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Finance Act 2026

Type Public General Act

Publication 2026-03-18

Last updated 2026-10-01

State In force

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(2) In this Part, “CBAM good” means a good specified by Schedule 16 (but see section 145 (3)).

(3) Schedule 16 specifies the following kinds of goods—

(a) aluminium goods;

(b) cement;

(d) hydrogen;

(e) iron and steel goods.

Importation

144

(1) For the purposes of this Part, a reference to a good being imported into the United Kingdom is a reference to—

(a) the first time a good is imported as described in this section, and

(b) if a good is imported as described in this section and subsequently exported from the United Kingdom, the next time the good is imported as described in this section.

(2) If a CBAM good is chargeable to import duty under section 1 of TCTA 2018, it is imported when liability to import duty is incurred in respect of the good.

(3) If a CBAM good is chargeable to duty under section 30C of TCTA 2018, it is imported when liability to that duty is incurred in respect of the good.

(4) If a CBAM good is chargeable to duty under section 30A (3) or 40A (1)(a) of TCTA 2018 (or would be so chargeable but for regulations within section 30B(1)(a) or 40B(1)(a) of that Act), it is imported when liability to that duty is incurred in respect of the good (or would be incurred but for the regulations).

(5) If a CBAM good is—

(a) a Union good that is imported into the United Kingdom as a result of its entry into Northern Ireland and not excluded by regulations made by the Treasury,

(b) a good that is imported into the United Kingdom from the Isle of Man and not excluded by regulations made by the Treasury,

(c) a domestic good by virtue of regulations made under section 33(8) of TCTA 2018 relating to goods declared for an outward processing procedure, or

(d) a domestic good by virtue of subsection (6) of section 36 of TCTA 2018 or regulations made under that section,

it is imported at the time of importation for the purposes of the customs and excise Acts.

(6) If a CBAM good would be chargeable to duty under section 30C of TCTA 2018 but for regulations within subsection (6)(a) of that section, it is imported at the time of entry of the good in Great Britain in the course of the removal of the good to Great Britain from Northern Ireland.

(7) The reference in subsection (4) to when liability to duty under section 30A(3) or 40A(1)(a) of TCTA 2018 is incurred in respect of a good is to when, for the purpose of the duty, a customs debt on import is incurred under UCC 2013.

(8) For the purposes of determining, in accordance with subsection (5), when a CBAM good is imported into the United Kingdom from the Isle of Man, section 8 of the Isle of Man Act 1979 (removal of goods from the Isle of Man) has effect as if, in subsection (2) of that Act, at the end of paragraph (c), there were inserted

; or (d) goods which are CBAM goods.

(9) Section 5 of CEMA 1979 applies for the purpose of subsection (6) to determine the time of entry of a CBAM good in Great Britain in the course of the removal of the good to Great Britain from Northern Ireland as it applies for the purpose of the customs and excise Acts to determine the time of importation of goods—

(a) reading references in that section to the time of importation of goods as the time of entry of the CBAM good in Great Britain, and

(b) reading references in subsections (2) and (6) of that section to the United Kingdom as Great Britain.

(10) Regulations made by the Treasury may exclude from subsection (4) or (6) (as the case may be) goods that would be chargeable to duty under section 30A(3), 30C or 40A(1)(a) of TCTA 2018 but for regulations within section 30B(1)(a), 30C(6)(a) or 40B(1)(a) of that Act.

Goods processed under a special customs procedure

145

(1) Subsection (2) applies where—

(a) a CBAM good has been declared for a special customs procedure,

(b) the CBAM good is processed under the procedure,

(d) that good is imported into the United Kingdom.

(2) When the good that is not a CBAM good is first imported as described in section 144, CBAM is charged on so much of the emissions embodied in that good as were embodied in the CBAM good when it was declared for the special customs procedure.

(3) References in this Part to a CBAM good include a reference to a good imported in the circumstances described in subsection (1).

(4) In this section, “special customs procedure” means—

(a) a special Customs procedure (within the meaning of section 3(4) of TCTA 2018);

(b) a special procedure provided for by Title 7 of UCC 2013, other than the outward processing procedure.

Person liable: the importer

146

(1) The person liable to CBAM on the emissions embodied in a CBAM good is the importer.

(2) If a CBAM good is imported as described in section 144 (2), (3) or (6), the importer is—

(a) if liability to import duty, or duty under section 30C of TCTA 2018, is incurred when a declaration for a Customs procedure is accepted, or when there is a breach of a requirement relating to the procedure—

(i) the person in whose name the declaration for the procedure was made, or

(ii) if the declaration was made on behalf of another person, the person on whose behalf the declaration was made, or

(b) if paragraph (a) does not apply, the person on whose behalf the good is imported.

(3) If a CBAM good is imported as described in section 144 (4), the importer is—

(a) if liability to duty under section 30A(3) or 40A(1)(a) of TCTA 2018 is incurred when a Union customs declaration in respect of the good is accepted, or when there is a breach of a requirement relating to the procedure for which it is accepted—

(i) the declarant, or

(ii) if the declaration was made on behalf of another person, the person on whose behalf the declaration was made, or

(b) if paragraph (a) does not apply, the person on whose behalf the good is imported.

(4) If a CBAM good is imported as described in section 144 (5), the importer is the person on whose behalf the good is imported.

