA 2004 (duties of promoter relating to any notifiable proposal), if the relevant date falls before 1st August 2006;

(b) for the purposes of section 308(3) of FA 2004 (duties of promoter relating to any notifiable arrangements), if the date on which the promoter first becomes aware of any transaction forming part of notifiable arrangements falls before 1st August 2006;

(c) for the purposes of section 309(1) of FA 2004 (duty of person dealing with promoter outside United Kingdom), and of section 310 of that Act (duty of parties to notifiable arrangements not involving promoter) if the date on which any transaction forming part of notifiable arrangements is entered into falls before 1st August 2006.

(3) In paragraph (2)(a) “the relevant date” has the meaning given by section 308(2) of FA 2004.

Interpretation : general

2

(1) This paragraph gives the meaning of the abbreviated references to Acts used in these Regulations—

“CAA 2001” means the Capital Allowances Act 2001[^f00002];

“CTA 2009” means the Corporation Tax Act 2009;

“CTA 2010” means the Corporation Tax Act 2010;

“FA 2004” means the Finance Act 2004;

“ICTA” means the Income and Corporation Taxes Act 1988[^f00003];

“ITA 2007” means the Income Tax Act 2007;

“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003[^f00004];

“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005[^f00005];

“TCGA 1992” means the Taxation of Chargeable Gains Act 1992[^f00006].

(2) In these Regulations—

“business” has the meaning given by regulation 3;

“generally accepted accounting practice” has the meaning given by section 1127 of CTA 2010;

“HMRC” means Her Majesty’s Revenue and Customs

“the Information Regulations” means the Tax Avoidance Schemes (Information) Regulations 2004[^f00007];

“the material date” means whichever of the following is applicable—for a proposal notifiable under section 308(1) of FA 2004, the relevant date (as defined in section 308(2) of FA 2004);for arrangements notifiable under section 308(3) of FA 2004, the date the promoter first becomes aware of any transaction forming part of the notifiable arrangements; orfor arrangements notifiable under section 309 or 310 of FA 2004, the date the person enters into any transaction forming part of the notifiable arrangements;

“plant or machinery lease” has the meaning given by section 70K CAA 2001;

“the Promoters Regulations” means the Tax Avoidance Schemes (Promoters and Prescribed Circumstances) Regulations 2004[^f00008];

“small or medium-sized enterprise” has the meaning given by regulation 4;.

(3) For the purposes of these Regulations section 839 of ICTA[^f00009] applies to determine whether persons are connected.

Meaning of “business”

3

In these Regulations “business” means—

(a) a company;

(b) a partnership; or

(i) as trading income under Part 2 of ITTOIA 2005 (trading income), or

(ii) as property income under section 268 of ITTOIA 2005 (charge to tax on profits of a property business).

Meaning of “small or medium-sized enterprise”

4

(1) For the purposes of these Regulations a “small or medium-sized enterprise” means a micro, small or medium-sized enterprise as defined in the Recommendation.

(2) In this regulation—

“the Recommendation” means the Commission Recommendation of 6th May 2003, and

“the Annex” means the Annex to the Recommendation.

(3) Paragraph (1) is subject to the following provisions.

(4) If a company (“C”) is a micro, small or medium-sized enterprise, disregarding any partner enterprise or linked enterprise, and, taken alone, it would satisfy the employee limit and at least one of the financial limits, but—

(a) the number of employees, annual turnover or annual balance sheet total (as the case may be) of a partner enterprise or linked enterprise to which it is related has been taken into account in determining whether the employee limits or the financial limits have been exceeded, and

(b) a partner enterprise or linked enterprise to which C is related would, disregarding the number of employees, and the annual turnover and annual balance sheet totals of C, exceed the employee limit, or either of the financial limits,

Article 4 (2) of the Annex is to be disregarded in determining whether C is a small or medium-sized enterprise for an accounting period in which it exceeds the employee or financial limits.

PART 2 — General

Prescribed descriptions of arrangements

5

(1) The following arrangements are prescribed for the purposes of Part 7 of the FA 2004 (disclosure of tax avoidance schemes)—

(a) in relation to income tax, corporation tax and capital gains tax, any arrangements which fall within any description specified in a provision of these Regulations listed in paragraph (2);

(b) in relation to inheritance tax, any arrangements which fall within any description specified in a provision of these Regulations listed in paragraph (2)(a) or (c);

(c) in relation to the apprenticeship levy, any arrangements which fall within any description specified in a provision of these Regulations listed in paragraph (2)(a), (b), (c) or (e).

