Condition one. (An in-scope entity or person) There is a person or entity (“X”) which is either: the Economic Operator or Essential Subcontractor (EOS); part of the same Group of companies of EOS. An entity will be treated as within the same Group of EOS where that entities’ financial statements would be required to be consolidated with those of EOS if prepared in accordance with IFRS 10 Consolidated Financial Accounts1; or any director, shareholder or other person (P) which exercises control over EOS. ‘Control’ means P can secure, through holding of shares or powers under articles of association or other document that EOS’s affairs are conducted in accordance with P’s wishes. Condition two: (Arrangements involving evasion, abuse or tax avoidance) X has been engaged in one or more of the following: fraudulent evasion2; conduct caught by the General Anti-Abuse Rule3; conduct caught by the Halifax Abuse principle4; entered into arrangements caught by a DOTAS or VADR scheme5; conduct caught by a recognised ‘anti-avoidance rule’6 being a statutory provision which targets arrangements where either a main purpose, or an expected benefit, is to obtain a tax advantage or where the arrangement is not effected for commercial purposes. ‘Targeted Anti-Avoidance Rules’ (TAARs). It may be useful to confirm that the Diverted Profits Tax is a TAAR for these purposes; entered into an avoidance scheme identified by HMRC’s published Spotlights list7; and/or engaged in conduct which falls under rules in other jurisdictions which are equivalent or similar to (a) to (f) above. Condition three (Arrangements are admitted, or subject to litigation/prosecution or identified in a published list (Spotlights)) X’s activity in Condition 2 is, where applicable, subject to dispute and/or litigation as follows: In respect of (a), either X: Has accepted the terms of an offer made under a Contractual Disclosure Facility (CDF) pursuant to the Code of Practice 9 (COP9) procedure8; or, Has been charged with an offence of fraudulent evasion. In respect of (b) to (e), once X has commenced the statutory appeal process by filing a Notice of Appeal and the appeal process is ongoing including where the appeal is stayed or listed behind a lead case (either formally or informally). NB Judicial reviews are not part of the statutory appeal process and no supplier would be excluded merely because they are applying for judicial review of an HMRC or HMT decision relating to tax or national insurance. In respect of (b) to...