(5) In this section—

“Customs procedure” means a procedure set out in section 3(3) of TCTA 2018;

“declarant”, in relation to a Union customs declaration, has the meaning given by Article 5(15) of UCC 2013;

“Union customs declaration” means a customs declaration for the purposes of UCC 2013.

Exemptions

147

(1) CBAM is not charged on the emissions embodied in a CBAM good if the importer—

(a) is, at the time the good is imported, neither registrable nor registered (see Part 2 of Schedule 17), or

(b) is importing the good otherwise than in the course of a business.

(2) CBAM is not charged on the emissions embodied in a CBAM good if—

(a) the place of origin of the good is the United Kingdom, determined in accordance with provision applicable in relation to the customs tariff in its standard form (see section 17(1) to (6) of TCTA 2018);

(b) the good is imported as described in section 144 (2) or (3) and returned goods relief is available in respect of the good;

(c) the good is imported as described in section 144 (4) and relief under Article 203 of UCC 2013 (returned goods) is available in respect of the good;

(d) the good is within section 144 (5)(a) and was—

(i) exported from the United Kingdom as a Union good as a result of its removal from Northern Ireland, and

(ii) imported into the United Kingdom as described in section 144 (5)(a) not more than 3 years later, in the state in which it was exported (see Article 203(5) of UCC 2013);

(e) the good is imported as described in section 144 (5)(b) and returned goods relief would be available in respect of it if liability to import duty were incurred by reference to its importation into the United Kingdom.

(3) CBAM is not charged on so much of the emissions embodied in a CBAM good (“the chargeable good”) as are attributable to the production of another CBAM good which—

(a) originated from the United Kingdom, determined in accordance with provision applicable in relation to the customs tariff in its standard form (see section 17(1) to (6) of TCTA 2018), and

(b) was processed to produce the chargeable good.

(4) If, but for this subsection, a liability to duty would have been incurred for the purposes of section 144 (2) or (3) in circumstances where—

(a) liability to duty was incurred in accordance with section 4(4)(a) of TCTA 2018,

(b) liability to duty was incurred by virtue of HMRC accepting a declaration of the good for a temporary admission procedure, and

the liability to duty is treated as not having been incurred on that occasion for the purposes of section 144 (2) or (3) (and, accordingly, the good is treated as not having been imported as described in section 144 (2) or (3) on that occasion).

(5) But subsection (4) does not apply if—

(a) there was no entitlement to make the declaration mentioned in subsection (4)(b), or

(b) the full relief given, mentioned in subsection (4)(c), was not available.

(6) The Treasury may by regulations specify other circumstances in which CBAM is not charged on emissions, or certain emissions, embodied in a CBAM good.

(7) Regulations under subsection (6) may also treat an importation into the United Kingdom, for any purpose of this Part, of a CBAM good in respect of which the regulations apply as not having occurred (including by virtue of provision similar to subsection (4)).

(8) In this section—

“customs tariff in its standard form” means the customs tariff, as defined in section 8 of TCTA 2018, as it has effect without regard to any provision made under sections 9 to 15 or section 19(4) of that Act;

“returned goods relief” means relief for import duty available—by virtue of the UK Reliefs document, andby reference to the fact the good is being returned to the United Kingdom, or Great Britain, having previously been exported;

“temporary admission procedure” has the meaning given by paragraph 15 of Schedule 2 to TCTA 2018;

“UK Reliefs document” has the meaning given by regulations under section 19 of TCTA 2018.

Embodied emissions

148

(1) In this Part, “emissions embodied in a CBAM good” means emissions that are attributable to the production of a CBAM good.

(2) The Treasury may by regulations make provision about what it means for emissions to be attributable to the production of a CBAM good.

(3) Regulations under subsection (2) may (among other things) make provision about emissions that are emitted in the course of an activity carried out in connection with the production of—

(a) a CBAM good, or

(b) materials used (including goods processed) to produce a CBAM good.

(4) See paragraphs 10 and 11 of Schedule 17 for provision about how to determine and evidence emissions embodied in a CBAM good.

Rate

149

(1) CBAM is charged at an amount equal to the sectoral domestic price applicable in respect of the CBAM good multiplied by the number of tonnes of carbon dioxide equivalent emissions embodied in the CBAM good.

(2) The “sectoral domestic price” applicable in respect of a CBAM good is the price calculated and published by the Treasury for—

(a) the CBAM sector in which the good falls, and

(b) the quarter in which the liability to CBAM is incurred in respect of the good.

(3) The Treasury must calculate and publish the sectoral domestic price for each CBAM sector for each quarter (“quarter Q”) as follows—

Step 1Calculate the average price per tonne of specified emissions under the UK Emissions Trading Scheme in the quarter preceding quarter Q—by reference to auction clearing prices for UK ETS allowances at auctions during the quarter preceding quarter Q, orif no allowances were sold at auction during that quarter, as provided in regulations under subsection (6).

Step 2Reduce that price by a percentage equal to the baseline free allocation percentage for the CBAM sector, as adjusted by a factor specified by regulations under subsection (6)—for the CBAM sector for the year in which quarter Q falls, andin light of reduction factors applicable in determining, under the UK Emissions Trading Scheme, the allocation in that year of free UK ETS allowances in respect of sub-installations that have a process that serves production of goods falling within the CBAM sector.