(2) The provisions are—

(a) regulation 6 (description 1: confidentiality in cases involving a promoter);

(b) regulation 7 (description 2: confidentiality in cases not involving a promoter);

(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(e) regulation 10 (description 5: standardised tax products);

(f) regulation 12 (description 6: loss schemes); ...

(g) regulation 13 (description 7: leasing arrangements) ; ...

(h) regulation 18 (description 8: employment income provided through third parties) and

(i) regulation 19 (description 9: financial products).

(3) For the purpose only of determining whether arrangements are prescribed by regulations 6, 7, 8 and 13 of these Regulations, regulation 6 of the Promoters Regulations (persons not to be treated as promoters: legal professional privilege)[^f00010] shall be disregarded.

PART 3 — Prescribed arrangements

Description 1: Confidentiality where promoter involved

6

(1) Arrangements are prescribed if—

(a) any element of the arrangements (including the way in which the arrangements are structured) gives rise to the tax advantage expected to be obtained under the arrangements; and

(b) it might reasonably be expected that a promoter would wish the way in which that element of those arrangements secures, or might secure, a tax advantage to be kept confidential from any other promoter at any time following the material date.

(2) Arrangements are prescribed if it might reasonably be expected that a promoter would, but for the requirements of these Regulations, wish to keep the way in which any element of those arrangements (including the way in which the arrangements are structured) that secures, or might secure, the tax advantage confidential from HMRC at any time following the material date, and a reason for doing so is to facilitate repeated or continued use of the same element, or substantially the same element, in the future.

(2A) Cases where arrangements will be prescribed under paragraph (2) include, but are not limited to, where—

(a) a promoter does not provide to the user of the arrangements (“the user”), or prevents or discourages the user from retaining, any promotional materials, data or written professional advice relating to those arrangements; and

(b) it might reasonably be expected that the reason for doing so is to keep the arrangements confidential from HMRC in order to facilitate repeated or continued use of any element of those arrangements.

(3) In a case where—

(a) by virtue of regulation 6 of the Promoters Regulations (persons not to be treated as promoters: legal professional privilege), no person is to be treated as the promoter in relation to the arrangements; or

(b) by virtue of section 309(1) of FA 2004 (duty of person dealing with promoter outside United Kingdom), a user of the arrangements has a duty to provide prescribed information,

for paragraph (2) substitute—

(2) Arrangements are prescribed if it might reasonably be expected that the user of the arrangements would, but for the requirements of these regulations, wish to keep the way in which any element of those arrangements (including the way in which the arrangements are structured) that secures the tax advantage confidential from HMRC at any time following the material date.

Description 2: Confidentiality where no promoter involved

7

(1) Arrangements are prescribed if—

(a) no person is a promoter in relation to them;

(b) the intended user of the arrangements is a business which is not a small or medium-sized enterprise;

(c) any element of the arrangements (including the way in which the arrangements are structured) gives rise to the tax advantage expected to be obtained under the arrangements;

(d) it might reasonably be expected that a user would, but for the requirements of these Regulations, wish to keep the way in which that element secures the advantage confidential from HMRC at any time following the material date; and

(e) a reason for the user’s wishing to keep the element confidential from HMRC is—

(i) to facilitate repeated or continued use of the same element, or substantially the same element, in the future; or

(ii) to reduce the risk of HMRC using that information to open an enquiry into any return or account which a person is required by or under any enactment to deliver to HMRC; or

(iii) to reduce the risk of HMRC using that information to withhold payment of all or part of an amount claimed separately from a return under—

(aa) section 261B of the Taxation of Chargeable Gains Act 1992 (treating trade loss etc as CGT loss); or

(bb) Part 4 of the ITA 2007 (loss relief).

(2) Arrangements are also prescribed if—

(a) paragraphs (1)(a) to (c) are met; and

(b) if there had been a promoter in relation to the arrangements, it might reasonably have been expected that they would, but for the requirements of these Regulations, wish to have kept the way in which any element of the arrangements (including the way in which the arrangements were structured) that secured the tax advantage confidential from HMRC at any time following the material date, and a reason for doing so would be to facilitate repeated or continued use of the same element, or substantially the same element, in the future.

