Guidance

Penalties for facilitating avoidance schemes involving non-resident promoters

Published 28 July 2022

This factsheet tells you about the penalties we may charge you if you facilitate avoidance schemes involving non-resident promoters. The legislation we charge these penalties under is Schedule 13 to the Finance Act 2022.

This factsheet is one of a series. For the full list of factsheets in the series, go to www.gov.uk and search for ‘HMRC compliance checks factsheets’.

This factsheet uses terms such as ‘promoter’, ‘promotion structure’, ‘relevant proposal’ and ‘relevant arrangements’. We explain what these terms mean in our guidance which you can find online. Go to www.gov.uk and search for ‘Clamping down on promoters of tax avoidance guidance’.

This factsheet at a glance

This factsheet tells you:

• about non-resident promoters
• when we may charge a penalty for facilitating an avoidance scheme involving a non-resident promoter
• about the penalty we may charge
• that you have certain rights under Article 6 of the European Convention on Human Rights, if we charge you a penalty
• that you can appeal if you disagree with our decision to charge you a penalty

About non-resident promoters

A non-resident promoter is a person who carries on a business as a promoter and is resident outside the UK.

Non-resident promoters of tax avoidance schemes often use a network of UK based intermediaries to market and promote their schemes in the UK. The UK based intermediaries provide vital support in facilitating the promotion of the non-resident promoters’ schemes.

The Finance Act 2022 introduced a penalty chargeable on these UK intermediaries to:

• deter UK based persons from acting on behalf of non-resident promoters
• make it more difficult for the non-resident promoters to sell their schemes in the UK

When we may charge a penalty for facilitating an avoidance scheme involving a non-resident promoter

We may charge you a penalty (the ‘further penalty’) for facilitating an avoidance scheme involving a non-resident promoter where (all of the following):

• you are liable to pay ‘original penalties’
• you incurred the ‘original penalties’ because of activities (called the ‘original activities’) you carried out as a member of the same promotion structure as a non-resident promoter
• the ‘original activities’ related to a relevant proposal or relevant arrangements (called the ‘facilitated proposal or arrangements’) which were promoted by the non-resident promoter

You will only be liable to a further penalty where the original penalties imposed on you relate to activities you carried out on or after 24 February 2022.

We explain the terms ‘original penalties’ and ‘original activities’ below.

What penalty you may be charged

A penalty for facilitating avoidance schemes involving non-resident promoters may be assessed by an ‘authorised HMRC officer’.

An ‘authorised HMRC officer’ is a senior officer within HMRC who has been authorised by the Commissioners for the purposes of Schedule 13 to the Finance Act 2022.

The further penalty will be for an amount that is equal to the total value of all ‘consideration’ received by all persons who, at the time of the ‘original activities’, were members of the promotion structure in connection with (both of the following):

• the facilitated proposal or arrangements
• any other proposals or arrangements that are substantially the same as the facilitated proposal or arrangements

The authorised HMRC officer may assess a lower amount if they consider this just and reasonable.

‘Consideration’ includes fees, remuneration, and any other kind of consideration, however received.
The authorised HMRC officer will work out the amount of the consideration to the best of their information and belief.

Consideration does not include any VAT charged. This means we will not include it when we’re working out the amount of the further penalty.

How we tell you about a penalty

If we’re going to charge you a penalty, we’ll send you a notice of penalty assessment. It will tell you how much the penalty is and how we have worked out the amount. You’ll then have 30 days to pay the penalty. However, if you appeal against the penalty, you will not have to pay it until the appeal is determined.

The time limit for giving a notice of penalty assessment

There’s a time limit for us to give a notice of penalty assessment relating to a penalty for facilitating an avoidance scheme involving a non-resident promoter.

The time limit is 2 years from the date we first became aware of the information that allows us to make the assessment.

Your rights when we’re considering penalties

The Human Rights Act 1998 gives you certain rights when we’re considering penalties. You can find details about these rights in factsheet CC/FS70, ‘The Human Rights Act and penalties for facilitating avoidance schemes involving non-resident promoters’. Go to www.gov.uk and search for ‘CC/FS70’.

If we give you a notice of penalty assessment, you can appeal if you disagree with our decision to charge a penalty, or with the amount of the penalty. The notice will tell you what to do if you disagree.

What we mean by ‘original penalties’

‘Original penalties’ are:

• penalties incurred under
  • Schedule 16 to Finance (No.2) Act 2017 (penalties for enablers of defeated tax avoidance)
  • paragraph 2(1) of Schedule 35 of Finance Act 2014 for promoting schemes subject to a promoters of tax avoidance schemes (POTAS) stop notice
• one or more penalties incurred under the following provisions, where the total amount payable under that penalty, or those penalties, is at least £100,000
  • section 98C of Taxes Management Act 1970 (disclosure of tax avoidance schemes (DOTAS))
  • Part 5 of Finance Act 2014 (POTAS) and Schedule 36 to Finance Act 2008 (information and inspection powers) as it has effect in relation to POTAS, with the exception of penalties for promoting schemes subject to a POTAS stop notice
  • Schedule 36 to Finance Act 2008 (information and inspection powers) as it has effect in relation to penalties for enablers of defeated tax avoidance
  • Schedule 17 to Finance (No.2) Act 2017 (disclosure of tax avoidance schemes: VAT and other indirect taxes (DASVOIT))

A person is liable to pay ‘original penalties’ from the date on which:

• notice of the penalty is given, in a case where the penalty is to be imposed by HMRC
• the penalty is determined, in a case where the penalty is to be determined by the First-tier Tribunal, regardless of any outstanding appeal relating to the original penalties

What we mean by ‘original activities’

‘Original activities’ are (all of the following):

• the activities carried out by a person that have led to the person incurring ‘original penalties’
• carried out by the person as a member of the same promotion structure as a non-resident promoter
• related to a relevant proposal or relevant arrangements that are promoted by the non-resident promoter

Our information and inspection powers

We may need information from you, or another person, to help us:

• decide whether to charge you a penalty
• work out the amount of any penalty

The legislation at Schedule 13 of Finance Act 2022 allows us to use our information and inspection powers in Schedule 36 to the Finance Act 2008 to help us get what we need.

If we’re checking whether you’re liable to a penalty, we may give you or another person:

• an information notice, which will require you, or them, to give us information and documents
• an inspection notice, which will allow us to
  • enter and inspect your, or their, business premises
  • inspect business assets or documents that are on those premises

We may charge you penalties if you do not do what information or inspection notices ask. If we give an information or inspection notice to another person, we may also charge them penalties if they do not comply with it.

If you need help

If you have any health or personal circumstances that may make it difficult for you to deal with us, please tell the officer that has contacted you. We’ll help you in whatever way we can. For more information, go to www.gov.uk and search for ‘get help from HMRC if you need extra support’.

You can also ask someone else to deal with us on your behalf. For example, a professional adviser, friend or relative. However, we may still need to talk or write to you directly about some things. If we need to write to you, we’ll send a copy to the person you’ve asked us to deal with. If we need to talk to you, they can be with you when we do, if you prefer.

If you are not happy with our service

Please tell the person or office you’ve been dealing with. They’ll try to put things right. If you are still not happy, they’ll tell you how to make a formal complaint.

Our privacy notice

Our privacy notice sets out the standards that you can expect from us when we ask for information or hold information about you. Go to www.gov.uk and search for ‘HMRC Privacy Notice’.