HMRC has updated its guidance Identify tax avoidance enabler penalties and when to appeal with new information about assessments, inspection powers, modifications and restrictions on the power to publish information.
The guidance has been updated for amendments made by FA 2021 s 123, including when those amendments take effect. The updates primarily relate to multi-user schemes.
For arrangements implementing a multi-user scheme that are enabled and defeated on or after 10 June 2021, HMRC may not assess an enabler until one of two conditions is met:
Condition 1 is that there has been a tribunal or court defeat of at least one set of the arrangements implementing the scheme; and
Condition 2 is that there has not been a judicial defeat, but HMRC reasonably believes the required number or percentage of relevant defeats, based on a prescribed tiered approach, has been reached, for example where sufficient taxpayers have agreed to settle their enquiries with HMRC.
For arrangements implementing a multi-user scheme that are enabled and defeated both before and on or after 10 June 2021, when determining whether condition 1 or 2 is met in relation to particular tax arrangements, account may be taken of defeats incurred in the case of other related arrangements before 10 June 2021.
HMRC will be able to use its formal powers under FA 2008 Sch 36 as modified for these purposes to check penalty liabilities in relation to particular tax arrangements before those arrangements are defeated. HMRC will issue information notices only where it considers particular arrangements are, or may be, abusive tax arrangements and has reason to suspect that the intended recipient of a notice has enabled those arrangements. The information notice and accompanying factsheet will set out clearly what the recipient of the notice should do if they believe that certain information or documents being requested are, or may be, covered by legal professional privilege.
HMRC will also be able to identify and contact other potential enablers to investigate their activities. In addition, the effectiveness of HMRC’s enquiries into enablers is intended to be improved by removing the restriction (relating to relevant communications) on the power to require a tax adviser to produce information or documents in response to an information notice.
HMRC has updated its guidance Identify tax avoidance enabler penalties and when to appeal with new information about assessments, inspection powers, modifications and restrictions on the power to publish information.
The guidance has been updated for amendments made by FA 2021 s 123, including when those amendments take effect. The updates primarily relate to multi-user schemes.
For arrangements implementing a multi-user scheme that are enabled and defeated on or after 10 June 2021, HMRC may not assess an enabler until one of two conditions is met:
Condition 1 is that there has been a tribunal or court defeat of at least one set of the arrangements implementing the scheme; and
Condition 2 is that there has not been a judicial defeat, but HMRC reasonably believes the required number or percentage of relevant defeats, based on a prescribed tiered approach, has been reached, for example where sufficient taxpayers have agreed to settle their enquiries with HMRC.
For arrangements implementing a multi-user scheme that are enabled and defeated both before and on or after 10 June 2021, when determining whether condition 1 or 2 is met in relation to particular tax arrangements, account may be taken of defeats incurred in the case of other related arrangements before 10 June 2021.
HMRC will be able to use its formal powers under FA 2008 Sch 36 as modified for these purposes to check penalty liabilities in relation to particular tax arrangements before those arrangements are defeated. HMRC will issue information notices only where it considers particular arrangements are, or may be, abusive tax arrangements and has reason to suspect that the intended recipient of a notice has enabled those arrangements. The information notice and accompanying factsheet will set out clearly what the recipient of the notice should do if they believe that certain information or documents being requested are, or may be, covered by legal professional privilege.
HMRC will also be able to identify and contact other potential enablers to investigate their activities. In addition, the effectiveness of HMRC’s enquiries into enablers is intended to be improved by removing the restriction (relating to relevant communications) on the power to require a tax adviser to produce information or documents in response to an information notice.