Description 3: Premium Fee

8

(1) Arrangements are prescribed if they are such that it might reasonably be expected that a promoter or a person connected with a promoter of arrangements that are the same as, or substantially similar to, the arrangements in question, would, but for the requirements of these Regulations, be able to obtain a premium fee from a person experienced in receiving services of the type being provided.

But arrangements are not prescribed by this regulation if—no person is a promoter in relation to them; andthe tax advantage which may be obtained under the arrangements is intended to be obtained by an individual or a business which is a small or medium-sized enterprise.

(2) For the purposes of paragraph (1), and in relation to any arrangements, a “premium fee” is a fee chargeable by virtue of any element of the arrangements (including the way in which they are structured) from which the tax advantage expected to be obtained arises, and which is—

(a) to a significant extent attributable to that tax advantage, or

(b) to any extent contingent upon the obtaining of that tax advantage as a matter of law.

Description 4: Off market terms

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Description 5: standardised tax products

10

(1) Subject to regulation 11, arrangements are prescribed if a promoter makes the arrangements available for implementation by more than one person and the conditions in paragraph (2) are met.

(2) The conditions are that an informed observer (having studied the arrangements and having regard to all relevant circumstances) could reasonably be expected to conclude that—

(a) the arrangements have standardised, or substantially standardised, documentation—

(i) the purpose of which is to enable a person to implement the arrangements;

(ii) the form of which is determined by the promoter; and

(iii) the substance of which does not need to be tailored, to any material extent, to enable a person to implement the arrangements;

(b) a person implementing the arrangements must enter into a specific transaction or series of specific transactions;

(d) either the main purpose of the arrangements is to enable a person to obtain a tax advantage or the arrangements would be unlikely to be entered into but for the expectation of obtaining a tax advantage.

Arrangements excepted from Description 5

11

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) The following arrangements are excepted from being prescribed under regulation 10—

(a) arrangements which consist solely of one or more plant or machinery leases ...;

(b) an enterprise investment scheme (Part 5 of ITA 2007 and Schedule 5B to TCGA 1992);

(d) arrangements qualifying under the corporate venturing scheme (see Schedule 15 to the Finance Act 2000);

(e) arrangements qualifying for community investment tax relief (see Schedules 16 and 17 to the Finance Act 2002);

(f) an account which satisfies the conditions in the Individual Savings Account Regulations 1998[^f00017];

(g) an approved share incentive plan (see Chapter 6 of Part 7 of, and Schedule 2 to, ITEPA 2003);

(h) an approved share option scheme (see Chapter 7 of Part 7 of, and Schedule 3 to, ITEPA 2003);

(i) an approved CSOP scheme (see Chapter 8 of Part 7 of, and Schedule 4 to, ITEPA 2003);

(j) the grant of one or more qualifying options which meet the requirements of Schedule 5 to ITEPA 2003 (enterprise management incentives)—

(i) together only with such other steps as are reasonably necessary in all the circumstances for the purposes of facilitating it, or

(ii) which fall to be notified to the Board in accordance with Part 7 of that Schedule;

(k) a registered pension scheme (see section 150(2) of FA 2004);

(l) an overseas pension scheme in respect of which tax relief is granted in the United Kingdom under section 615 of ICTA (exemption from tax for superannuation payments in respect of persons not resident in the United Kingdom or in respect of trades carried on wholly or partly outside the United Kingdom);

(m) a pension scheme which is a relevant non-UK pension scheme within the meaning given by paragraph 1(5) of Schedule 34 to FA 2004;

(n) a scheme to which section 731 of ITTOIA 2005 applies (periodical payments of personal injury damages);

(o) arrangements which would be prescribed by regulation 19 but for regulation 21.

Description 6: Loss schemes

12

Arrangements are prescribed if—

(a) the promoter expects more than one individual to implement the same, or substantially the same, arrangements; and

(b) an informed observer (having studied the arrangements and having regard to all relevant circumstances) could reasonably be expected to conclude that—

(i) the main benefit or one of the main benefits which could be expected to accrue to some or all of the individuals participating in the arrangements is the provision of losses, and

(ii) the arrangements (including the way they are structured) contain an element which is, or elements which are, unlikely to have been entered into by the individuals concerned were it not for the provision of those losses, and

(iii) those individuals would be expected to use those losses to reduce their liability to income tax or capital gains tax.

