A7.334 Serial tax avoidance—restriction of relief notices
In summary, if a taxpayer has, during the warning period, used three sets of arrangements which relate to the 'misuse of reliefs', HMRC must issue a 'restriction of relief' notice. The recipient of a relief restriction notice may then not make any claim for a relief during the restricted period. Where a company is treated as having been issued with a warning notice because another member of the corporate group had previously been issued with a notice, or because it is an associated person of the recipient, no account is taken of this notice in relation to a relief restriction notice1.
In detail, where a person has incurred three relevant defeats, each of which:
• is by virtue of conditions A, B, or C (see A7.331)
• relates to the misuse of a relief, and
• has been counteracted, on the basis that a particular avoidance-related rule applies in relation to a person's affairs (see below), or the misused relief is a loss relief2,
HMRC must issue a 'restriction of relief' notice, which must set out the effects of the restriction and the restriction period3.
For these purposes a relevant defeat relates to the 'misuse of reliefs' where the tax advantage in question (or part thereof) results from a relief or increased relief from tax, or where it is reasonable to assume that the claim for, or use of, a particular relief is a significant component of the arrangements in question4. The tax advantage in question
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