Finance Act 2013

[F1 PART 3 U.K. Notices of proposed counteraction

Textual Amendments

F1 Sch. 43D inserted (with effect in accordance with s. 124(2) of the amending Act) by Finance Act 2021 (c. 26), Sch. 32 para. 1

Power to give notice of proposed counteraction to responsible partner U.K.

5 (1) If a designated HMRC officer considers that, in relation to a partnership— U.K.

(a) a partnership return has been made on the basis that a tax advantage has arisen to one or more partners from tax arrangements that are abusive, and

(b) the tax advantage ought to be counteracted under section 209,

the officer may give the responsible partner a written notice under this paragraph.

(2) A partner who appears to a designated HMRC officer to fall within sub-paragraph (1)(a) is a “relevant partner” for the purposes of this Part of this Schedule.

(3) The notice must—

(a) specify each relevant partner, the arrangements and the tax advantage,

(b) explain why the officer considers that a tax advantage has arisen to each relevant partner from tax arrangements that are abusive,

(c) set out the counteraction that the officer considers ought to be taken,

(d) inform the responsible partner of the period for making representations under paragraph 4 of Schedule 43, and

(e) explain the effect of—

(i) paragraphs 5 and 6 of Schedule 43, and

(ii) sections 209(8) and 212B.

(4) The notice may set out steps that may be taken to avoid the proposed counteraction.

(5) If, after the notice has been given, it appears to a designated HMRC officer that the tax advantage has not in fact arisen to a partner specified in the notice, the officer must amend the notice accordingly.

(6) Where a designated HMRC officer so amends a notice—

(a) it is treated as having been given in the amended form, and

(b) the officer may take such other steps as the officer considers appropriate.

Effect of giving a notice under paragraph 5 U.K.

6 U.K. Where an officer gives a notice under paragraph 5 in respect of a tax advantage, this Part of this Act has effect in relation to the tax advantage with the modifications in paragraph 7.

Modifications to Schedule 43 U.K.

7 (1) Schedule 43 (procedural requirements) has effect with the following modifications. U.K.

(2) Schedule 43 is to be read as if paragraphs 1A and 3 were omitted.

(3) References to a notice given under paragraph 3 of Schedule 43 are to be read as if they were to a notice given under paragraph 5 of this Schedule.

(4) In paragraphs 4 and 6 to 12, references to the taxpayer are to be read as if they were to the responsible partner.

(5) Schedule 43 is to be read as if, for paragraphs 4A and 4B (and the headings before those paragraphs), there were substituted—

“Corrective action taken by the responsible partner U.K.

4A (1) Where, in respect of a partnership—

(a) a designated HMRC officer gives a notice under paragraph 5 of Schedule 43D in respect of a tax advantage arising to one or more partners,

(b) the closed period mentioned in section 209(8) has not begun, and

(c) the responsible partner—

(i) amends a partnership return or claim to counteract the tax advantage, and

(ii) notifies HMRC of that fact,

the matter is not to be referred to the GAAR Advisory Panel.

(2) Where a tax enquiry is in progress, no enactment limiting the time during which amendments may be made to returns or claims operates to prevent the responsible partner taking the action mentioned in sub-paragraph (1)(c)(i) and (ii) before the enquiry is closed.

(3) No appeal may be brought, by virtue of a provision mentioned in sub-paragraph (4), against an amendment made by a closure notice in respect of a tax enquiry, to the extent that the amendment takes into account an amendment made by the responsible partner to a return or claim as mentioned in sub-paragraph (1)(c).

(4) The provisions are—

(a) section 31(1)(b) or (c) of TMA 1970,

(b) paragraph 9 of Schedule 1A to TMA 1970.

Corrective action by relevant partners U.K.

4B (1) Where, in respect of a partnership—

(a) a designated HMRC officer gives a notice under paragraph 5 of Schedule 43D in respect of a tax advantage arising to one or more partners,

(b) the closed period mentioned in section 209(8) has not begun, and

(c) a partner mentioned in paragraph (a) takes all necessary action to enter into an agreement with HMRC (in writing) for the purpose of relinquishing the tax advantage,

the partner is not to be treated as a relevant partner for the purposes of Part 3 of Schedule 43D.

(2) As soon as is practicable after the beginning of the closed period, the notice given under paragraph 5 of Schedule 43D must be amended by a designated HMRC officer so each partner to whom sub-paragraph (1) applies is no longer specified in it.

(3) Where a notice is amended in accordance with sub-paragraph (2), the notice is treated as having been given in the amended form.

(4) If a partner to whom sub-paragraph (1) applies fails to enter into the written agreement, HMRC may proceed as if that sub-paragraph had not applied in relation to the partner (and accordingly, as if the partner were a relevant partner).

Referral to GAAR Advisory Panel U.K.

4C Paragraph 5 and 6 apply if, immediately before the beginning of the closed period mentioned in section 209(8)—

(a) the responsible partner has not taken the action described in paragraph 4A(1)(c), and

(b) there is at least one relevant partner.”

Notices may be given on assumption that tax advantage does arise U.K.

8 (1) A designated HMRC officer may give a notice, or do anything else, under this Part of this Schedule where the officer considers that a tax advantage might have arisen. U.K.

(2) Accordingly, any notice given by a designated HMRC officer under paragraph 5 may be expressed to be given on the assumption that the tax advantage does arise (without agreeing that it does).

HMRC officers U.K.

9 U.K. Anything that may or must be done by a given designated HMRC officer under this Part of this Schedule may be done instead by any other designated HMRC officer.]