Description 7: Leasing arrangements

13

(1) Arrangements are prescribed if—

(a) the arrangements include a plant or machinery lease ...;

(b) one of the additional conditions is met (see regulation 15);

(d) the lease is not a short-term lease (see regulation 17).

(2) But arrangements are not prescribed by this regulation if—

(a) no person is a promoter in relation to them; and

(b) the tax advantage which may be obtained under the arrangements is intended to be obtained by an individual or a business which is a small or medium-sized enterprise.

Meaning of “plant or machinery lease”

14

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The additional conditions

15

(1) The first additional condition is that the arrangements are designed in such a way that one or more of the plant or machinery leases, comprised in the arrangements, are or would be entered into by—

(a) one party who has or would have a right or entitlement to claim capital allowances under Part 2 of CAA 2001 (plant and machinery allowances) in respect of the expenditure incurred on the plant or machinery, and

(b) another party who is not, or would not be, within the charge to corporation tax.

(2) A lease satisfies this condition if sub-paragraphs (a) and (b) of paragraph (1) are met, regardless of whether there are or would be (in addition to the parties mentioned in those sub-paragraphs) other parties to the lease who satisfy neither of those conditions.

(3) A party who acts merely as a guarantor under the lease is to be disregarded for the purposes of paragraph (1)(b).

(4) The second additional condition is that the arrangements include provision designed to—

(a) remove from the lessor the whole, or the greater part, of any risk, which would otherwise fall directly or indirectly upon the lessor, of sustaining a loss if payments due under the lease are not made in accordance with its terms, and

(b) do so by the provision of money or a money debt.

The relevant value condition

16

(1) The relevant value condition is met if—

(a) the lower of the cost to the lessor, or the market value, of any one asset forming part of the plant and machinery leased or to be leased under the arrangements is at least £10,000,000; or

(b) the aggregate of the lower of the costs to the lessor, or the market values, of all of the assets forming part of the plant and machinery leased or to be leased under the arrangements is at least £25,000,000.

(2) For the purposes of paragraph (1) the market value of plant or machinery leased or to be leased under the arrangements is to be determined on the assumption of a disposal—

(a) by an absolute owner;

(b) free from all encumbrances; and

(3) “Absolute owner” in the application of paragraph (2)(a) to Scotland, means the owner.

Short-term leases

17

(1) For the purposes of regulation 13(1)(d) a lease whose term is 2 years or less is a short-term lease.

PART 4 — Further provisions

Revocations

18

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Signed

Frank Roy — Dave Watts — Two of the Lords Commissioners of Her Majesty’s Treasury — 15th June 2006

Explanatory note

(This note is not part of the Regulations)

These Regulations make fresh provision for the disclosure of tax avoidance schemes in relation to income tax, corporation tax and capital gains tax. They replace the Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2004 (S.I. 2004/1863, amended by S.I. 2004/3429).

Regulation 1 deals with the citation and commencement of the Regulations.

Regulations 2 to 4 deal with interpretation.

Regulation 5 introduces the descriptions of arrangements prescribed by these Regulations.

Regulations 6 and 7 prescribe with arrangements which a promoter or (where he is obliged to report them) a user might wish to keep confidential from either Her Majesty’s Revenue and Customs or other promoters.

Regulation 8 prescribes arrangements for which a promoter might reasonably expect a premium fee.

Regulation 9 prescribes arrangements where —

(a) the tax advantage arises, to more than an incidental degree, from the inclusion of a financial product;

(b) a promoter or someone connected with him becomes a party to the financial product;

Regulation 10 prescribes arrangements which involve the use of standardised tax products.

Regulation 11 contains a list of arrangements which do not fall within regulation 10.

Regulation 12 prescribes arrangements which are made available to more than one individual and are expected to generate losses to enable individuals to reduce their income tax or capital gains tax liability.

Regulations 13 to 17 prescribe arrangements which include a plant or machinery lease.

Regulation 18 provides for the revocation of the 2004 Regulations and an amending instrument.

A full regulatory impact assessment in respect of these Regulations has been prepared and is available on the website of HM Revenue and Customs at www.hmrc.gov.uk/ria/#full.

Footnotes

[^f00001]: 2004 c. 12.

[^f00002]: 2001 c. 2.

[^f00003]: 1988 c. 1.

