Guidance

Consequences if you fail to comply with a stop notice — CC/FS61

Updated 12 March 2024

You should read this factsheet if you are subject to a stop notice given under the promoters of tax avoidance schemes (POTAS) rules.

This factsheet tells you the consequences if you are subject to a stop notice and fail to comply with that notice.

This factsheet is one of a series. For the full list of factsheets in the series, go to www.gov.uk and search ‘HMRC compliance checks factsheets’.

This factsheet at a glance

This factsheet tells you:

• when you might be committing a criminal offence and what that could mean for you
• when you may be charged a stop notice penalty
• about the penalties you may be charged for failing to comply with a stop notice
• that you have certain rights under Article 6 of the Human Rights Act, if we charge you a stop notice penalty
• that you can appeal if you disagree with the decision to charge you a stop notice penalty

What is a stop notice

A stop notice is a notice given by an authorised HM Revenue and Customs (HMRC) officer to any person who they suspect of promoting arrangements which meet certain conditions. That person becomes ‘subject to a stop notice’. Certain other persons associated with the recipient may also become subject to the notice.

The notice requires the recipient and other persons subject to the notice to immediately stop promoting arrangements of the kind described in the notice. It also requires the persons subject to the notice to meet certain other obligations. For the recipient of the notice, these obligations include giving a copy of the notice to the other persons who are subject to it.

An ‘authorised HMRC officer’ is a senior officer within HMRC who has been designated as an authorised officer by the Commissioners of HMRC.

When you might be committing a criminal offence

The government introduced 2 new criminal offences relating to stop notices in Finance Act 2024.

This means that you may commit a criminal offence if you (do one or both of the following):

• continue to promote arrangements meeting the description specified in a stop notice
• do not comply with a duty to give a copy of a stop notice to another person subject to that notice, and that person then promotes arrangements meeting the description specified in the stop notice

Any ‘relevant person’ whose actions contribute to the commission of the offence by a company, LLP, or partnership, will also be guilty of the offence. A relevant person is defined in section 277B(2) of the Finance Act 2014.

What this could mean for you

If you are found guilty of a criminal offence, you may be liable to (one or both of the following):

• an unlimited fine
• imprisonment for up to 2 years

Where one or both of the new offences is committed, we will still be able to assess civil penalties under the existing rules. However, if you have been convicted of an offence, you will not also be liable to a civil penalty for the same offence.

There is more information about the civil penalties you could be charged in the section ‘What penalties you can be charged’.

When you may be charged a stop notice penalty

You may be charged a penalty if you are subject to a stop notice and any one or more of the following apply. You:

• continue to promote arrangements of the kind described in the stop notice, or a proposal for such arrangements
• are the recipient of the stop notice and do not give a copy of the notice to any other persons who are subject to it
• are the recipient of the stop notice and do not give us the information required by the stop notice about the other persons that are subject to it
• do not tell clients and intermediaries that you are subject to a stop notice and give them a copy of that notice
• do not send us the quarterly returns required by the stop notice, or send us a quarterly return that contains inaccuracies
• give us inaccurate or false documents or information to support an application to either suspend or withdraw a stop notice

What we mean by ‘promote’

An authorised HMRC officer may give a person a stop notice if they suspect that person promotes, or has promoted, arrangements or a proposal for arrangements of the kind described in the notice.

A person promotes arrangements or a proposal for arrangements if they:

• are to any extent responsible for the design of the proposed arrangements
• make a firm approach to a person in relation to the proposal with a view to making that proposal available for that person, or any other person, to implement
• make the proposal available for other persons to implement
• are to any extent responsible for the design, organisation or management of the arrangements

What we mean by ‘arrangements’

Arrangements mean any agreement, scheme, arrangement or understanding of any kind, whether or not they can be enforced by law, involving a single transaction or 2 or more transactions.

What penalties you can be charged

There are a number of penalties that you can be charged if you are subject to a stop notice and fail to comply with it. These are shown below.

Continuing to promote arrangements or a proposal described in a stop notice

If you are subject to a stop notice and continue to promote arrangements or proposals meeting the description specified in that notice, we may charge you a penalty. This can be up to £100,000 and we may also charge you a penalty of up to £5,000 for each person you promote such arrangements or proposals to.

