Finance Act 2021

PART 1 Amendments of Part 7 of FA 2004

1 Part 7 of FA 2004 (disclosure of tax avoidance schemes) is amended as follows.

2 Before section 306 insert—

“305A Introduction

(1) This Part makes provision about the disclosure of information in relation to arrangements, or proposed arrangements, that enable, or might be expected to enable, a person to obtain a tax advantage.

(2) Among other things, this Part—

(a) imposes duties to provide information to HMRC (and others);

(b) allows HMRC to allocate reference numbers in relation to arrangements and proposed arrangements (in cases where the disclosure duties have been complied with and in other cases);

(c) makes provision about publication of information about arrangements and proposed arrangements, and persons involved in their supply;

(d) makes provision about penalties.”

3 In section 307(4A) (meaning of “makes a firm approach”), omit “notifiable” in both places.

4 After section 310C insert—

“310D Notice of potential allocation of reference number: arrangements and proposals suspected of being notifiable

(1) This section applies where—

(a) HMRC have become aware that—

(i) a transaction forming part of arrangements has been entered into,

(ii) a firm approach has been made to a person in relation to a proposal for arrangements, with a view to making the proposal available for implementation, or

(iii) a proposal for arrangements is made available for implementation, and

(b) HMRC have reasonable grounds for suspecting that the arrangements are notifiable, or the proposal is notifiable.

(2) HMRC may issue a notice to a person explaining that, unless the person is able to satisfy HMRC, before the end of the notice period, that the arrangements are not notifiable or (as the case may be) the proposal is not notifiable, HMRC may allocate a reference number to the arrangements or (in the case of a proposal) the proposed arrangements.

(3) But HMRC may not issue a notice under this section before the end of the period of 15 days beginning with the day on which they first become aware that the condition in paragraph (a)(i), (ii) or (iii) of subsection (1) is met.

(4) A notice under this section must be issued to any person who, on the day the notice is issued, HMRC reasonably suspect to be a promoter in relation to the arrangements or proposal.

(5) A notice under this section may be issued to any other person who HMRC reasonably suspect to be involved in the supply of the arrangements or proposed arrangements.”

5 For section 311 substitute—

“311 Allocation of reference number to arrangements

(1) This section applies in—

(a) a subsection (2) case, or

(b) a subsection (3) case.

(2) A “subsection (2) case” is a case where a person complies, or purports to comply, with section 308(1) or (3), 309(1) or 310 in relation to a notifiable proposal or notifiable arrangements.

(3) A “subsection (3) case” is a case where—

(a) notice in relation to arrangements or a proposal has been issued in accordance with section 310D (notice of potential allocation of reference number),

(b) the notice period has expired, and

(c) the person to whom the notice was given has failed to satisfy HMRC, before the expiry of the notice period, that the arrangements are not notifiable or (as the case may be) that the proposal is not notifiable.

(4) “The notice period” means—

(a) the period of 30 days beginning with the day on which the notice under section 310D is issued, or

(b) such longer period as HMRC may direct.

(5) HMRC may allocate a reference number to the arrangements or, in the case of a proposal, the proposed arrangements, subject to subsection (6).

(6) HMRC may not allocate a reference number to arrangements or proposed arrangements after the time limit for doing so.

(7) The time limit for allocating a reference number is—

(a) in a subsection (2) case, the end of the period of 90 days beginning with the compliance, or purported compliance, with section 308(1) or (3), 309(1) or 310, as the case may be;

(b) in a subsection (3) case, the end of the period of one year beginning with the day after the end of the notice period (see subsection (4)).

(8) HMRC may at any time withdraw a reference number allocated to arrangements in a subsection (3) case.

(9) The allocation of a reference number to arrangements or proposed arrangements is not to be regarded as constituting an indication by HMRC that the arrangements could as a matter of law result in the obtaining by any person of a tax advantage.