(4) In this section—

“auction” means an auction under the Greenhouse Gas Emissions Trading Scheme Auctioning Regulations 2021 (S.I. 2021/484);

“auction clearing price”, in relation to a UK ETS allowance, has the same meaning as in those Regulations (see regulation 7);

“baseline free allocation percentage” means, in relation to a CBAM sector, the average percentage of sectoral emissions that were covered—in the 2019 scheme year, by free EU ETS allowances, andin the 2022 and 2023 scheme years, by free UK ETS allowances,allocated in the scheme years mentioned here in respect of sub-installations that have a process that serves the production of goods falling within the CBAM sector;

“CBAM sector” means the commodity codes set out under a single heading in the Table in Schedule 16 other than the commodity codes that the Table indicates are excepted;

“the ETS Regulations” means the Greenhouse Gas Emissions Trading Scheme Regulations 2012 (S.I. 2012/3038);

“free EU ETS allowance” means an allowance allocated free of charge in accordance with Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emissions allowance trading within the Community and amending Council Directive 96/61/EC;

“free UK ETS allowance” means an allowance allocated free of charge under Part 4A of the UK ETS Order;

“quarter” means a period of 3 months ending at the end of March, June, September or December;

“regulated activity” and “specified emissions” have the meaning given by paragraph 3 of Schedule 2 to the UK ETS Order (or, in relation the 2019 scheme year, given by regulation 3 of the ETS Regulations as it had effect during that year);

“scheme year” has the meaning—in relation to the 2019 scheme year, given by regulation 3 of the ETS Regulations;in relation to the 2022 and 2023 scheme years, given by article 4 of the UK ETS order;

“sectoral emissions” means, in relation to a CBAM sector, the specified emissions that were emitted in the course of regulated activities carried out at sub-installations in the United Kingdom that have a process that serves the production of goods falling within the CBAM sector;

“sub-installation” means each kind of sub-installation defined by Article 2 of Commission Delegated Regulation (EU) 2019/331 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council (or, in relation to the 2019 scheme year, has the meaning given by regulation 3 of the ETS Regulations as it had effect during that year);

“UK ETS allowance” means an allowance created under the UK ETS Order (see article 18);

“UK ETS Order” means the Greenhouse Gas Emissions Trading Scheme Order 2020 (S.I. 2020/1265).

(5) In determining the “baseline free allocation percentage” in relation to a CBAM sector, ignore any scheme year in which there were no sectoral emissions.

(6) The Treasury may by regulations make further provision about the calculation of the sectoral domestic price.

(7) In this section—

(a) references to a good falling within a CBAM sector are references to the good falling within one of the commodity codes comprising the sector;

(b) references to emissions are references to tonnes of carbon dioxide equivalent emissions;

(c) references to regulated activities carried out to produce goods include regulated activities consisting in the production of heating and cooling consumed during the regulated activities.

Carbon price relief

150

(1) The amount of CBAM charged on emissions may be reduced under this section if another monetary amount is payable in relation to the emissions, whether the amount is—

(a) in the form of taxation,

(b) in exchange for allowances (however expressed) under an emissions trading scheme, or

(c) required to be paid under the law of a country or territory in connection with the importation of goods into the country or territory.

(2) The Treasury may by regulations make provision about relief under this section, including provision—

(a) describing which monetary amounts may generate relief,

(b) about when a monetary amount is to be treated as being payable in relation to emissions, and how the emissions are to be identified, and

(3) In this Part, “carbon price” means a monetary amount of a kind described in regulations under subsection (2)(a).

(4) Regulations under subsection (2) may (among other things) make provision—

(a) for the amount of relief to be determined by reference to averages, estimates, assumptions or by reference to information provided by a third party;

(b) to take account of other reliefs, allowances, offsets or similar relating to a carbon price;

(d) for the amount of relief to differ depending on where the carbon price is payable;

(e) specifying periods by reference to which calculations or measurements are to be made.

(5) In this section, references to an amount being payable in relation to emissions includes a reference to—

(a) an amount that indirectly relates to emissions, and

(b) an amount having been payable, or that is going to become payable, in relation to emissions.

Administration and enforcement

151

Schedule 17 makes provision for the administration and enforcement of CBAM.

Criminal offences

152

Schedule 18 makes provision for criminal offences relating to CBAM and about proceedings for those offences.

General

Supplementary amendments

153

Schedule 19 contains supplementary amendments of other legislation.

Emissions: meaning etc

154

(1) In this Part, “emissions” means emissions of greenhouse gases (within the meaning of section 92 of the Climate Change Act 2008) into the atmosphere that are attributable to human activity.

(2) For the purposes of this Part, “emissions” are determined or expressed in tonnes of carbon dioxide equivalent.

(3) In this Part, a “tonne of carbon dioxide equivalent” means one metric tonne of carbon dioxide or an amount of any other greenhouse gas with an equivalent global warming potential.

(4) The Commissioners may by regulations make provision setting, or about the determination of, such amounts.

Interpretation

155

(1) In this Part—

“business” includes any activity of a government department or other public authority, or of a charity, that is carried out for commercial purposes;

“CBAM good”: see section 143;

“the Commissioners” means the Commissioners for His Majesty’s Revenue and Customs;

“the customs and excise Acts” has the meaning given by section 1 of CEMA 1979;

“emissions”: see section 154;

“HMRC” means His Majesty’s Revenue and Customs;

“import”: see section 144;

“import duty” has the meaning given by section 1 of TCTA 2018;

“importer”: see section 146;

“registered person” and “registrable person”: see paragraph 2 (10) of Schedule 17;

“tonne of carbon dioxide equivalent” see section 154;

“UCC 2013” means Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code, as it has effect by virtue of section 7A of the European Union (Withdrawal) Act 2018;

“UK Emissions Trading Scheme” has the meaning given in Article 16 of the Greenhouse Gas Emissions Trading Order 2020 (S.I. 2020/1265);

“Union good” has the meaning given by Article 5(23) of UCC 2013;

“working day” means any day other than—a Saturday or Sunday, ora day that is a bank holiday in any part of the United Kingdom under the Banking and Financial Dealings Act 1971.

