Finance Act 2014

4 (1) The partner payment notice given to a relevant partner must— U.K.

(a) specify the paragraph or paragraphs of paragraph 3(5) by virtue of which the notice is given,

(b) specify the payment [F1 (if any)] required to be made under paragraph 6, F2 ...

(c) explain the effect of paragraphs 5 and 6, and of the amendments made by sections 224 and 225 (so far as relating to the relevant tax in relation to which the partner payment notice is given)[F3 , and

(d) if the denied advantage consists of or includes an asserted surrenderable amount, specify that amount and any action which is required to be taken in respect of it under paragraph 6A.]

(2) The payment required to be made under paragraph 6 is an amount equal to the amount which a designated HMRC officer determines, to the best of the officer's information and belief, as the understated partner tax [F4 (and disregarding any dispute which has been referred to a tribunal under section 12ABZB(3) of TMA 1970 but not yet determined)].

(3) “The understated partner tax” means the additional amount that would become due and payable by the relevant partner in respect of tax if—

(a) in the case of a notice given by virtue of paragraph 3(5)(a) (case where a partnership follower notice is given)—

(i) it were assumed that the explanation given in the follower notice in question under section 206(b) is correct, and

(ii) what the officer may determine to the best of the officer's information and belief as the denied advantage is counteracted to the extent that it is reflected in a return or claim of the relevant partner;

(b) in the case of a notice given by virtue of paragraph 3(5)(b) (cases where the DOTAS arrangements are met), such adjustments were made as are required to counteract so much of what the designated HMRC officer so determines as the denied advantage as is reflected in a return or claim of the relevant partner;

(c) in the case of a notice given by virtue of paragraph 3(5)(c) (cases involving counteraction under the general anti-abuse rule), such of the adjustments set out in the GAAR counteraction notice are made as have effect to counteract so much of the denied advantage as is reflected in a return or claim of the relevant partner.

(4) “The denied advantage”—

(a) in the case of the notice given by virtue of paragraph 3(5)(a), has the meaning given by paragraph 4(3) of Schedule 31,

(b) in the case of a notice given by virtue of paragraph 3(5)(b), means so much of the asserted advantage as is not a tax advantage which results from the chosen arrangements or otherwise, and

(c) in the case of a notice given by virtue of paragraph 3(5)(c), means so much of the asserted advantage as would be counteracted by making the adjustments set out in the GAAR counteraction notice.

[F5 (4A) Asserted surrenderable amount” means so much of a surrenderable loss which the relevant partner asserts to have as a designated HMRC officer determines, to the best of that officer's information and belief, to be an amount—

(a) which would not be a surrenderable loss of that partner if the position were as stated in paragraphs (a), (b) or (c) of sub-paragraph (3), and

(b) which is not the subject of a claim by the relevant partner to relief from corporation tax which is reflected in the amount of the understated partner tax of that partner (and hence in the payment required to be made under paragraph 6).

(4B) “Surrenderable loss” means a loss or other amount within section 99(1) of CTA 2010 (or part of such a loss or other amount).]

(5) If a notice is given by reason of two or all of the requirements of paragraph 3(5) being met, [F6 any payment specified under sub-paragraph (1)(b) or amount specified under sub-paragraph (1)(d)] is to be determined as if the notice were given by virtue of such one of them as is stated in the notice as being used for this purpose.

Textual Amendments

F1 Words in Sch. 32 para. 4(1)(b) inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 18 para. 10(2)(a)

F2 Word in Sch. 32 para. 4(1)(b) omitted (26.3.2015) by virtue of Finance Act 2015 (c. 11), Sch. 18 para. 10(2)(b)

F3 Sch. 32 para. 4(1)(d) and preceding word inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 18 para. 10(2)(b)

F4 Words in Sch. 32 para. 4(2) inserted (with effect in accordance with Sch. 6 para. 14 of the amending Act) by Finance Act 2018 (c. 3), Sch. 6 para. 13(5)(a)

F5 Sch. 32 para. 4(4A)(4B) inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 18 para. 10(2)(c)

F6 Words in Sch. 32 para. 4(5) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 18 para. 10(2)(d)