[^f00004]: 2003 c. 1.

[^f00005]: 2005 c. 5.

[^f00006]: 1992 c. 12.

[^f00007]: S.I. 2004/1864, amended by S.I. 2005/1869.

[^f00008]: S.I. 2004/1865, amended by regulation 2 of S.I. 2004/2613.

[^f00009]: Section 839 was amended by paragraph 20 of Schedule 17 to the Finance Act 1995 (c. 4) and by paragraph 340 of Schedule 1 to the Income Tax (Trading and Other Income) Act 2005.

[^f00010]: S.I. 2004/1865. Regulation 6 was added by regulation 2 of S.I. 2004/2613.

[^f00017]: S.I. 1998/1870.

Editorial notes

[^key-d5318273cd995282f8e27adca1d15ec3]: Reg. 5 in force at 1.8.2006, see reg. 1(1)

[^key-1cf2185821d4e6a17a0b7d89d312e7bd]: Reg. 2 in force at 1.8.2006, see reg. 1(1)

[^key-df3a141998a226f436c90e1883abb59c]: Reg. 11 in force at 1.8.2006, see reg. 1(1)

[^key-d35696e2a7321a08440056c32712dc71]: Reg. 13 in force at 1.8.2006, see reg. 1(1)

[^key-2307709f9e97e292851d4fd40da19eea]: Reg. 15 in force at 1.8.2006, see reg. 1(1)

[^key-f43d0c2ec879435a6dea6f1dfd755950]: Reg. 17 in force at 1.8.2006, see reg. 1(1)

[^key-0ac72808f07d0de2fb299bb374bde804]: Reg. 1 in force at 1.8.2006, see reg. 1(1)

[^key-08ec08e6b61b4a047f87b396995f4d22]: Reg. 3 in force at 1.8.2006, see reg. 1(1)

[^key-9f9948b7db8a98f2a4c2c025c0560b25]: Reg. 4 in force at 1.8.2006, see reg. 1(1)

[^key-b6f8058665f4693f0237d74feb9261f5]: Reg. 7 in force at 1.8.2006, see reg. 1(1)

[^key-52f7b6460236c5ec7fd492d8f9e7a90c]: Reg. 8 in force at 1.8.2006, see reg. 1(1)

[^key-c816af3be020fe6cde3112c48cde0bd7]: Reg. 12 in force at 1.8.2006, see reg. 1(1)

[^key-dd16847da53d4ad6d724682b1465b3e0]: Reg. 16 in force at 1.8.2006, see reg. 1(1)

[^key-76d42cf32cd5328086445d08091ca8d8]: Word in reg. 5(2)(g) substituted for full stop (1.9.2009) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2009 (S.I. 2009/2033), regs. 1, 2(2)(b) (with reg. 3)

[^key-32c9919537a9d2ccbf00d5ac374d0ce7]: Word in reg. 5(2)(f) omitted (1.9.2009) by virtue of The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2009 (S.I. 2009/2033), regs. 1, 2(2)(a) (with reg. 3)

[^key-9f3814b6134edeb83c68dc7f8384c994]: Words in reg. 2(2) inserted (1.1.2011) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2010 (S.I. 2010/2834), regs. 1, 3(2)

[^key-0cd76f1423a53f16c0d3c8133accde73]: Words in reg. 2(2) inserted (1.1.2011) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2010 (S.I. 2010/2834), regs. 1, 3(3)

[^key-c70ee20e974569153d51b47442e6c504]: Words in reg. 2(2) omitted (1.1.2011) by virtue of The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2010 (S.I. 2010/2834), regs. 1, 3(4)

[^key-19f1763045e7a6a514eb1c7a7ebaaf73]: Words in reg. 2(2) substituted (1.1.2011) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2010 (S.I. 2010/2834), regs. 1, 3(5)

[^key-0f5e70fc2f807a19688117c64dcc0537]: Reg. 5(2)(d) omitted (1.1.2011) by virtue of The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2010 (S.I. 2010/2834), regs. 1, 4

[^key-b1825fb7ddc812482fe33ce79579062a]: Reg. 6 substituted (1.1.2011) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2010 (S.I. 2010/2834), regs. 1, 5

[^key-628b222b8864059386e1fb6a6834c017]: Reg. 7(d) substituted (1.1.2011) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2010 (S.I. 2010/2834), regs. 1, 6(2)

