A7.416 GAAR—Penalties

A7.416 GAAR—Penalties

A person will be liable to a tax-geared penalty in cases which have successfully been counteracted under the GAAR1. The rules apply equally to abusive NIC arrangements2. The penalty is 60% of the value of the tax advantage that has been counteracted and applies to tax arrangements entered into on or after 15 September 2016. It is triggered when a document is submitted to HMRC which includes arrangements which are later found to come within the scope of the GAAR and becomes chargeable at the point when the counteraction is final, ie where either there is either no appeal by the taxpayer or, an appeal has failed3.

For details of penalties to enablers of tax avoidance schemes see A4.573A. For details of the presumption of carelessness relating to tax avoidance schemes see A4.532A.

Liability to a GAAR penalty

A person is liable to a penalty if:


    •     he has been given notice of final decision by HMRC stating that a tax advantage arising from the particular tax arrangements is to be counteracted under the GAAR provisions (see A7.414)


    •     a tax document has been given to HMRC on the basis that the tax advantage arises to him from those arrangements


    •     that document was given to HMRC by either the person counteracted or another person, and the person who is counteracted knew (or should have known) that the document was given on the basis that a tax advantage arises to him from the tax arrangements

A tax document means a

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