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You should read this factsheet if we鈥檝e given you a notice of binding and a bound arrangements opinion notice under the general anti-abuse rule (GAAR). We鈥檒l give you these notices if you鈥檝e used tax arrangements that we consider the GAAR may apply to.

For more information about the GAAR please read factsheet CC/FS34a, 鈥業nformation about the general anti-abuse rule鈥�.

Where this factsheet refers to 鈥榯ax鈥�, this means the taxes, levies and contributions to which the GAAR applies. You can find details of these in factsheet CC/FS34a.

This factsheet is one of a series. For the full list, go to www.gov.uk and search for 鈥楬MRC compliance checks factsheets鈥�.

Giving a notice of binding and a bound arrangements opinion notice on the assumption that a tax advantage has arisen

Where we consider that a tax advantage may have arisen, we can give you a notice of binding and a bound arrangements opinion notice on the assumption that a tax advantage arises to you, without accepting that it does. Paragraph 12 of Schedule 43A to the Finance Act 2013 allows us to do this.

About binding

We can send you a notice of binding if a counteraction notice has been given under paragraph 12 of Schedule 43 to the Finance Act 2013 to a person in relation to any tax arrangements (the 鈥榗ounteracted arrangements鈥�) and we consider that all of the following apply:

• a tax advantage has arisen to you from tax arrangements that are abusive
• those arrangements are equivalent to the counteracted arrangements
• the advantage should be counteracted under the GAAR

If we send you a notice of binding, we do not have to refer your individual set of arrangements to the GAAR Advisory Panel. Instead, we can apply the panel鈥檚 opinions relevant to the counteracted arrangements to equivalent arrangements (such as yours) that have been bound to those arrangements.

For the purposes of binding, tax arrangements are 鈥榚quivalent鈥� to one another if they鈥檙e substantially the same as one another, having regard to all of the following:

• the substantive results of the arrangements
• the means of achieving those results
• the characteristics on the basis of which it could reasonably be argued, in each case, that the arrangements are abusive tax arrangements under which a tax advantage has arisen to a person

When we send you a notice of binding, we鈥檒l also send you a bound arrangements opinion notice. This includes reports prepared by HM Revenue and Customs (HMRC) of any opinion of the GAAR Advisory Panel about the counteracted arrangements.

Notice of binding

Your notice of binding will:

• tell you which tax arrangements it relates to
• tell you what the tax advantage is
• explain why we consider that your arrangements are equivalent to the counteracted arrangements
• explain why we consider that a tax advantage has arisen to you from the arrangements that are abusive
• tell you what adjustments are needed to counteract the tax advantage
• tell you what to do if you want to take corrective action (read the section 鈥楾aking corrective action鈥� for more information about this)
• tell you about the notice of final decision

The notice of binding will tell you about the period during which you will not be able to take corrective action under the GAAR. This is known as the 鈥榗losed period鈥�. It鈥檒l also tell you about the penalties that we may charge if we give you a notice of final decision telling you that a tax advantage is to be counteracted under the GAAR. You can find more information about this in the sections 鈥楴otice of final decision鈥� and 鈥楶enalties under the GAAR鈥�.

You can find more information about the closed period in the section 鈥楥losed period鈥�.

Bound arrangements opinion notices

If we give you a notice of binding, we鈥檒l also give you a bound arrangements opinion notice. A bound arrangements opinion notice is a written notice which tells you about the GAAR Advisory Panel鈥檚 opinions about the counteracted arrangements.

You cannot appeal against a bound arrangements opinion notice, but you can make representations.

You have 30 days beginning with the day on which the notice is given to do this. You can make representations if you believe that no tax advantage has arisen from your arrangements, or that your arrangements are materially different from the counteracted arrangements.

Taking corrective action

If we give you a notice of binding, it鈥檒l tell you how to take corrective action. Taking corrective action means taking the steps set out below to settle your tax affairs.

You can take relevant corrective action before the beginning of the closed period by taking the 2聽steps below.

First step

Take one of the following actions:

• all necessary action to enter into a written agreement with us to relinquish that tax advantage 鈥� if you take all necessary action but do not enter into a written agreement, we may proceed as if you have not taken the corrective action
• amend your return, or claim, to counteract the tax advantage specified in the notice of binding 鈥� you will not be prevented by any other statutory time limits from amending your return, or claim, before the compliance check is closed

Second step

Tell us:

• that you鈥檝e taken the first step
• the additional amount which has or will become due and payable as a result of you taking the first step

If you take the relevant corrective action in line with the notice of binding, then you鈥檒l be treated as not having been given the notice of binding.

Your appeal rights if you take corrective action

If you amend your return, or claim, to counteract the tax advantage specified in the notice of binding, and we take that amendment into account when we close the compliance check, you will not be able to appeal against that amendment.

Closed period

If we give you a notice of binding for tax arrangements there鈥檚 a deadline by which you can take relevant corrective action. You can only take relevant corrective action before the 31st day after we give you the notice.

There is then a period during which you cannot make any GAAR-related adjustments. It鈥檚 known as the 鈥榗losed period鈥�.