311A Duty of HMRC to notify persons of reference number

(1) If a reference number is allocated in a case within section 311(2), HMRC must notify the following of the number—

(a) the person who has complied, or purported to comply, with section 308(1) or (3), 309(1) or 310, and

(b) where the person has complied, or purported to comply, with section 308(1) or (3), any other person—

(i) who is a promoter in relation to the proposal (or arrangements implementing it) or the arrangements (or a proposal implemented by them), and

(ii) whose identity and address have been notified to HMRC by the person who complied, or purported to comply, with section 308(1) or (3).

(2) If a reference number is allocated in a case within section 311(3), HMRC must notify the following of the number—

(a) any person who HMRC reasonably suspect to be, or to have been, a promoter in relation to the arrangements or the proposed arrangements, and

(b) any other person who HMRC reasonably suspect to be, or to have been, involved in the supply of the arrangements or the proposed arrangements.

(3) The duty in subsection (2) applies irrespective of whether the notice under section 310D as a result of which the reference number was allocated has been issued to the person concerned.

311B Right of appeal: section 311(3) case

(1) This section applies where HMRC have allocated a reference number to arrangements or proposed arrangements in a case within section 311(3).

(2) A person who has been notified of the reference number may appeal to the tribunal against its allocation.

(3) An appeal under this section may be brought only on the following grounds—

(a) that, in issuing the notice under section 310D as a result of which the reference number was allocated, HMRC did not act in accordance with that section;

(b) that, in allocating the reference number, HMRC did not act in accordance with section 311;

(c) that the arrangements are not in fact notifiable arrangements or, in the case of proposed arrangements, that the proposal for the arrangements is not in fact a notifiable proposal.

(4) Notice of appeal under this section must be given to the tribunal in writing before the end of the period of 30 days beginning with the day on which the person is notified of the number by HMRC.

(5) Notice may be given after that time if the tribunal give permission.

(6) The notice of appeal must specify the grounds of appeal.

(7) On an appeal under this section, the tribunal may affirm or cancel HMRC’s decision.

(8) If the tribunal cancel HMRC’s decision, HMRC must withdraw the reference number.

(9) Bringing an appeal under this section does not prevent—

(a) a power conferred by this Part from being exercised, or

(b) a duty imposed by this Part from continuing to apply.

311C Duty to provide further information requested by HMRC: section 311(3) case

(1) This section applies where HMRC have allocated a reference number to arrangements or proposed arrangements in a case within section 311(3).

(2) HMRC may require a relevant person to provide—

(a) specified information about the arrangements or proposed arrangements;

(b) documents relating to the arrangements or proposed arrangements.

(3) In subsection (2), “relevant person” means—

(a) any person who HMRC reasonably suspect to be, or to have been, a promoter in relation to the arrangements or the proposed arrangements;

(b) any other person who HMRC reasonably suspect to be, or to have been, involved in the supply of the arrangements or the proposed arrangements.

(4) HMRC may require information or documents only if they have reasonable grounds for suspecting that the information or documents will assist them in considering the arrangements or proposed arrangements.

(5) Where HMRC impose a requirement on a person under subsection (2), the person must comply with the requirement before the end of—

(a) the period of 10 working days beginning with the day on which HMRC imposed the requirement, or

(b) such longer period as HMRC may direct.”

6 (1) Section 312 (duty of promoter to notify client of reference number) is amended as follows.

(2) In the heading, at the end insert “: section 311(2) case”.

(3) In subsection (2)—

(a) after “any reference number” insert “allocated in a case within section 311(2)”;

(b) for “one reference number” substitute “one such reference number”.

7 After section 312 insert—

“312ZA Duty to notify client of reference number: section 311(3) case

(1) This section applies where a person is providing (or has provided) services to another person (“the client”) in connection with arrangements or proposed arrangements.

(2) The person must, before the end of the period of 30 days beginning with the relevant date, provide the client with prescribed information relating to any reference number allocated in a case within section 311(3) (or, if more than one, any one such reference number) that has been notified to the person (whether by HMRC or any other person) in relation to—

(a) the arrangements or proposed arrangements, or

(b) any arrangements substantially the same as the arrangements or proposed arrangements (whether involving the same or different parties).