(2) In this Part—

(a) a person imports a CBAM good only if the person is “the importer” of the good (within the meaning of section 146);

(b) references to the production of goods include the manufacture of goods;

(3) The Treasury may by regulations make such amendments to this Part as they consider appropriate in consequence of UCC 2013, or any legislation replacing it, being amended or replaced.

Power to make provision for linked emissions trading schemes

156

(1) The Treasury may by regulations amend this Part for the purpose of—

(a) excluding emissions embodied in goods that originate from a country or territory with a linked emissions trading scheme from the charge to CBAM;

(b) providing that such goods are to be disregarded when calculating the aggregate value of imports for the purposes of Part 2 of Schedule 2 (registration).

(2) In this section, “a country or territory with a linked emissions trading scheme” means—

(a) a country or territory that has entered into arrangements with the United Kingdom for the purpose of linking its emissions trading scheme with the UK Emissions Trading Scheme, or

(b) a country or territory that has entered into arrangements with a country or territory of a kind referred to in paragraph (a) for the purpose of linking its emissions trading scheme with that country or territory’s emissions trading scheme.

Regulations and notices

157

(1) Regulations under this Part—

(a) may make different provision for different purposes;

(b) may include incidental, consequential, supplementary or transitional provision.

(2) Regulations under this Part may make provision by reference to things specified in a notice that is—

(a) published by the Treasury or the Commissioners in accordance with the regulations, and

(b) not withdrawn by a further notice.

(3) Regulations under this Part are to be made by statutory instrument.

(4) A statutory instrument containing regulations under section 156 (1) (linked emission trading schemes) is subject to the affirmative procedure.

(5) A statutory instrument containing regulations under any of the following provisions is subject to the made affirmative procedure—

(a) section 149 (6) (rate of CBAM);

(b) section 150 (2) (carbon price relief);

(6) A statutory instrument containing regulations under paragraph 2 (3) of Schedule 16 and under section 8 of TCTA 2018 is subject to the procedure under section 32 of TCTA 2018 that applies by virtue of the instrument containing regulations section 8 of TCTA 2018.

(7) A statutory instrument containing regulations under this Part, other than regulations in respect of which subsection (4), (5) or (6) applies, is subject to the negative procedure.

(8) Subsection (7) does not apply to a statutory instrument containing only regulations under section 158 (transitory provision).

(9) Where a statutory instrument is subject to the affirmative procedure, it may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.

(10) Where a statutory instrument is subject to the made affirmative procedure—

(a) it must be laid before the House of Commons after being made, and

(b) it ceases to have effect at the end of the period of 28 days beginning with the day on which the instrument is made, unless within that period the instrument is approved by a resolution of the House of Commons.

(11) Where a statutory instrument is subject to the negative procedure, it is subject to annulment in pursuance of a resolution of the House of Commons.

(12) Where a statutory instrument ceases to have effect as a result of subsection (10), that does not—

(a) affect the validity of anything previously done under the instrument, or

(b) prevent the making of a new statutory instrument.

(13) In calculating the period of 28 days for the purposes of subsection (10), no account is to be taken of any whole days that fall within a period during which—

(a) Parliament is dissolved or prorogued, or

(b) the House of Commons is adjourned for more than 4 days.

(14) Any provision that may be included in regulations in a statutory instrument under this Part subject to the negative procedure may be included in regulations in a statutory instrument subject to the affirmative procedure or the made affirmative procedure.

(15) Any provision that may be included in regulations in a statutory instrument under this Part subject to the made affirmative procedure may be included in regulations in a statutory instrument subject to the affirmative procedure.

(16) A notice published by the Treasury or the Commissioners under this Part—

(a) may be amended or withdrawn by a further notice;

(b) may include provision mentioned in subsection (1)(a) and (b).

Commencement and transitory provision

158

(1) This Part has effect in relation to goods imported into the United Kingdom on or after 1 January 2027.

(2) The Treasury may by regulations modify the effect of—

(a) paragraph 2 (4) of Schedule 17 as regards any person who triggers registration in 2027 or 2028;

(b) paragraph 6 (2) or (3) or 7 (2) for the purposes of any accounting period in respect of CBAM falling in 2027 or 2028.

(3) Provision included in regulations under this section by virtue of section 157 (1)(b) may modify the effect of any enactment.

Part 6 — Avoidance

Chapter 1 — Prohibition of promotion of certain tax avoidance arrangements

Prohibition

Prohibition of promotion of certain tax avoidance arrangements

159

(1) A person must not promote arrangements that—

(a) have been, or are likely to be, marketed as a means by which a person may seek a particular tax advantage if there is no realistic prospect that the arrangements will result in the tax advantage, or

(b) are of a kind specified in regulations under subsection (2).

