Income Tax Act 2007

Procedure for counteraction of income tax advantages U.K.

[F1 695 Notice of enquiry U.K.

(1) An officer of Revenue and Customs may enquire into a transaction or transactions if—

(a) the officer has reason to believe that section 684 (person liable to counteraction of income tax advantage) may apply to a person (“the taxpayer”) in respect of the transaction or transactions, and

(b) the officer notifies the taxpayer of his intention to do so.

(2) The notification may be given at any time not more than 6 years after the end of the tax year to which the income tax advantage in question relates.]

Textual Amendments

F1 S. 695 substituted (with effect in accordance with s. 34(8)(9) of the amending Act) by Finance Act 2016 (c. 24), s. 34(2)

F2 696 Opposed notifications: statutory declarations U.K.

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Textual Amendments

F2 Ss. 696, 697 omitted (with effect in accordance with s. 34(8)(9) of the amending Act) by virtue of Finance Act 2016 (c. 24), s. 34(3)

F2 697 Opposed notifications: determinations by tribunal U.K.

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Textual Amendments

F2 Ss. 696, 697 omitted (with effect in accordance with s. 34(8)(9) of the amending Act) by virtue of Finance Act 2016 (c. 24), s. 34(3)

698 Counteraction notices U.K.

[F3 (1) If on an enquiry under section 695 an officer of Revenue and Customs determines that section 684 applies to the taxpayer, the income tax advantage in question is to be counteracted by adjustments, unless the officer is of the opinion that no counteraction is required.]

(2) The adjustments required to be made to counteract the income tax advantage and the basis on which they are to be made are to be specified in a notice served on the person by an officer of Revenue and Customs.

(3) In this Chapter such a notice is referred to as a “counteraction notice”.

(4) Any of the following adjustments may be specified—

(a) an assessment,

(b) the nullifying of a right to repayment,

(c) the requiring of the return of a repayment already made, or

(d) the calculation or recalculation of profits or gains or liability to income tax.

[F4 (5) An assessment may be made in accordance with a counteraction notice at any time (without regard to any time limit on making the assessment that would otherwise apply).]

(6) This section is subject to—

• F5 ...

• section 700 (timing of assessments F6 ...), and

• section 702(2) (effect of clearance notification under section 701).

(7) But no other provision in the Income Tax Acts is to be read as limiting the powers conferred by this section.

Textual Amendments

F3 S. 698(1) substituted (with effect in accordance with s. 34(8)(9) of the amending Act) by Finance Act 2016 (c. 24), s. 34(4)

F4 S. 698(5) substituted (with effect in accordance with s. 34(8)(9) of the amending Act) by Finance Act 2016 (c. 24), s. 34(5)

F5 Words in s. 698(6) omitted (8.4.2010 with effect in accordance with Sch. 12 para. 15(1) of the amending Act) by virtue of Finance Act 2010 (c. 13), Sch. 12 para. 3(a)

F6 Words in s. 698(6) omitted (8.4.2010 with effect in accordance with Sch. 12 para. 15(1) of the amending Act) by virtue of Finance Act 2010 (c. 13), Sch. 12 para. 3(b)

[F7 698A No-counteraction notices U.K.

(1) If on an enquiry under section 695 an officer of Revenue and Customs is of the opinion that no counteraction is required, the officer must serve notice on the person (a “no-counteraction notice”) stating that no counteraction is required and why.

(2) The taxpayer may apply to the tribunal for a direction requiring an officer of Revenue and Customs to issue one of the following within a specified period—

(a) a counteraction notice;

(b) a no-counteraction notice.

(3) Any such application is to be subject to the relevant provisions of Part 5 of TMA 1970 (see, in particular, section 48(2)(b) of that Act).

(4) The tribunal must give the direction applied for unless satisfied that there are reasonable grounds for not serving either a counteraction notice or a no-counteraction notice within a specified period.]

Textual Amendments

F7 S. 698A inserted (with effect in accordance with s. 34(8)(9) of the amending Act) by Finance Act 2016 (c. 24), s. 34(6)

F8 699 Limit on amount assessed in section 689 and 690 cases U.K.

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Textual Amendments

F8 S. 699 omitted (8.4.2010 with effect in accordance with Sch. 12 para. 15(1) of the amending Act) by virtue of Finance Act 2010 (c. 13), Sch. 12 para. 4

700 Timing of assessments F9 ... U.K.

(1) This section applies if section 684 (person liable to counteraction of income tax advantage) applies to a person because the person is in a position to obtain or has obtained an income tax advantage by falling within the circumstances mentioned in section [F10 685(2)(c) or (3)] when share capital is repaid.

(2) An assessment to income tax made in accordance with a counteraction notice must be an assessment for the tax year in which the repayment occurs.

(3) The references in this section to the repayment of share capital include references to any distribution made in respect of any shares in a winding up or dissolution of the company.

(4) In subsection (3) “shares” includes stock and any other interest of a member in a company.

Textual Amendments

F9 Words in s. 700 heading omitted (8.4.2010 with effect in accordance with Sch. 12 para. 15(1) of the amending Act) by virtue of Finance Act 2010 (c. 13), Sch. 12 para. 5(b)

F10 Words in s. 700(1) substituted (8.4.2010 with effect in accordance with Sch. 12 para. 15(1) of the amending Act) by Finance Act 2010 (c. 13), Sch. 12 para. 5(a)