Finance Act 2006
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Transactions to avoid liability to tax: surcharge, interest and protective notifications. |
126.— The Principal Act is amended— | |
(a) in section 811(1)— | ||
(i) in paragraph (a) by substituting “In this section and section 811A—” for “In this section—”, and | ||
(ii) by inserting after paragraph (b) the following paragraph: | ||
“(c) For the purposes of this section and section 811A, all appeals made under section 811(7) by, or on behalf of, a person against any matter or matters specified or described in the notice of opinion of the Revenue Commissioners that a transaction is a tax avoidance transaction, if they have not otherwise been so determined, shall be deemed to have been finally determined when— | ||
(i) there is a written agreement, between that person and an officer of the Revenue Commissioners, that the notice of opinion is to stand or is to be amended in a particular manner, | ||
(ii) (I) the terms of such an agreement that was not made in writing have been confirmed by notice in writing given by the person to the officer of the Revenue Commissioners with whom the agreement was made, or by such officer to the person, and | ||
(II) 21 days have elapsed since the giving of the notice without the person to whom it was given giving notice in writing to the person by whom it was given that the first-mentioned person desires to repudiate or withdraw from the agreement, or | ||
(iii) the person gives notice in writing to an officer of the Revenue Commissioners that the person desires not to proceed with an appeal against the notice of opinion.”, | ||
and | ||
(b) by inserting the following after section 811: | ||
“Transactions to avoid liability to tax: surcharge, interest and protective notification. | ||
811A.— (1) (a) In this section references to tax being payable shall, except where the context requires otherwise, include references to tax being payable by a person to withdraw from that person so much of a tax advantage as is a refund of, or a payment of, an amount of tax, or an increase in an amount of tax, refundable, or otherwise payable, to the person. | ||
(b) For the purposes of this section the date on which the opinion of the Revenue Commissioners that a transaction is a tax avoidance transaction becomes final and conclusive is— | ||
(i) where no appeal is made under section 811(7) against any matter or matters specified or described in the notice of that opinion, 31 days after the date of the notice of that opinion, or | ||
(ii) the date on which all appeals made under section 811(7) against any such matter or matters have been finally determined and none of the appeals has been so determined by an order directing that the opinion of the Revenue Commissioners to the effect that the transaction is a tax avoidance transaction is void. | ||
(c) This section shall be construed together with section 811 and shall have effect notwithstanding any of the provisions of section 811. | ||
(2) Where, in accordance with adjustments made or acts done by the Revenue Commissioners under section 811(5), on foot of their opinion (as amended, or added to, on appeal where relevant) that a transaction is a tax avoidance transaction having become final and conclusive, an amount of tax is payable by a person that would not have been payable if the Revenue Commissioners had not formed the opinion concerned, then, subject to subsection (3)— | ||
(a) the person shall be liable to pay an amount (in this section referred to as the ‘surcharge’) equal to 10 per cent of the amount of that tax and the provisions of the Acts, including in particular section 811(5) and those provisions relating to the collection and recovery of that tax, shall apply to that surcharge, as if it were such tax, and | ||
(b) for the purposes of liability to interest under the Acts on tax due and payable, the amount of tax, or parts of that amount, shall be deemed to be due and payable on the day or, as respects parts of that amount, days specified in the notice of opinion (as amended, or added to, on appeal where relevant) in accordance with section 811(6)(a)(iii) construed together with subsection (4)(a) of this section, | ||
and the surcharge and interest shall be payable accordingly. | ||
(3) (a) Subject to subsection (6), neither a surcharge nor interest shall be payable by a person in relation to a tax avoidance transaction finally and conclusively determined to be such a transaction if the Revenue Commissioners have received from, or on behalf of, that person, on or before the relevant date (within the meaning of paragraph (c)), notification (referred to in this subsection and subsection (6) as a ‘protective notification’) of full details of that transaction. | ||
(b) Where a person makes a protective notification, or a protective notification is made on a person’s behalf, then the person shall be treated as making the protective notification— | ||
(i) solely to prevent any possibility of a surcharge or interest becoming payable by the person by virtue of subsection (2), and | ||
(ii) wholly without prejudice as to whether any opinion that the transaction concerned was a tax avoidance transaction, if such an opinion were to be formed by the Revenue Commissioners, would be correct. | ||
(c) Regardless of the type of tax concerned— | ||
(i) where the whole or any part of the transaction, which is the subject of the protective notification, is undertaken or arranged on or after 2 February 2006, then the relevant date shall be— | ||
(I) the date which is 90 days after the date on which the transaction commenced, or | ||
(II) if it is later than the said 90 days, 2 May 2006, | ||
(ii) where— | ||
(I) the whole of the transaction is undertaken or arranged before 2 February 2006, and would give rise to, or would but for section 811 give rise to, a reduction, avoidance, or deferral of any charge or assessment to tax, or part thereof, and | ||
(II) that charge or assessment would arise only by virtue of one or more other transactions carried out wholly on or after 2 February 2006, | ||
then the relevant date shall be the date which is 90 days after the date on which the first of those other transactions commenced, or | ||
(iii) where— | ||
(I) the whole of the transaction is undertaken or arranged before 2 February 2006, and would give rise to, or would but for section 811 give rise to, a refund or a payment of an amount, or of an increase in an amount of tax, or part thereof, refundable or otherwise payable to a person, and | ||
(II) that amount or increase in the amount would, but for section 811, become first so refundable or otherwise payable to the person on a date on or after 2 February 2006, | ||
