What is a proposed counteraction notice under section 81F of the Tax Collection and Management (Wales) Act 2016?

A proposed counteraction notice is an advance warning issued by the Welsh Revenue Authority to a taxpayer before formally counteracting a tax advantage. It can only be issued where WRA considers a tax advantage has arisen from an artificial tax avoidance arrangement and should be counteracted through an adjustment under section 81E of the Act.

What information must a proposed counteraction notice contain under section 81F?

The notice must identify the tax avoidance arrangement in question, specify the tax advantage that has arisen, explain why WRA considers the arrangement artificial, set out the proposed adjustment to counteract the advantage, and state the amount the taxpayer would be required to pay under the proposed assessment.

How long does a taxpayer have to respond to a proposed counteraction notice under section 81F?

The taxpayer has at least 45 days from the date the proposed counteraction notice is issued before WRA can issue a final counteraction notice. During this period, the taxpayer may submit written representations to WRA and may also request an extension to the 45-day window to allow additional time to respond.

Can a taxpayer challenge a proposed counteraction notice before it becomes final?

Yes. The taxpayer may submit written representations to WRA at any point before a final counteraction notice is issued. WRA must consider these representations before proceeding. The taxpayer can also request an extension to the 45-day response period, ensuring a meaningful opportunity to challenge or discuss the proposed action.

Tax Collection and Management (Wales) Act 2016 section 81F

Notice of proposed counteraction

Section 81F sets out the process by which the Welsh Revenue Authority (WRA) must notify a taxpayer before taking action to counteract a tax advantage gained through an artificial tax avoidance arrangement.

WRA may issue a "proposed counteraction notice" to a taxpayer where it believes a tax advantage has arisen from an artificial tax avoidance arrangement and should be counteracted by adjustment.
The notice must specify the arrangement, the tax advantage, why WRA considers it artificial, the proposed adjustment, and any amount the taxpayer will need to pay.
The taxpayer has a 45-day period from the date of the proposed notice before WRA issues a final counteraction notice.
The taxpayer may request an extension to the 45-day period and may make written representations to WRA at any time before the final notice is issued.

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