A7.413 GAAR—Counteraction procedure

Administration and compliance

A7.413 GAAR—Counteraction procedure

A7.413 GAAR—Counteraction procedure

HMRC can make an adjustment before the GAAR procedural requirements (detailed below) have been satisfied. However the effect of the adjustment is suspended until the GAAR procedural requirements have been completed1.

Procedural requirements for counteractions by HMRC

Counteractions can be made by a taxpayer (see A2.129). However if HMRC wish to make a counteraction then the procedure is as follows:


    (1)     a designated HMRC officer must first give written notice to a taxpayer, explaining why he considers that a tax advantage has arisen from abusive tax arrangements, setting out his proposed counteraction and inviting a written response from the taxpayer. The taxpayer has 45 days from the day on which the notice is given to respond in writing, or such longer period as the officer may allow on receipt of the taxpayer's written request2. Where the taxpayer takes 'relevant corrective action' before the relevant 'closed period' begins, by either amending his return (and notifying HMRC that he has done so) or by settling any open appeal, the matter will not be referred to the independent GAAR Advisory Panel. A taxpayer who does not finalise the steps required as part of the relevant corrective action will remain within the counteraction procedure.


    The closed period for these purposes means 32 days after the 45-day period allowed for a response3


    (2)     where either no written response is received from the taxpayer, or after considering the written representations made by the taxpayer, the designated officer is still of the opinion that the

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