Income Tax Act 2007 section 698

Counteraction notices

Section 698 deals with the process by which HMRC formally counteracts an income tax advantage arising from transactions in securities, by issuing a counteraction notice specifying the adjustments to be made.

• Where an HMRC officer determines, following an enquiry, that a taxpayer has obtained an income tax advantage from transactions in securities, that advantage must be counteracted by adjustments unless the officer considers no counteraction is needed
• The adjustments and the basis on which they are made must be set out in a formal "counteraction notice" served on the taxpayer by an HMRC officer
• Adjustments that may be specified include raising an assessment, cancelling a right to repayment, requiring a repayment already made to be returned, or recalculating profits, gains, or income tax liability
• An assessment made under a counteraction notice can be raised at any time, overriding any normal time limits that would otherwise apply