Commentary

A7.312 Promoters of tax avoidance schemes—penalties

Administration and compliance

A7.312 Promoters of tax avoidance schemes—penalties

A7.312 Promoters of tax avoidance schemes—penalties

For the latest New Developments, see ND.1940.

HMRC has the power to stop persons promoting certain arrangements that may give rise to a tax advantage. HMRC can also require such persons to maintain certain conduct and monitor them if they fail to do so. This is known as the promoters of tax avoidance scheme (POTAS) regime. For an overview of the regime, see A7.301. For the key definitions, see A7.301A.

This article considers the penalties charged for failure to comply with the various obligations under the regime.

Penalties—general points

Penalties can be charged under the POTAS regime for:

  1.  

    •     failure to comply with an obligation

  2.  

    •     providing inaccurate information and documents, and

  3.  

    •     concealing or destroying documents

These penalties are discussed in detail below.

As a general rule, the amount of a penalty under the POTAS regime must be determined by the tribunal1.

The legislation only allows limited categories of penalties to be charged by HMRC without reference to the tribunal. These are:2

  1.  

    •     £600 daily penalties for failure to comply with an obligation

  2.  

    •     initial penalty for the continued promotion of arrangements/proposals of a description specified in a stop notice (unless the maximum initial penalty is £1m, in which case the amount of the penalty must be determined by the tribunal)

  3.  

    •     initial penalty for the failure to notify persons who are subject to a stop notice

  4.  

    •     initial penalty for failure to notify HMRC of persons who are subject to a stop notice

  5.  

    •     penalty for failure to

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