(2) The Commissioners may by regulations specify arrangements that in the reasonable opinion of the Commissioners—

(a) have been, or are likely to be, marketed as a means by which a person may seek a particular tax advantage,

(b) are unlikely to result in the tax advantage, and

(3) The following factors would, for example, indicate that arrangements are likely to cause harm to participants—

(a) a large number of participants;

(b) participants that are not independently advised;

(d) mass-marketing;

(e) standardised implementation documents;

(f) promoters that are unknown to, or not able to be contacted by, participants.

(4) Regulations under subsection (2) may specify arrangements by—

(a) describing—

(i) some or all of the steps to be taken by participants or other persons;

(ii) the tax advantage sought;

(iii) the marketing;

(iv) characteristics of participants;

(b) providing examples or illustrations;

(5) It does not matter for the purposes of this section whether a person knows, or has reason to believe, that the arrangements fall within subsection (1).

Meaning of promotion

160

(1) For the purposes of section 159, a person promotes arrangements if, in the course of a business or with a view to monetary gain, the person—

(a) communicates information with a view to encouraging another person to implement the arrangements or part of the arrangements,

(b) makes the arrangements available for implementation by another person,

(c) in circumstances where the arrangements have been implemented by another person, organises or manages any aspect of the arrangements, or

(d) arranges (whether directly or indirectly) for another person or persons to take the steps above.

(2) A person does not promote arrangements merely by—

(a) providing goods or services on commercial terms in circumstances where the person does not know, and could not reasonably be expected to know, that the goods or services are being procured or used for the purposes of arrangements falling within section 159 (1) (prohibition of promotion), or

(b) providing legally privileged advice or legally privileged information.

(3) For the purposes of subsection (2)(b), advice or information is legally privileged if a claim to legal professional privilege, or (in Scotland) to confidentiality of communications as between client and professional legal adviser, could be maintained in respect of it in legal proceedings.

Procedure

161

(1) Regulations under section 159 (2) are to be made by statutory instrument.

(2) A statutory instrument containing regulations under section 159 (2) must be laid before the House of Commons after being made.

(3) Regulations contained in a statutory instrument laid before the House of Commons under subsection (2) cease to have effect at the end of the period of 28 days beginning on the day on which the instrument is made unless, during that period, the instrument is approved by a resolution of the House of Commons.

(4) In calculating the period of 28 days, no account is to be taken of any whole days that fall within a period during which—

(a) Parliament is dissolved or prorogued, or

(b) the House of Commons is adjourned for more than four days.

(5) If the regulations cease to have effect as a result of subsection (3), that does not—

(a) affect the validity of anything previously done under the regulations, or

(b) prevent the making of new regulations.

Sanctions

Civil penalties

162

(1) A person who promotes arrangements in breach of section 159 (1) is liable to a penalty.

(2) The maximum penalty under this section is the sum of—

(a) £1,000,000, and

(b) £5,000 for each person who participated in the arrangements.

(3) Before imposing a penalty under this section, an authorised officer of Revenue and Customs must—

(a) notify the person of the fact that the authorised officer considers subsection (1) to apply, and

(b) allow the person 30 days from the date of notification to make representations to HMRC.

(4) In imposing a penalty under this section, an authorised officer of Revenue and Customs must have regard to—

(a) the number of persons participating, or targeted to participate, in the arrangements,

(b) the amount of tax that was likely at risk in connection with the arrangements,

(d) whether the wrongdoing was repeated, or continued over an extended period.

(5) A penalty imposed under this section is to be treated as a penalty determined under section 100(1) of TMA 1970.

(6) A penalty imposed under this section is to carry interest in accordance with section 101 of FA 2009.

(7) A person is not liable to a penalty under this section in respect of anything for which the person has been convicted of an offence.

(8) In paragraph 5(6) of Schedule 13 to FA 2020 (joint and several liability of company directors etc) after paragraph (f) insert—

(g) section 162 of FA 2026 (prohibition of promotion of certain tax avoidance arrangements: penalties).

Criminal offence

163

(1) A person who promotes arrangements in breach of section 159 (1) commits an offence.

(2) A person who commits an offence under this section is liable—

(a) on summary conviction, to—

(i) in England and Wales, a fine, or

(ii) in Scotland or Northern Ireland, a fine not exceeding the statutory maximum, or

(b) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or both.

Criminal liability of responsible persons

164

(1) If an offence under section 163 is committed by a body corporate or a partnership and—

(a) is committed with the consent or connivance of a responsible person, or

(b) is attributable to the neglect of a responsible person,

the responsible person commits the offence (as well as the body or partnership).

(2) A “responsible person” means—

(a) in relation to a body corporate other than one whose affairs are managed by its members—

(i) a director, manager, secretary or other similar officer of the body, or a person purporting to act in such a capacity, or

(ii) a shadow director within the meaning given in section 251 of the Companies Act 2006;

(b) in relation to a limited liability partnership or other body corporate whose affairs are managed by its members—

(i) a member exercising management functions, or purporting to do so, or

(ii) in the case of a limited liability partnership, a shadow member;

(3) In this section, a “shadow member” means a person in accordance with whose directions or instructions the members of the limited liability partnership are accustomed to act, save that a person is not a shadow member by reason only of the fact that the members act on advice given by that person in a professional capacity.