(3) In subsection (2), “the relevant date” means the date on which the person has been notified of the reference number.

(4) HMRC may give notice that, in relation to arrangements or proposed arrangements specified in the notice, no person is under the duty imposed by subsection (2) after the date specified in the notice.”

8 (1) Section 312A (duty of client to notify parties of reference number) is amended as follows.

(2) In subsection (1)—

(a) after “prescribed information” insert “under section 312”;

(b) for “allocated to the notifiable arrangements or proposed notifiable arrangements” substitute “allocated to—

(a) the notifiable arrangements or proposed notifiable arrangements, or

(b) any arrangements substantially the same as the notifiable arrangements or proposed notifiable arrangements.”

(3) After subsection (1) insert—

“(1A) This section also applies where a person (a “client”) to whom a person is providing (or has provided) services in connection with arrangements or proposed arrangements receives prescribed information under section 312ZA relating to the reference number allocated to—

(a) the arrangements or proposed arrangements, or

(b) any arrangements substantially the same as the arrangements or proposed arrangements.”

(4) In subsection (4), for “notifiable arrangements or a notifiable proposal” substitute “arrangements or a proposal”.

9 (1) Section 312B (duty of client to provide information to promoter) is amended as follows.

(2) In the heading, omit “to promoter”.

(3) For subsection (1) substitute—

“(1) This section applies where a person (“the client”) has been provided with information under section 312(2) or 312ZA(2) (prescribed information about reference number).”

(4) In subsection (2), for “promoter” substitute “person who provided the information”.

10 (1) Section 313 (duty of parties to notifiable arrangements to notify Board of number etc) is amended as follows.

(2) For the heading substitute “Duty of parties to notify HMRC of reference number etc”.

(3) In subsection (1), omit “notifiable”.

(4) In subsection (2), for “any notifiable arrangements” substitute “arrangements of any description”.

(5) In subsection (5), omit “notifiable”.

11 (1) Section 313ZA (duty to provide details of clients) is amended as follows.

(2) In subsection (1), for paragraphs (a) and (b) substitute—

“(a) the promoter is subject to the requirement under section 312(2) to provide to the client prescribed information relating to the reference number allocated to—

(i) the arrangements, or

(ii) any arrangements substantially the same as the arrangements, or

(b) the promoter has failed to comply with section 308(1) or (3) in relation to the notifiable arrangements (or the notifiable proposal for them) but would be subject to that requirement if a reference number had been allocated to—

(i) the notifiable arrangements, or

(ii) any arrangements substantially the same as the arrangements”.

(3) After subsection (1) insert—

“(1A) This section also applies where—

(a) a person (“the provider”) is providing (or has provided) services to another person (“the client”) in connection with arrangements or proposed arrangements, and

(b) the provider is subject to the requirement under section 312ZA(2) to provide to the client prescribed information relating to the reference number allocated to—

(i) the arrangements or proposed arrangements, or

(ii) any arrangements substantially the same as the arrangements or proposed arrangements.”

(4) Omit subsection (2).

(5) In subsection (3), after “promoter” insert “or (as the case may be) provider”.

(6) For subsection (4) substitute—

“(4) In subsection (3) “the relevant period” means—

(a) in a case within subsection (1), such period as is prescribed and is a period during which the promoter is or would be subject to the requirement mentioned in that subsection;

(b) in a case within subsection (1A), such period as is prescribed and is a period during which the provider is or would be subject to the requirement mentioned in that subsection.”

(7) After subsection (5) insert—

“(6) The provider need not comply with subsection (3) in relation to any arrangements at any time after HMRC have given notice under section 312ZA(4) in relation to the arrangements.”

12 (1) Section 313ZB (enquiry following disclosure of client details) is amended as follows.

(2) In subsection (1), for paragraph (a) substitute—

“(a) a person (“the service provider”) is providing or has provided services to another person (“the client”) in connection with arrangements or proposed arrangements,

(aa) the service provider has provided HMRC with information in relation to the client under section 313ZA(3), and”.