[^key-d886cb795b6233776660b9a35119c93f]: Reg. 7(e) substituted (1.1.2011) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2010 (S.I. 2010/2834), regs. 1, 6(3)

[^key-8659a74a5dbe022666492df520299a34]: Word in reg. 8(1) substituted (1.1.2011) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2010 (S.I. 2010/2834), regs. 1, 7(2)

[^key-b41dd9ee60ac311eb8b1fde4a185b085]: Words in reg. 8(2)(b) inserted (1.1.2011) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2010 (S.I. 2010/2834), regs. 1, 7(3)

[^key-93ddd3092479dc7372d8ff380da0c945]: Reg. 9 omitted (1.1.2011) by virtue of The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2010 (S.I. 2010/2834), regs. 1, 8

[^key-1fb00ea3868f239ffc78c2ebee750d92]: Words in reg. 11(2)(a) omitted (1.1.2011) by virtue of The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2010 (S.I. 2010/2834), regs. 1, 9

[^key-d1f340c319612beb9bc37b39f1f41de6]: Words in reg. 13(1)(a) omitted (1.1.2011) by virtue of The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2010 (S.I. 2010/2834), regs. 1, 10

[^key-1d13e01be91a6936ded7966b7a9f2165]: Reg. 14 omitted (1.1.2011) by virtue of The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2010 (S.I. 2010/2834), regs. 1, 11

[^key-122578e3c6f644173faa163a009f005b]: Word in reg. 15(5)(b) substituted (1.1.2011) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2010 (S.I. 2010/2834), regs. 1, 12

[^key-2798902e409ff71ac2d87325a8acbdf2]: Reg. 17(5) inserted (1.1.2011) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2010 (S.I. 2010/2834), regs. 1, 13

[^key-78a1caaf2516a5dfd0680a791d913432]: Reg. 5(2)(h) substituted (4.11.2013) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2013 (S.I. 2013/2595), regs. 1(1), 9 (with reg. 1(2))

[^key-df3911c1cdb0f6acce856bf255b16db9]: Reg. 6(2A) inserted (4.11.2013) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2013 (S.I. 2013/2595), regs. 1(1), 4 (with reg. 1(2))

[^key-9e055d95514865d188f87ca72ab4aa6b]: Words in reg. 6(2) substituted (4.11.2013) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2013 (S.I. 2013/2595), regs. 1(1), 3(a) (with reg. 1(2))

[^key-bf51cd84759148f36c85251405171bf9]: Words in reg. 6(2) substituted (4.11.2013) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2013 (S.I. 2013/2595), regs. 1(1), 3(b) (with reg. 1(2))

[^key-a13cff503dc8b7b1921ea63f6e677cd4]: Words in reg. 6(3) substituted (4.11.2013) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2013 (S.I. 2013/2595), regs. 1(1), 5 (with reg. 1(2))

[^key-8c87dcb95442df46d4b4e637b5f0b45c]: Reg. 7(1): reg. 7 renumbered as reg. 7(1) (4.11.2013) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2013 (S.I. 2013/2595), regs. 1(1), 6 (with reg. 1(2))

[^key-8b73ade12a59f1db473ae5ffb254be13]: Reg. 7(2) inserted (4.11.2013) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2013 (S.I. 2013/2595), regs. 1(1), 8 (with reg. 1(2))

[^key-e5f474d59f8baf476057b177a1f23389]: Words in reg. 7(1)(d) substituted (4.11.2013) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2013 (S.I. 2013/2595), regs. 1(1), 7 (with reg. 1(2))

[^key-48f2afd84ad9c45e4830600e1021bfb7]: Pt. 4 revoked (4.11.2013) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2013 (S.I. 2013/2595), regs. 1(1), 10(1) (with reg. 1(2))

[^key-ee2cc87ed54928ab42001fe8c0808cae]: Reg 18 substituted for reg. 17A (4.11.2013) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2013 (S.I. 2013/2595), regs. 1(1), 10(2) (with reg. 1(2))

[^key-0c094024dd2b5177a6a17b4557211f78]: Words in reg. 2(2) inserted (23.2.2016) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2016 (S.I. 2016/99), regs. 1(1), 3(3) (with reg. 1(2))

[^key-955276b053d94b0880f547d21ed9bd47]: Words in reg. 2(1) inserted (23.2.2016) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2016 (S.I. 2016/99), regs. 1(1), 3(2) (with reg. 1(2))