General

Interpretation and commencement

165

(1) In this Chapter—

“arrangements” includes any agreement, scheme, arrangement or understanding of any kind whether or not legally enforceable involving one or more transactions, and includes a proposal for arrangements;

“authorised officer of Revenue and Customs” means an officer of Revenue and Customs who is, or is a member of a class of officers who are, authorised by the Commissioners for the purpose of this Chapter;

“Commissioners” means the Commissioners for His Majesty’s Revenue and Customs;

“HMRC” means His Majesty’s Revenue and Customs;

“promotion” has the meaning given in section 160;

“tax advantage” includes—relief or increased relief from tax,repayment or increased repayment from tax,avoidance or reduction of a charge to tax or an assessment to tax,avoidance of a possible assessment to tax,deferral of a payment of tax or advancement of a repayment of tax, andavoidance of an obligation to deduct or account for tax.

(2) Section 159 (1) comes into force two months after the day on which this Act is passed.

Chapter 2 — Promoter action notices

Promoter action notices

Certification of promoters

166

(1) An authorised officer of Revenue and Customs may, for the purposes of this Chapter, certify that a person is promoting arrangements—

(a) in breach of section 236B of FA 2014 (effect of stop notices), or

(b) in breach of section 159 (1) (prohibition of promotion of certain tax avoidance arrangements).

(2) A certification under subsection (1) must be in writing and include the following—

(a) the name of the person,

(b) a statement to the effect that—

(i) an authorised officer of Revenue and Customs has certified that the person is promoting arrangements as described in subsection (1)(a) or (b), and

(ii) accordingly, the person is a certified promoter for the purposes of this Chapter,

(c) a summary of the officer’s reasons for coming to the conclusion certified, including a description of the arrangements and promotion, and

(d) information about how the person may make representations to HMRC (see subsection (4)(b)).

(3) For the purposes of this Chapter, a “certified promoter” means a person certified under this section.

(4) Before issuing a notice under section 167 (promoter action notice) in respect of a certified promoter, an authorised officer of Revenue and Customs must—

(a) provide the certified promoter with a copy of the certification, and

(b) allow the certified promoter 30 days from the date of provision to make representations to HMRC.

Promoter action notices

167

(1) An authorised officer of Revenue and Customs may issue a notice to a person if the officer reasonably suspects that—

(a) the person (the “recipient”) is providing goods or services to a certified promoter (the “target”), and

(b) the goods or services are being procured or used wholly or partly in connection with the promotion of arrangements in respect of which the target is certified.

(2) For the purposes of this Chapter, a “promoter action notice” means a notice issued under subsection (1).

(3) A promoter action notice may, for the purpose of impeding the target’s promotion of the arrangements, require the recipient of the notice to—

(a) stop providing some or all of the goods or services,

(b) provide the goods or services subject to specified conditions, or

(4) A promoter action notice must identify the target and specify—

(a) the goods or services in respect of which it is issued,

(b) the requirements applicable under subsection (3), and

(5) A time specified under subsection (4)(c)—

(a) must be the end of—

(i) the period of 30 days beginning with the day on which the notice is issued, or

(ii) such longer period as an authorised officer of Revenue and Customs considers appropriate, and

(b) takes precedence over any statutory or regulatory requirement to provide a period of notice before terminating or modifying a contract.

(6) A promoter action notice may not—

(a) require the recipient to monitor or assess whether or how particular goods or services are being procured or used in connection with the promotion or arrangements,

(b) restrict the provision of services that provide access to the internet, or

(7) An authorised officer of Revenue and Customs may withdraw a promoter action notice.

(8) The recipient is not liable in damages in respect of anything done, or omitted to be done, in good faith for the purposes of complying with a promoter action notice.

Preliminary notices

168

(1) An authorised officer of Revenue and Customs may issue a notice to a person who the officer reasonably suspects is providing goods or services as described in section 167 (1).

(2) A notice under this section must—

(a) identify the target referred to in section 167 (1);

(b) give reasons for the suspicion referred to in subsection (1);

(3) A notice under this section may request information from the recipient.

(4) A disclosure of information by the recipient in response to a request under subsection (3) does not breach—

(a) any obligation of confidence owed by the person making the disclosure, or

(b) any other restriction on the disclosure of information (however imposed).

(5) A person who receives a notice under this section may not disclose the existence or contents of the notice to—

(a) the target identified in the notice, or

(b) any person who might reasonably be expected to disclose the existence or contents of the notice to the target.

(6) An authorised officer of Revenue and Customs may withdraw a notice under this section.

Disclosure of information by HMRC

169

(1) An authorised officer of Revenue and Customs may for the purposes of this Chapter disclose—

(a) information relating to the target identified in a promoter action notice to the recipient of the notice, or

(b) information relating to the target identified in a notice issued under section 168 (preliminary notices) to the recipient of the notice.

(2) A person to whom an authorised officer of Revenue and Customs discloses information under this section—

(a) may use it only for the purpose for which it was disclosed, and

(b) may not further disclose it without the consent of HMRC (which may be general or specific).

(3) Where a person contravenes subsection (2)(b) by disclosing information relating to a person whose identity—

(a) is specified in the disclosure, or

(b) can be deduced from it,

section 19 of CRCA 2005 (offence of wrongful disclosure) applies in relation to the disclosure as it applies in relation to a disclosure in contravention of section 20(9) of that Act.

(4) Nothing in this section limits the circumstances in which information may be disclosed under section 18(2) of CRCA 2005 or under any other enactment or rule of law.