(3) In subsection (2), for “promoter”, in both places, substitute “service provider”.

(4) In subsection (3), for “promoter” substitute “service provider”.

13 (1) Section 313ZC (duty of employer to notify HMRC of details of employees etc) is amended as follows.

(2) For subsection (2) substitute—

“(2) Condition A is that—

(a) a person who is a promoter in relation to notifiable arrangements or a notifiable proposal is providing (or has provided) services in connection with the arrangements or proposal to a person (“the client”), or

(b) a person is providing (or has provided) services in connection with arrangements or a proposal to a person (“the client”).”

(3) In subsection (3), after “312(2)” insert “or 312ZA(2)”.

(4) In subsection (4), omit “notifiable”, in both places.

(5) In subsection (6)—

(a) omit “notifiable”, in both places;

(b) after “312(6)” insert “, 312ZA(4)”.

14 In section 316 (information to be provided in form and manner specified by HMRC), in subsection (2)—

(a) after “310C,” insert “311C,”;

(b) after “312(2),” insert “312ZA(2),”.

15 In section 316A (duty to provide additional information), in subsections (1) and (2), after “312(2)” insert “, 312ZA(2)”.

16 (1) Section 316C (publication by HMRC) is amended as follows.

(2) For subsection (1) substitute—

“(1) HMRC may publish information about—

(a) any arrangements, or proposed arrangements, to which a reference number is allocated under section 311;

(b) where the reference number is allocated in a case within section 311(2), any person who is a promoter in relation to the arrangements or, in the case of proposed arrangements, the proposal;

(c) where the reference number is allocated in a case within section 311(3), any person who is or has been—

(i) a promoter in relation to the arrangements or proposed arrangements, or

(ii) otherwise involved in the supply of the arrangements or proposed arrangements.”

(3) In subsection (2)—

(a) in paragraph (a)—

(i) after “(1)(b)” insert “or (c)”;

(ii) for “308, 309 or 310” substitute “any provision of this Part”;

(b) for paragraph (b) substitute—

“(b) any ruling of a court or tribunal relating to—

(i) arrangements within subsection (1)(a);

(ii) a person within subsection (1)(b), in that person’s capacity as a promoter;

(iii) a person within subsection (1)(c), in that person’s capacity as a promoter or a person otherwise involved in the supply of arrangements or proposed arrangements;”;

(c) in paragraph (c), omit “notifiable”;

(d) in paragraph (e), after “(1)(b)” insert “or (c)”.

(4) In subsection (4), omit “notifiable”.

(5) After subsection (4) insert—

“(4A) No information may be published under this section in respect of a person involved in the supply of arrangements or proposed arrangements where there are reasonable grounds for believing that the person’s involvement is limited to activities subject to legal professional privilege.”

(6) In subsection (5)—

(a) for “who is a promoter within subsection (1)(b)” substitute “within subsection (1)(b) or (c)”;

(b) for “as a promoter” substitute “as a promoter or a person involved in the supply of arrangements or proposed arrangements”.

(7) In subsection (6), for “a promoter within subsection (1)(b)” substitute “a person within subsection (1)(b) or (c)”.

(8) After subsection (6) insert—

“(6A) Where the reference number is allocated in a case within section 311(3)—

(a) information that identifies a person within subsection (1)(c) may not be published for the first time after the end of the period of one year beginning with the day on which the reference number is allocated;

(b) no information that identifies a person within subsection (1)(c) may be published (or continue to be published) after the end of the period of one year beginning with the day on which it is first published.

(6B) In determining a period of one year for the purposes of subsection (6A)(a) or (b), no account is to be taken of any period during which HMRC are prohibited from publishing the information because of proceedings before a court or tribunal.”

17 In section 316D (section 316C: subsequent judicial rulings), in subsection (1)(a), omit “notifiable”, in both places.

18 In section 318(1) (interpretation of Part 7), for the definition of “reference number” substitute—

• ““reference number” means a reference number allocated under section 311;”.