[^key-7ff051cdbfc8ff4b965ed80a4ec3aec6]: Reg. 5(1) substituted (23.2.2016) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2016 (S.I. 2016/99), regs. 1(1), 4(2) (with reg. 1(2))

[^key-02b10337f14da3f2946434745bf6b636]: Word in reg. 5(2) omitted (23.2.2016) by virtue of The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2016 (S.I. 2016/99), regs. 1(1), 4(3)(a) (with reg. 1(2))

[^key-d128656bf8f462fe22e5a621bfb697b7]: Reg. 5(2)(i) and word inserted (23.2.2016) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2016 (S.I. 2016/99), regs. 1(1), 4(3)(b) (with reg. 1(2))

[^key-137b131fc13a750dc103e147e9065ccc]: Regs. 19-21 inserted (23.2.2016) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2016 (S.I. 2016/99), regs. 1(1), 9 (with reg. 1(2))

[^key-c6ffc247b439cd1fc8473254035d7494]: Words in reg. 7(1)(e)(iii)(bb) substituted (23.2.2016) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2016 (S.I. 2016/99), regs. 1(1), 5 (with reg. 1(2))

[^key-677ed95b25cbc01388664eb8a8d1eb06]: Reg. 10 substituted (23.2.2016) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2016 (S.I. 2016/99), regs. 1(1), 6 (with reg. 1(2))

[^key-3ecec1fe24fa729bb8267ac91e7a8506]: Words in reg. 11(2) substituted (23.2.2016) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2016 (S.I. 2016/99), regs. 1(1), 7(3)(a) (with reg. 1(2))

[^key-b3de409d9e97e52da80917f086e5f9dd]: Reg. 11(2)(o) inserted (23.2.2016) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2016 (S.I. 2016/99), regs. 1(1), 7(3)(d) (with reg. 1(2))

[^key-b864be604efdaf1d9aba6af2a33f34fc]: Reg. 11(1) omitted (23.2.2016) by virtue of The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2016 (S.I. 2016/99), regs. 1(1), 7(2) (with reg. 1(2))

[^key-13af9f84222bc65057663f00bad93699]: Words in reg. 11(2)(b) substituted (23.2.2016) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2016 (S.I. 2016/99), regs. 1(1), 7(3)(b) (with reg. 1(2))

[^key-8724866360503ddbaa095045d859871c]: Words in reg. 11(2)(c) substituted (23.2.2016) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2016 (S.I. 2016/99), regs. 1(1), 7(3)(c) (with reg. 1(2))

[^key-a0e433e55d6727eef53b40543252a4c7]: Reg. 12(b) substituted (23.2.2016) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2016 (S.I. 2016/99), regs. 1(1), 8 (with reg. 1(2))

[^key-e28945e49bdacb5864af3ba234a98cf7]: Reg. 5(1)(c) inserted (21.12.2017) by The Tax Avoidance Schemes (Miscellaneous Amendments) Regulations 2017 (S.I. 2017/1171), regs. 1(1), 3 (with reg. 1(2))

[^key-3378a42078c0b4e68bdeaf6dc6ad09a9]: Word in reg. 18(4) substituted (21.12.2017) by The Tax Avoidance Schemes (Miscellaneous Amendments) Regulations 2017 (S.I. 2017/1171), regs. 1(1), 4 (with reg. 1(2))

Description 8: Pensions

17A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Description 8: Employment income provided through third parties

18

(1) Arrangements are prescribed if—

(a) Conditions 1 and 2 are met and Condition 3 is not met; or

(b) Conditions 1, 2 and 3 are met and at least one of Conditions 4 and 5 is met.

(2) Condition 1 is met if the arrangements involve at least one of the following—

(a) a relevant third person taking a relevant step under section 554B;

(b) any person taking a relevant step under section 554C or 554D; or

(3) Condition 2 is met if the main benefit, or one of the main benefits, of the arrangements is that an amount that would otherwise count as employment income under section 554Z2(1) is reduced or eliminated.

(4) Condition 3 is met if, by reason of at least one of sections 554E to 554XA or regulations made under section 554Y, Chapter 2 of Part 7A does not apply.

(5) Condition 4 is met if the arrangements involve one or more contrived or abnormal steps without which the main benefit in paragraph (3) would not be obtained.

