CTM36845 - Particular topics: transactions in securities: response to a clearance application

ITA07/S701 (4) and (5) require HMRC to notify the person whether they are satisfied that the transaction or transactions as described in the particulars were or will be such that no counteraction notice ought to be served (“clearance”). The notification must be given within 30 days of receipt of the particulars or, where appropriate, the further information requested (see CTM36841).

Clearance is given

For Income Tax purposes clearance is given under ITA07/S701 (under CTA10/S748 for Corporation Tax) and ITA07/S702 (1) and (2) then apply to exclude the issue of a counteraction notice, subject to what follows. Each application is considered on its own merits.

HMRC will not give reasons where clearance is given. HMRC may nevertheless carry out a compliance check into the transaction or transactions but will only issue a counteraction notice in consequence if the facts and considerations are found not to be in accordance with those disclosed in the application (together with further information provided, where relevant) or there are transactions beyond those to which the notification and further information relate: ITA07/S702 (3).

Clearance given on incorrect or incomplete information

A clearance notification is void if the information in the application and any further particulars provided about the transaction or transactions do not fully and accurately disclose all material facts and considerations relevant to the decision (see CTM36841).

Clearance is given on the understanding that the person has come to HMRC with “all cards face up on the table”. In that connection, information supplied to any other part of HMRC is not considered to be a disclosure for the purposes of a clearance application.

HMRC may apply the relevant anti-avoidance provision where they consider clearance was given on incorrect or materially incomplete information. Whether a clearance is, or is not, effective accordingly is a question of fact that may ultimately need to be determined by the Tribunal on appeal.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Clearance is refused

If clearance is not given HMRC will give reasons for their decision. The effect of refusal of a clearance is explained in SP3/80. There is no provision for appealing against a refusal.