We can make any adjustments that we consider to be just and reasonable in order to counteract the tax advantage you benefited from by entering into an artificial tax avoidance arrangement.
We will initially set out what adjustments we think should be taken in the proposed notice of counteraction under the Scottish GAAR (see RSTP8007). If, after taking into account any representations you have made, we still consider that counteraction of the tax advantage is required then we will set out the required adjustments in the final notice of counteraction (see RSTP8007).
These adjustments may be made either in respect of the devolved tax in relation to which the tax advantage has been gained, or in respect of any other devolved tax. Tax is to be charged in accordance with the adjustment.
The adjustments that we may make include (but are not restricted to) those that:
- impose a liability to tax where, ignoring the Scottish GAAR, there would be no liability; or
- increase a liability to tax where, ignoring the Scottish GAAR, there would be a smaller liability.
Making an adjustment
We can specify that the adjustments required to counteract the tax advantage under the Scottish GAAR are to be made either by you or us.
Adjustments that we may require to be made by you include:
- amending your tax return, as long as it is within the period allowed (see RSTP1002);
- making a self-assessed tax return to us following a determination we have made, as long as it is within the period allowed (see RSTP1007);
- entering into a contract settlement with us (see RSTP5002); or
- such other method as we consider appropriate
Adjustments that we may decide will be made by us include:
- amending your tax return either during an enquiry (see RSTP1004) or at the closure of an enquiry (see RSTP1006);
- correcting your tax return in relation to any obvious error or omission (see RSTP1009);
- making a determination if you have not made a tax return (see RSTP1007);
- making an assessment (see RSTP1008);
- entering into a contract settlement with you (see RSTP5002); or
- such other method as we consider appropriate.
The power to make adjustments in each of the above circumstances is subject to any statutory time limit.
Liability to paying tax, interest, penalties etc. due following a counteraction under the Scottish GAAR
You must pay any amount (or additional amount) of tax, penalties or interest arising from a Scottish GAAR counteraction before the end of the period of 30 days beginning with the day on which the final notice of counteraction was issued. This time limit supersedes any other time limit in place for the payment of tax, penalties or interest.
If you fail to pay tax on or before the due date then you may be liable to a penalty. For further guidance on this penalty see RSTP3008.
We will charge you interest on the amount, or additional amount, of tax which is payable as a result of the counteraction under the Scottish GAAR. The interest will be backdated and charged from the filing date (see RSTP1000) of the devolved tax return that was originally made in respect of the transaction.
If no tax return had been made, interest will be backdated and charged from the filing date of the return that would have been required to have been made had the tax avoidance arrangement not been entered into or carried out. You may also be liable in this instance to a penalty for failing to make a return. See RSTP3005 for further guidance.
Irrespective of whether or not a return had been made, you will continue to be charged interest on any unpaid tax until such time as you pay the entire amount due in full. See RSTP4002 for further guidance.
RSTPA 2014 section 70