Income Tax Act 2007

Procedure for counteraction of income tax advantagesU.K.

[F1695Notice of enquiryU.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.]

F2696Opposed notifications: statutory declarationsU.K.

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F2697Opposed notifications: determinations by tribunalU.K.

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698Counteraction noticesU.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.

[F7698ANo-counteraction noticesU.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.]

F8699Limit on amount assessed in section 689 and 690 casesU.K.

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700Timing 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 [F10685(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.