This case concerned notifiable arrangements under FA 2004, s. 308 – disclosure of tax avoidance schemes – HMRC v Root2 Tax Ltd  UKUT 353 (TCC).
The particular question arising was the point at which an arrangement is notifiable. A key paragraph of the Upper Tribunal decision reads as follows:
“Where a promoter fails to provide information about the implementation of a scheme, it is liable to a penalty. However, that liability to a penalty is not open ended. Parliament clearly intended the liability should cease after a period of time. On our reading of the provisions, liability ceases 6 years after the prescribed period. Namely, 6 years and 6 days after the promoter first became aware of a transaction implementing the notifiable arrangements. HMRC say that a longer limitation period would be more consistent with the overall scheme of the legislation. That is a period which effectively expires 6 years after the promoter first becomes aware of the last transaction implementing the notifiable arrangements. HMRC say that would be a more effective limitation period because until notification they are likely to be in the dark about the existence of a scheme. A promoter might take the risk of incurring a penalty in the period of 6 years and 6 days from the first transaction where it would not take the risk if time ran from the last transaction. We do not find that persuasive. Parliament has chosen to define the commencement of the limitation period by reference to the date on which a promoter acquires knowledge of a relevant transaction, not by reference to the date when HMRC becomes aware of the promoter’s default. It is that choice which means there is always a risk that HMRC will not become aware of the fact that the promoter has incurred a potential penalty liability until after the limitation period has expired, whether the limitation period commences upon the promoter first becoming aware of a transaction, or upon the promoter becoming aware of the last transaction implementing a scheme.”
Although the Upper Tribunal did not agree “in all respects with the analysis of the FTT”, it was nevertheless satisfied that the correction conclusion had been reached in dismissing HMRC’s penalty application.