Income Tax Act 2007 section 257SH

Power to require information in other cases

Section 257SH gives HMRC the power to demand information from relevant parties where an officer has reason to believe that Social Investment (SI) tax relief may have been incorrectly claimed due to the existence of prohibited arrangements.

• Where HMRC suspects SI relief may be invalid due to prohibited arrangements (such as pre-arranged exits, risk avoidance, tax avoidance, disqualifying arrangements, collusion, or breaches of control, independence, trading or subsidiary requirements), an officer may issue a formal notice requiring information from the relevant parties.
• The notice can require a written declaration confirming whether such arrangements exist or have existed, together with any other information the officer reasonably needs — and the person served must be given at least 60 days to respond.
• The identity of the "person concerned" who can be required to provide information varies depending on the specific provision under investigation — it may include the investor, the social enterprise, persons controlling or connected with the enterprise, or anyone believed to be party to the arrangements in question. References to the investor also include any person to whom the investor appears to have transferred all or part of the investment to a spouse or civil partner.
• Where SI relief has been obtained or claimed, HMRC can also require anyone who has received payments or assets from the social enterprise (which might constitute "value received"), or anyone who holds or has held investments in the enterprise, to disclose whether they act on behalf of another person and, if so, to provide that person's name and address.