Appeal against a decision to issue a promoter action notice

170

(1) A recipient of a promoter action notice may appeal to the tribunal against a decision to issue the notice on the grounds that—

(a) the recipient is not providing the goods or services specified in the notice to the target identified in the notice;

(b) the goods or services are not being used wholly or partly in connection with the arrangements referred to in section 167 (1).

(2) Notice of an appeal must—

(a) state the ground of appeal, and

(b) be given in writing to HMRC before the end of the period of 30 days beginning with the day on which the promoter action notice was issued.

(3) The provisions of Part 5 of TMA 1970 relating to appeals have effect in relation to appeals under this section as they have effect in relation to an appeal against an assessment to income tax.

(4) In this section, the “tribunal” means the First-tier Tribunal or, where determined by or under the Tribunal Procedure Rules, the Upper Tribunal.

Sanctions

Civil penalties

171

(1) A recipient of a promoter action notice is liable to a penalty if the recipient—

(a) fails to comply with the notice, and

(b) does so without reasonable excuse.

(2) The maximum penalty under this section is £1,000 for each day on which the recipient failed, without reasonable excuse, to comply with the notice.

(3) Before imposing a penalty under this section, an authorised officer of Revenue and Customs must—

(a) notify the recipient of the fact that the authorised officer considers subsection (1) to apply, and

(b) allow the recipient 30 days from the date of notification to make representations to HMRC.

(4) In imposing a penalty under this section, an authorised officer of Revenue and Customs must have regard to—

(a) the likely cost to the recipient of complying with the notice;

(b) any benefit for the recipient of not complying with the notice;

(5) A penalty imposed under this section is to be treated as a penalty determined under section 100(1) of TMA 1970.

(6) A penalty imposed under this section is to carry interest in accordance with section 101 of FA 2009.

(7) In paragraph 5(6) of Schedule 13 to FA 2020 (joint and several liability of company directors etc) after paragraph (g) (inserted by section 162 (8)) insert—

(h) section 171 of FA 2026 (promoter action notices: penalties).

Publication

172

(1) Subsection (2) applies if—

(a) a penalty under section 171 has been imposed on a recipient of a promoter action notice, and

(b) notice of appeal against the penalty can no longer be given or, if notice has been given, the appeal has been determined or withdrawn.

(2) An authorised officer of Revenue and Customs may publish—

(a) the recipient’s name (including any trading name, previous name or pseudonym);

(b) any address used by the recipient;

(c) any other information that the authorised officer considers appropriate for the purposes of identifying the recipient or their business;

(d) details of the recipient’s failure to comply;

(e) details of the penalty imposed on the recipient under section 171.

(3) Before publishing information under this section, an authorised officer of Revenue and Customs must—

(a) notify the recipient of their intention to publish, including the information that they intend to publish, and—

(b) allow the recipient 30 days from the date of notification to make representations to HMRC.

(4) Information published under this section must be withdrawn no later than 12 months after its publication.

(5) Nothing in this section limits the circumstances in which information may be disclosed under section 18 (2) of CRCA 2005 or under any other enactment or rule of law.

Reporting to regulators etc

173

(1) This section applies if an authorised officer of Revenue and Customs considers that a recipient of a promoter action notice—

(a) failed to comply with the notice, and

(b) did so without reasonable excuse.

(2) An authorised officer of Revenue and Customs may, for the permitted purpose, disclose the following information to a regulator, representative body or trade body of the recipient—

(a) the recipient’s name (including any trading name, previous name or pseudonym);

(b) any address used by the recipient;

(c) any other information that the authorised officer considers appropriate for the purposes of identifying the recipient or their business;

(d) details of the recipient’s failure to comply;

(e) details of any penalty imposed on the recipient under section 171;

(f) any other information that the authorised officer considers appropriate for the permitted purpose.

(3) In this section, the “permitted purpose” means assisting the person to whom the information is disclosed in relation to—

(a) a current or future investigation into the failure referred to in subsection (1), or

(b) any other action taken, or to be taken, by the person in relation to that failure.

(4) Before disclosing information under this section, an authorised officer of Revenue and Customs must—

(a) notify the recipient of their intention to disclose it, including—

(i) their reasons for considering that subsection (1) applies, and

(ii) the information that they intend to disclose, and

(b) allow the recipient 30 days from the date of notification to—

(i) comply with any requirements specified in the promoter action notice, or

(ii) make representations to HMRC.

(5) A person to whom an authorised officer of Revenue and Customs discloses information under this section—

(a) may use it only for the purpose for which it was disclosed, and

(b) may not further disclose it without the consent of HMRC (which may be general or specific).

(6) Where a person contravenes subsection (5)(b) by disclosing information relating to a person whose identity—

(a) is specified in the disclosure, or

(b) can be deduced from it,

section 19 of CRCA 2005 (offence of wrongful disclosure) applies in relation to the disclosure as it applies in relation to a disclosure in contravention of section 20(9) of that Act.

(7) Nothing in this section limits the circumstances in which information may be disclosed under section 18(2) of CRCA 2005 or under any other enactment or rule of law.

Extension of time periods

174

For the purposes of sections 171 and 173, a failure of a person to do anything within a limited period of time is to be disregarded if the person did the thing within such further period of time, if any, as an officer of Revenue and Customs allowed.