(6) Condition 5 is met if the arrangements involve—

(a) a relevant step being treated as taking place; and

(b) Chapter 2 of Part 7A applying as a consequence of sub-paragraph (a).

(7) In this regulation—

(a) references to sections or Parts are to those in ITEPA unless otherwise stated;

(b) “B” has the meaning given for Part 7A by sections 554A(1)(a) and 554Z17(7) read together;

(d) “relevant third person” has the same meaning as in section 554A(7).

Description 9: Financial products

19

(1) Subject to regulation 21, arrangements are prescribed if—

(a) condition 1 is met, and

(b) it would be reasonable to expect an informed observer (having studied the arrangements and having regard to all relevant circumstances) to conclude that—

(i) condition 2 is met, and

(ii) either condition 3 or condition 4 is met.

(2) Condition 1 is that the arrangements include at least one financial product specified in regulation 20(1) (a “specified financial product”).

(3) Condition 2 is that the main benefit, or one of the main benefits, of including a specified financial product in the arrangements is to give rise to a tax advantage.

(4) Condition 3 is that a specified financial product included in the arrangements contains at least one term which is unlikely to have been entered into by the persons concerned were it not for the tax advantage.

(5) Condition 4 is that the arrangements involve one or more contrived or abnormal steps without which the tax advantage could not be obtained.

(6) For the purposes of this regulation condition 3 is treated as not having been met if—

(a) the specified financial product includes a term requiring that it is held for a minimum period of time before it is redeemed and—

(i) section 135 or 136 of TCGA 1992 applies to the specified financial product, and

(ii) condition 3 is met only by virtue of that term; or

(b) the specified financial product includes a term whereby the issuing company can secure that the date for redemption falls before the end of the permitted period and—

(i) but for that term, the specified financial product would be an equity note, and

(ii) condition 3 is met only by virtue of that term.

(7) In paragraph (6)(b) “equity note” and “the permitted period” have the meanings given by section 1016 of CTA 2010.

(8) For the purposes of condition 4 a step is not to be treated as being contrived or abnormal if—

(a) that step involves only the transfer of an asset to which the condition in paragraph 15A(2)(b) of Schedule 7AC to TCGA 1992 applies; or

(b) that step involves only the issue of shares and—

(i) that step is taken to eliminate or substantially reduce the economic risk of holding a loan relationship or a derivative contract, or part of such a loan relationship or a derivative contract, which is attributable to fluctuations in exchange rates, and

(ii) the shares are treated for accounting purposes as a liability of the company in accordance with generally accepted accounting practice.

(9) For the purposes of this regulation, neither condition 3 nor condition 4 is treated as having been met if—

(a) the specified financial product includes a term providing for conversion into, or redemption in, a currency other than sterling, and

(b) both condition 3 and condition 4 are met only by virtue of that term.

20

(1) The financial products specified in this paragraph are—

(a) a loan,

(b) a share,

(d) a repo in respect of securities within the meaning given by section 263A(A1) of TCGA 1992,

(e) a creditor repo, creditor quasi-repo, debtor repo or a debtor quasi-repo (within the meanings given by sections 543, 544, 548 and 549 of CTA 2009 respectively),

(f) a stock lending arrangement within the meaning given by section 263B(1) of TCGA 1992,

(g) an alternative finance arrangement within Chapter 6 of Part 6 of CTA 2009 or Part 10A of ITA 2007,

(h) a contract which, whether alone or in combination with one or more other contracts—

(i) is in accordance with generally accepted accounting practice required to be treated as a loan, deposit or other financial asset or obligation, or

(ii) would be required to be so treated by the person entering into the arrangements were that person a company to which the Companies Act 2006 applies.

(2) Paragraph (1) does not specify a financial product held within an account which satisfies the conditions in regulation 4 of the Individual Savings Account Regulations 1998.

Arrangements excepted from Description 9

21

Arrangements are excepted from being prescribed under regulation 19 if—

(a) a promoter is a participating entity, or is part of a participating group, within the meaning of section 286 of the Finance Act 2014; and

(b) HMRC has confirmed, or could reasonably be expected to confirm, to the promoter that the arrangements are acceptable transactions under the Code of Practice on Taxation for Banks (as published by the Commissioners for Her Majesty’s Revenue and Customs on 31st May 2013).

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