Section 215
1U.K.This Schedule makes special provision about the application of Chapter 2 to partners and partnerships.
2(1)This paragraph applies for the purposes of this Schedule.U.K.
(2)“Partnership follower notice” means a follower notice given by reason of—
(a)a tax enquiry being in progress into a partnership return, or
(b)an appeal having been made in relation to an amendment of a partnership return or against a conclusion stated by a closure notice in relation to a tax enquiry into a partnership return.
(3)“Partnership return” means a return in pursuance of a notice under section 12AA(2) or (3) of TMA 1970.
(4)“The representative partner”, in relation to a partnership return, means the person who was required by a notice served under or for the purposes of section 12AA(2) or (3) of TMA 1970 to deliver the return.
(5)“Relevant partner”, in relation to a partnership return, means a person who was a partner in the partnership to which the return relates at any time during the period in respect of which the return was required.
(6)References to a “successor”, in relation to the representative partner are to be construed in accordance with section 12AA(11) of TMA 1970.
3(1)If the representative partner in relation to a partnership return is no longer available, then, for the purposes of section 204 the return, or an appeal in respect of the return, is to be regarded as made by the person who is for the time being the successor of that partner (if that would not otherwise be the case).U.K.
(2)Where, at any time after a partnership follower notice is given to P, P is no longer available, any reference in this Chapter (other than section 204 and this sub-paragraph) to P is to be read as a reference to the person who is, for the time being, the successor of the representative partner.
(3)For the purposes of Condition B in section 204 a partnership return, or appeal in respect of a partnership return, is made on the basis that a particular tax advantage results from particular tax arrangements if—
(a)it is made on the basis that an increase or reduction in one or more of the amounts mentioned in section 12AB(1) of TMA 1970 (amounts in the partnership statement in a partnership return) results from those tax arrangements, and
(b)that increase or reduction results in that tax advantage for one or more of the relevant partners.
(4)For the purposes of Condition D in section 204—
(a)a notice given to a person in the person's capacity as the representative partner of a partnership, or a successor of that partner, and a notice given to that person otherwise than in that capacity are not to be treated as given to the same person, and
(b)all notices given to the representative partner and successors of that partner, in that capacity, are to be treated as given to the same person.
(5)In this paragraph references to a person being “no longer available” have the same meaning as in section 12AA(11) of TMA 1970.
4(1)Section 208 applies, in relation to a partnership follower notice, in accordance with this paragraph.U.K.
(2)Subsection (2) applies as if the reference to P were to each relevant partner.
(3)References to the denied advantage are to be read as references to the increase or reduction in an amount in the partnership statement mentioned in paragraph 3(3) which is denied by the application of the principles laid down or the reasoning given in the judicial ruling identified in the partnership follower notice under section 206(a) or, if only part of any increase or reduction is so denied, that part.
(4)In subsection (6)(b) the words from “and (where different)” to the end are to be ignored, and accordingly subsection (7) does not apply.
Textual Amendments
F1Sch. 31 para. 4A and cross-heading inserted (with effect in accordance with Sch. 28 para. 15 of the amending Act) by Finance Act 2021 (c. 26), Sch. 28 para. 11
4AU.K.Section 208A(3) applies, in relation to a partnership follower notice, as if the first reference to P were to each relevant partner.]
5(1)This paragraph applies in relation to a partnership follower notice.U.K.
(2)Section 209 applies subject to the following modifications—
(a)the total amount of the penalties under section 208(2) for which the relevant partners are liable is [F212%] of the value of the denied advantage,
[F3(aa)the total amount of the penalties under section 208A(3) for which the relevant partners are liable is 8% of the value of the denied advantage,]
(b)the amount of the penalty [F4under section 208(2) or 208A(3) (as modified by this paragraph)] for which each relevant partner is liable is that partner's appropriate share of that total amount, and
(c)the value of the denied advantage for the purposes of calculating the total amount of the penalties is—
(i)in the case of a notice given under section 204(2)(a), the net amount of the amendments required to be made to the partnership return to counteract the denied advantage, and
(ii)in the case of a notice given under section 204(2)(b), the net amount of the amendments that have been made to the partnership return to counteract the denied advantage,
(and, accordingly, Schedule 30 does not apply).
(3)For the purposes of sub-paragraph (2), a relevant partner's appropriate share is—
(a)the same share as the share in which any profits or loss for the period to which the return relates would be apportioned to that partner in accordance with the firm's profit-sharing arrangements, or
(b)if HMRC do not have sufficient information from P to establish that share, such share as is determined for the purposes of this paragraph by an officer of HMRC.