Reasonable excuse

175

For the purposes of sections 171 and 173—

(a) an insufficiency of funds is not a reasonable excuse unless attributable to events outside the person’s control,

(b) if the person relies on any other person to do anything, that is not a reasonable excuse unless the first person took reasonable care to avoid the failure,

(c) if the person had a reasonable excuse for the failure but the excuse has ceased, the person is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased, and

(d) reliance on legal advice is to be taken automatically not to constitute a reasonable excuse if either—

(i) the advice was not based on a full and accurate description of the facts, or

(ii) the conclusions in the advice that the person relied upon were unreasonable.

General

Interpretation

176

In this Chapter—

“arrangements” includes any agreement, scheme, arrangement or understanding of any kind whether or not legally enforceable involving one or more transactions, and includes a proposal for arrangements;

“authorised officer of Revenue and Customs” means an officer of Revenue and Customs who is, or is a member of a class of officers who are, authorised by the Commissioners for the purpose of this Chapter;

“certified promoter” has the meaning given in section 166 (3);

“Commissioners” means the Commissioners of His Majesty’s Revenue;

“HMRC” means His Majesty’s Revenue and Customs;

“promoter action notice” has the meaning given in section 167 (2);

“promotion” has the meaning it has in section 236B (1) of FA 2014 (effect of stop notices) or section 159 (prohibition of promotion of certain tax avoidance arrangements) (as the context requires).

Chapter 3 — Anti-avoidance information notices

Key definitions

Connected persons

177

(1) In this Chapter, a “connected person” means a person who an officer of Revenue and Customs reasonably suspects is or has been—

(a) contravening an anti-avoidance enactment,

(b) connected to a person who is or has been contravening an anti-avoidance enactment, or

(2) For the purposes of subsection (1)(b), two persons (“A” and “B”) are connected if—

(a) A is a director, manager, secretary or other officer or employee of B,

(b) A is a member of, or partner in, B,

(c) A is a trustee, settlor, beneficiary or administrator of a trust in respect of which B is a trustee, settlor, beneficiary or administrator, or

(d) A is accustomed to acting in accordance with B’s directions or instructions.

(3) For the purposes of subsection (1)(c), a person is connected to arrangements if the person is—

(a) to any extent involved in making the arrangements available for implementation by another person,

(b) to any extent involved in the organisation or management of the arrangements, or

Anti-avoidance enactments

178

(1) In this Chapter, an “anti-avoidance enactment” means—

(a) Part 7 of FA 2004 (disclosure of tax avoidance schemes);

(b) Part 5 of FA 2014 (promoters of tax avoidance schemes);

(d) Schedule 17 to F(No.2)A 2017 (disclosure of tax avoidance schemes: VAT and other indirect taxes);

(e) Chapter 1 of this Part (prohibition on promotion of certain tax avoidance arrangements).

(2) And a reference to taking action under an anti-avoidance enactment includes a reference to taking action under—

(a) sections 8ZF and 8ZG of the Company Directors Disqualification Act 1986 (disqualification for promoting tax avoidance);

(b) Schedule 13 to FA 2020 (joint and several liability);

(d) section 86 of FA 2022 (publication by HMRC of information about tax avoidance schemes);

(e) sections 87, 88 and 89 of FA 2022 (freezing orders etc);

(f) Schedule 13 to FA 2022 (penalties for facilitating avoidance schemes involving non-resident promoters);

(g) Chapter 2 of this Part (promoter action notices).

Notices by type

Information notices: connected persons

179

(1) An officer of Revenue and Customs may by notice require a connected person to provide information that is, in the opinion of the officer, reasonably required for the purposes of—

(a) monitoring the compliance of the connected person with an anti-avoidance enactment, or

(b) HMRC taking, or considering whether HMRC could take, action against the connected person under an anti-avoidance enactment.

(2) An officer of Revenue and Customs may seek the approval of the tribunal before issuing a notice under this section.

Information notices: third parties

180

(1) An officer of Revenue and Customs may by notice require a person to provide information that is, in the opinion of the officer, reasonably required for the purposes of—

(a) monitoring the compliance of a connected person with an anti-avoidance enactment, or

(b) HMRC taking, or considering whether HMRC could take, action against a connected person under an anti-avoidance enactment.

(2) A notice under this section must identify the connected person to whom it relates.

(3) Before issuing a notice under this section, an officer of Revenue and Customs must—

(a) notify the intended recipient of—

(i) the officer’s intention to issue the notice, and

(ii) the information that would be required under the notice, and

(b) allow the intended recipient reasonable opportunity to make representations to HMRC.

(4) An officer of Revenue and Customs may not issue a notice under this section without either—

(a) the agreement of the connected person identified in the notice, or

(b) the approval of the tribunal.

(5) The tribunal may not approve a notice unless it has been given a summary of any representations made under subsection (3)(b).

(6) After issuing a notice under this section, an officer of Revenue and Customs must provide to the connected person identified in the notice—

(a) a copy of the notice, and

(b) a summary of the officer’s reasons for requiring the information.

(7) Subsections (2), (3) and (6) do not apply to the extent the tribunal is satisfied that taking the steps in those subsections might prejudice the investigation of tax avoidance.

Information notices: unidentified connected persons

181

(1) An officer of Revenue and Customs may by notice require a person to provide information that is, in the opinion of the officer, reasonably required for the purposes of—

(a) monitoring the compliance of an unidentified connected person with an anti-avoidance enactment, or

(b) HMRC taking, or considering whether HMRC could take, action against an unidentified connected person under an anti-avoidance enactment.

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