then the relevant date shall be the date which is 90 days after that date. | ||
(d) Notwithstanding the receipt by the Revenue Commissioners of a protective notice, paragraph (a) shall not apply to any interest, payable in relation to a tax avoidance transaction finally and conclusively determined to be such a transaction, in respect of days on or after the date on which the opinion of the Revenue Commissioners in relation to that transaction becomes final and conclusive. | ||
(4) (a) The determination of tax consequences, which would arise in respect of a transaction if the opinion of the Revenue Commissioners, that the transaction was a tax avoidance transaction, were to become final and conclusive, shall, for the purposes of charging interest, include the specification of— | ||
(i) a date or dates, being a date or dates which is or are just and reasonable to ensure that tax is deemed to be due and payable not later than it would have been due and payable if the transaction had not been undertaken, disregarding any contention that another transaction would not have been undertaken or arranged to achieve the results, or any part of the results, achieved or intended to be achieved by the transaction, and | ||
(ii) the date which, as respects such amount of tax as is due and payable by a person to recover from the person a refund of or a payment of tax, including an increase in tax refundable or otherwise payable, to the person, is the day on which the refund or payment was made, set off or accounted for, | ||
and the date or dates shall be specified for the purposes of this paragraph without regard to— | ||
(I) when an opinion of the Revenue Commissioners that the transaction concerned was a tax avoidance transaction was formed, | ||
(II) the date on which any notice of that opinion was given, or | ||
(III) the date on which the opinion (as amended, or added to, on appeal where relevant) became final and conclusive. | ||
(b) Where the grounds of an appeal in relation to tax consequences refer to such a date or dates as are mentioned in paragraph (a), subsection (7) of section 811 shall apply, in that respect, as if the following paragraph were substituted for paragraph (c) of that subsection: | ||
‘(c) the tax consequences specified or described in the notice of opinion, or such part of those consequences as shall be specified or described by the appellant in the notice of appeal, would not be just and reasonable to ensure that tax is deemed to be payable on a date or dates in accordance with subsection (4)(a) of section 811A,’ | ||
and the grounds of appeal referred to in section 811(8)(a) shall be construed accordingly. | ||
(5) A surcharge payable by virtue of subsection (2)(a) shall be due and payable on the date that the opinion of the Revenue Commissioners that a transaction is a tax avoidance transaction becomes final and conclusive and interest shall be payable in respect of any delay in payment of the surcharge as if the surcharge were an amount of that tax by reference to an amount of which the surcharge was computed. | ||
(6) (a) A protective notification shall— | ||
(i) be delivered in such form as may be prescribed by the Revenue Commissioners and to such office of the Revenue Commissioners as— | ||
(I) is specified in the prescribed form, or | ||
(II) as may be identified, by reference to guidance in the prescribed form, as the office to which the notification concerned should be sent, and | ||
(ii) contain— | ||
(I) full details of the transaction which is the subject of the protective notification, including any part of that transaction that has not been undertaken before the protective notification is delivered, | ||
(II) full reference to the provisions of the Acts that the person, by whom, or on whose behalf, the protective notification is delivered, considers to be relevant to the treatment of the transaction for tax purposes, and | ||
(III) full details of how, in the opinion of the person, by whom, or on whose behalf, the protective notification is delivered, each provision, referred to in the protective notification in accordance with clause (II), applies, or does not apply, to the transaction. | ||
(b) Without prejudice to the generality of paragraph (a), the specifying, under— | ||
(i) section 19B of the Value-Added Tax Act 1972 , | ||
(ii) section 46A of the Capital Acquisitions Tax Consolidation Act 2003 , | ||
(iii) section 8 of the Stamp Duties Consolidation Act 1999 , or | ||
(iv) section 955(4) of this Act, | ||
of a doubt as to the application of law to, or the treatment for tax purposes of, any matter to be contained in a return shall not be regarded as being, or being equivalent to, the delivery of a protective notification in relation to a transaction for the purposes of subsection (3). | ||
(c) Where the Revenue Commissioners form the opinion that a transaction is a tax avoidance transaction and believe that a protective notification in relation to the transaction has not been delivered by a person in accordance with subsection (6)(a) by the relevant date (within the meaning of subsection (3)(c)) then, in giving notice under section 811(6)(a) to the person of their opinion in relation to the transaction, they shall give notice that they believe that a protective notification has not been so delivered by the person and section 811 shall be construed, subject to any necessary modifications, as if— | ||
(i) subsection (7) of that section included as grounds for appeal that a protective notification in relation to the transaction was so delivered by the person, and | ||
(ii) subsection (9) of that section provided that an appeal were to be determined, in so far as it is made on those grounds, by ordering that a protective notification in relation to the transaction was so delivered or that a protective notification in relation to the transaction was not so delivered. | ||
(7) This section shall apply— | ||
(a) as respects any transaction where the whole or any part of the transaction is undertaken or arranged on or after 2 February 2006, and | ||
(b) as respects any transaction, the whole of which was undertaken or arranged before that date, in so far as it gives rise to, or would but for section 811 give rise to— | ||
(i) a reduction, avoidance, or deferral of any charge or assessment to tax, or part thereof, where the charge or assessment arises only by virtue of another transaction or other transactions carried out wholly on or after 2 February 2006, or | ||
(ii) a refund or a payment of an amount, or of an increase in an amount of tax, or part thereof, refundable or otherwise payable to a person where, but for section 811, that amount or increase in the amount would become first so refundable or otherwise payable to the person on or after 2 February 2006.”. |