The closed period begins 31 days after the day the notice was given to you, and ends the day before the day we give you one of the following:

• a notice of final decision under paragraph 9(2) of Schedule 43A
• a notice of final decision in relation to a generic referral under paragraph 9(2) of Schedule 43B

If we then counteract the tax advantage under the GAAR, we may also charge you a penalty. Read the section 鈥楶enalties under the GAAR鈥� for more information.

We cannot charge this type of penalty if you entered into the tax arrangements before
15 September 2016.

Notice of final decision

If you do not take the necessary corrective action within the time allowed, we鈥檒l consider the GAAR Advisory Panel鈥檚 opinions about the counteracted arrangements. We鈥檒l also consider any representations you鈥檝e made within the 30 days, beginning with the day on which we gave you a bound arrangements opinion notice.

We鈥檒l then decide whether to counteract the tax advantage under the GAAR. We鈥檒l send you a notice of final decision telling you what will happen next. This is unless a notice of binding and/or one or more protective GAAR notices have been treated as a notice of final decision. We explain more about this in the section 鈥楳aking the adjustments and appealing鈥�.

Protective GAAR notices

We may have given you one or more protective GAAR notices before we give you a notice of binding.

A protective GAAR notice tells you about some or all of the adjustments that we consider may be needed under the GAAR to counteract a tax advantage.

If we consider that any other adjustments are needed to counteract the tax advantage, they鈥檒l also be included in the notice of binding.

Penalties under the GAAR

We may charge you a penalty if you entered into the tax arrangements on or after 15 September 2016 and all of the conditions below apply:

• we鈥檝e given you a notice of final decision, stating that a tax advantage arising from tax arrangements is to be counteracted
• a tax document has been given to us on the basis that the tax advantage arises to you from those arrangements
• that document was given to us by you or another person in circumstances where you knew, or should have known, that they gave the document on the basis that the tax advantage arises to you from those arrangements
• the tax advantage has been counteracted by making adjustments under the GAAR

We can only charge a GAAR penalty if the tax advantage is counteracted under the GAAR, rather than in any other way.

A tax document for this purpose means any document submitted to HMRC in accordance with any statutory provision. It includes, for example, a claim or return.

The penalty is an amount equal to 60% of the value of the counteracted advantage. The counteracted advantage is generally the additional amount due or payable in respect of tax, as a result of the adjustments made to counteract the tax advantage.

Making adjustments and appealing

You cannot appeal against a notice of binding 鈥� either to us, or to a tribunal or court.

You can appeal against the adjustments once we鈥檝e made them.

Adjustments we鈥檝e already made

We may have already made some or all of the adjustments shown in a notice of binding. If so, we鈥檒l have sent you one or more protective GAAR notices.

They will have explained:

• your right to appeal against the adjustments once we made them
• the effect of not appealing against the adjustments

Adjustments we may make between giving a notice of binding and a notice of final decision

After we鈥檝e given you a notice of binding, we do not have to give you a protective GAAR notice if we make any of the adjustments shown in the notice of binding, before giving you a notice of final decision. The legislation that allows us to do this is at section 209AB of the Finance Act 2013. When we make any of these adjustments, we鈥檒l tell you how to appeal and the time limits for doing so.

If:

• you do not appeal
• you appeal and later withdraw your appeal
• your appeal is settled by agreement

and we do not give you a notice of final decision, then the notice of binding is treated (for all purposes other than penalties) as if it were a notice of final decision. The GAAR legislation refers to a notice of final decision as a final GAAR counteraction notice. You can find out what we mean by a final GAAR counteraction notice in section 鈥楩inal GAAR counteraction notice鈥�.

If you do not appeal, you鈥檒l have to pay the additional tax that results from us having made the adjustments.

Adjustments we may make after giving a notice of final decision

Further adjustments may be needed if a notice of final decision states the tax advantage should be counteracted under the GAAR.

Once we make any further adjustments, you鈥檒l be able to appeal against us having made them. When we make the adjustments, we鈥檒l tell you more about how to appeal, and the time limits for doing so.

Final GAAR counteraction notice

A final GAAR counteraction notice is one of the following:

• notice of final decision after considering the opinion of the GAAR Advisory Panel (under paragraph 12 of Schedule 43 to the Finance Act 2013)
• pooled arrangements notice of final decision (under paragraph 8(2) of Schedule 43A to the Finance Act 2013)
• generic referral notice of final decision (under paragraph 8 of Schedule 43B to the Finance Act 2013)
• bound arrangements notice of final decision (under paragraph 9(2) of Schedule 43A to the Finance Act 2013)

Each of these notices will tell you whether the tax advantage from your tax arrangements is to be counteracted under the GAAR.

More information

If you need help

If you have any health or personal circumstances that may make it difficult for you to deal with us, please tell the officer who as contacted you. We鈥檒l help you in whatever way we can. For more information, go to www.gov.uk and search for 鈥楪et help from HMRC if you need extra support鈥�.

If you鈥檙e not happy with our service

Please tell the person or office you鈥檝e been dealing with. They鈥檒l try to put things right. If you鈥檙e still not happy, they鈥檒l tell you how to make a formal complaint.