Amendment of Return to take Account of Relevant Judicial Ruling and Accelerated Payments of Tax in Follower Cases

Users of any avoidance scheme defeated by HMRC in a tribunal or court hearing in another party’s litigation will be obliged to concede their position to reflect the tribunal’s or court’s decision. A ‘Follower Notice’ will be issued by HMRC requiring such users for whom there is an open enquiry or appeal to amend their tax return or agree to resolve their appeal in accordance with the court’s decision. HMRC can also issue a ‘Notice to Pay’ to a taxpayer who has claimed a tax advantage by the use of arrangements on the same or similar grounds to those rejected by the courts. The taxpayer must then make payment upfront of the tax in dispute. If the taxpayer does not settle he risks a penalty. Penalties will also apply to late payment.

These measures will have effect from Royal Assent to Finance Act 2014.

Promoters of Tax Avoidance Schemes and Disclosure of Tax Avoidance Schemes (DOTAS)

New measures will give HMRC powers to issue conduct notices to promoters who breach certain defined ‘threshold’ conditions. Promoters who fail to comply with a conduct notice may be issued with a ‘monitoring’ notice, which can be appealed. Names of promoters subject to a monitoring notice may be published by HMRC, including details of how the conduct notice was breached, and the promoter will be required to notify its monitored status to clients. New information powers and penalties will apply to both monitored promoters, and intermediaries and clients of monitored promoters. Clients of monitored promoters will also be subject to certain obligations (with a penalty for non-compliance) and extended time limits for assessments. The measure also includes a new requirement under DOTAS for further information to be provided by a promoter when requested by HMRC.

These measures will have effect from Royal Assent to Finance Act 2014.

Accelerated Payments of Tax Associated with Schemes Covered by DOTAS or GAAR

Taxpayers who have sought tax advantages through tax avoidance schemes that fall within the Disclosure of Tax Avoidance Schemes (DOTAS) rules or are counteracted under the General Anti-Abuse Rule (GAAR) will be required to pay the disputed tax upfront. Penalties will apply to late payment.

This measure applies from Royal Assent to Finance Act 2014 to all cases where there is an open enquiry or open appeal on or after that day.

Double Taxation Relief

With effect from 5 December 2013, two changes will be made to the double taxation rules, to prevent tax avoidance. New legislation will confirm that TIOPA 2010, s 42, which imposes a limit on the amount of credit for foreign tax against corporation tax, is to be applied separately to each non-trading credit from a loan relationship or an intangible fixed asset, so that credit for foreign tax arising on such a non-trading credit will be limited to the amount of corporation tax on that non-trading credit. TIOPA 2010, s 34 and s 112 will be amended to reduce the credit allowed or deduction given where a repayment is made by a foreign tax authority and there are arrangements in place which enable another person to receive the repayment of foreign tax.