We can increase the maximum amounts of the penalties to £250,000 and £10,000. We would do this if you, or a person you control or have significant influence over, were also subject to a monitoring notice when a relevant promotion took place. In these cases, if the authorised HMRC officer thinks the £250,000 maximum penalty is too low, they can apply to the First-tier Tribunal to increase it to £1 million.

You can find more information about ‘control’ and ‘significant influence’ in the stop notice. We explain what a ‘monitoring notice’ is in our online guidance. Go to www.gov.uk and search ‘Promoters of tax avoidance schemes guidance’.

Failure to give copies of the stop notice

A stop notice requires the recipient to notify certain other persons that they are also subject to the stop notice. ‘Notifying’ means giving them a copy of the stop notice. The stop notice sets out who the recipient needs to give copies to.

If you are the recipient of the stop notice and you do not do this within the time specified in the notice, we may charge you a penalty. This will be up to £10,000 for each person that you fail to notify.

Failure to give us information about the other persons subject to a stop notice

The recipient of the notice is also required to give us certain information about each person they are required to give a copy of the notice to. The stop notice tells recipients what information they must give us and by when.

If you are the recipient of the stop notice and you do not give us this information within the time limit, we may charge you a penalty of up to £25,000. We will do this for each person whose details you failed to give us.

Failure to tell your clients and intermediaries

A stop notice requires you to tell persons who are your clients and intermediaries in relation to relevant arrangements and proposals that you are subject to a stop notice. You must also tell them the relevant arrangements or proposals meet the description specified in the stop notice and give them a copy of the stop notice. The stop notice will tell you when you have to do this.

We may charge you a penalty of up to £5,000, if you do not:

• tell your clients and intermediaries
• give your clients and intermediaries a copy of the copy notice

The penalty will be for each failure.

Failure to send us quarterly returns

A stop notice requires you to send us quarterly returns for certain clients. The stop notice tells you what information you must send us and when.

We may charge you a penalty for (one or more of the following):

• not sending us the quarterly return – the penalty will be up to £5,000 for each client you should have included on the return
• not sending us the quarterly return on time – the penalty will be up to £5,000 for each day the return is late
• sending a quarterly return that contains inaccuracies – the penalty will be up to £5,000

Providing false or inaccurate documents or information

We may apply to the First-tier Tribunal if you give us false or inaccurate documents or information to support an application to have a stop notice withdrawn or suspended. The penalty will be up to £5,000.

Facilitating avoidance schemes involving non-resident promoters

If we charge you a penalty for continuing to promote arrangements or a proposal described in a stop notice, you may be liable for a further penalty. We may charge a further penalty if you promoted the arrangements or proposal as a member of a promotion structure involving a non-resident promoter.

The amount will be (either of the following):

• equal to the value of all consideration received by all persons who were members of the promotion structure in connection with:
  • the relevant proposal or arrangements
  • any other proposals or arrangements that are substantially the same
• an amount that the assessing officer considers just and reasonable (this will be lower than the value of all consideration received by all persons who were members of the promotion structure)

You can find more information about these penalties in factsheet CC/FS67, ‘Penalties for facilitating avoidance schemes involving non-resident promoters’. Go to www.gov.uk and search ‘CC/FS67’.

Your rights when we’re considering penalties

If we’re considering charging you a penalty, or applying to the tribunal for one, you’ll have the right to make representations to us in certain circumstances. We’ll tell you more about this at the time.

The European Convention on Human Rights gives you certain rights when we’re considering penalties. You can find details about these rights in factsheet CC/FS63, ‘The Human Rights Act and penalties for failure to comply with a stop notice’. Go to www.gov.uk and search ‘CC/FS63’.

If we give you a notice of penalty assessment, you can appeal if you disagree with our decision to charge a penalty, or with the amount of the penalty. The notice will tell you what to do if you disagree. If the tribunal charge you a penalty, they’ll tell you what you need to do if you disagree.

General information

If you need extra support

If you, as an individual, have any health or personal circumstances that may make it difficult for you to deal with us, please let us know. We’ll help you in whatever way we can. For more information about this, go to www.gov.uk and search ‘get help from HMRC if you need extra support’.