(4)Where—
(a)the relevant partners are liable to pay a penalty under section 208(2) (as modified by this paragraph),
(b)the penalties have not yet been assessed, and
(c)P has co-operated with HMRC,
section 210(1) does not apply, but HMRC may reduce the total amount of the penalties determined in accordance with sub-paragraph (2)(a) to reflect the quality of that co-operation.
(5)Nothing in sub-paragraph (4) permits HMRC to reduce the total amount of the penalties [F5under section 208(2) (as modified by this paragraph)] to less than 4% of the value of the denied advantage (as determined in accordance with sub-paragraph (2)(c)).
(6)For the purposes of section 212, a penalty imposed on a relevant partner by virtue of paragraph 4(2) [F6or 4A] is to be treated as if it were determined by reference to such additional amount of tax as is due and payable by the relevant partner as a result of the counteraction of the denied advantage.
(7)The right of appeal under section 214 extends to—
(a)a decision that penalties [F7under section 208(2)] are payable by the relevant partners by virtue of this paragraph, and
(b)a decision as to the total amount of those penalties payable by those partners,
but not to a decision as to the appropriate share of, or the amount of a penalty payable by, a relevant partner.
(8)Section 214(3) applies to an appeal by virtue of sub-paragraph (7)(a) as it applies to an appeal under section 214(1).
(9)Section 214(8) applies to an appeal by virtue of sub-paragraph (7)(a), and section 214(9) to an appeal by virtue of sub-paragraph (7)(b).
[F8(9A)The right of appeal under section 214A extends to—
(a)a decision that penalties under section 208A(3) are payable by the relevant partners by virtue of this paragraph, and
(b)a decision as to the total amount of those penalties payable by those partners,
but not to a decision as to the appropriate share of, or the amount of a penalty payable by, a relevant partner.
(9B)Section 214A(3) applies to an appeal by virtue of sub-paragraph (9A)(a) as it applies to an appeal under section 214A(1).
(9C)Section 214A(5) applies to an appeal by virtue of sub-paragraph (9A)(a), and section 214A(6) to an appeal by virtue of sub-paragraph (9A)(b).]
(10)An appeal by virtue of sub-paragraph (7) may be brought only by the representative partner or, if that partner is no longer available, the person who is for the time being the successor of that partner.
(11)The Treasury may by order made by statutory instrument vary the rates for the time being specified in sub-paragraphs (2)(a) [F9and (aa)] and (5).
(12)Any statutory instrument containing an order under sub-paragraph (10) is subject to annulment in pursuance of a resolution of the House of Commons.
Textual Amendments
F2Word in Sch. 31 para. 5(2)(a) substituted (with effect in accordance with Sch. 28 para. 15 of the amending Act) by Finance Act 2021 (c. 26), Sch. 28 para. 12(2)(a)
F3Sch. 31 para. 5(2)(aa) inserted (with effect in accordance with Sch. 28 para. 15 of the amending Act) by Finance Act 2021 (c. 26), Sch. 28 para. 12(2)(b)
F4Words in Sch. 31 para. 5(2)(b) inserted (with effect in accordance with Sch. 28 para. 15 of the amending Act) by Finance Act 2021 (c. 26), Sch. 28 para. 12(2)(c)
F5Words in Sch. 31 para. 5(5) inserted (with effect in accordance with Sch. 28 para. 15 of the amending Act) by Finance Act 2021 (c. 26), Sch. 28 para. 12(3)
F6Words in Sch. 31 para. 5(6) inserted (with effect in accordance with Sch. 28 para. 15 of the amending Act) by Finance Act 2021 (c. 26), Sch. 28 para. 12(4)
F7Words in Sch. 31 para. 5(7)(a) inserted (with effect in accordance with Sch. 28 para. 15 of the amending Act) by Finance Act 2021 (c. 26), Sch. 28 para. 12(5)
F8Sch. 31 para. 5(9A)-(9C) inserted (with effect in accordance with Sch. 28 para. 15 of the amending Act) by Finance Act 2021 (c. 26), Sch. 28 para. 12(6)
F9Words in Sch. 31 para. 5(11) inserted (with effect in accordance with Sch. 28 para. 15 of the amending Act) by Finance Act 2021 (c. 26), Sch. 28 para. 12(7)