GAAR ADVISORY PANEL

Anonymised and sub-Panel approved version of the Opinion Notice issued on 29 October 2024

Subject Matter

Avoiding charges to Inheritance Tax. Reducing the value of an estate by acquiring shares in a company and gifting those shares to an employee trust.

Taxes

Inheritance Tax

Relevant Tax Provisions

Inheritance Tax Act 1984, in particular s28 and s86.

Opinion

The entering into and carrying out of the tax arrangements is not a reasonable course of action in relation to the relevant tax provisions.

Opinion Notice

This opinion notice is given pursuant to paragraph 11 of Schedule 43 to the Finance Act 2013 (“FA13”) by a sub-panel consisting of three members of the GAAR Advisory Panel (the “Panel”) in relation to a referral by HMRC dated 31 May 2024.

This opinion is in response to a referral addressed to the Panel in relation to Mrs Y (‘PR1’) as a personal representative of the late Mrs Z (‘the Deceased’); there is a parallel referral in relation to Mr W (‘PR2’), husband of PR1 and her fellow personal representative in relation to the Deceased’s estate. There is a third referral in respect of X Ltd (‘Trustee’) who acted as trustee to an employee trust created by a company incorporated by the Deceased. As there are three referrals, we must produce three opinions though the opinions are essentially the same as the facts and circumstances are precisely the same for the referrals for PR1 and PR2 (as would be expected in the case of personal representatives of a deceased person’s estate) and effectively the same for the Trustee.

The sub-panel received copies of the various relevant documents:

the paragraph 3 schedule 43 FA 2013 notices sent by HMRC to PR1, PR2 and Trustee dated 23 June 2023

the paragraphs 6 & 8 notices sent to PR1, PR2 and Trustee dated 31 May 2024

the paragraphs 6 & 8 notice sent to the chair of the Panel on the same date

representations submitted on behalf of PR1, PR2 and Trustee in response to the paragraph 3 notice dated 7 August 2023

comments by HMRC’s designated officer (‘DO’) on those representations

further representations on behalf of PR1, PR2 and Trustee following the paragraphs 6 & 8 notices dated 1 July 2024

exchange between the DO (dated 19 September 2023) and the Advisers (dated 21 October 2023) clarifying a shareholding matter.

In addition, the sub-panel received copies of relevant legislation, a statement of practice and Hansard debates.

Reminder of what the sub-Panel’s opinion notice is to cover

“An opinion notice is a notice which states that in the opinion of the members of the sub-panel, or one or more of those members –

(a) The entering into and carrying out of the tax arrangements is a reasonable course of action in relation to the relevant tax provisions –

(i) having regard to all the circumstances (including the matters mentioned in subsections (2)(a) to (c) and (3) of section 207), and

(ii) taking account of subsections (4) to (6) of that section, or

(b) the entering into or carrying out of the tax arrangements is not a reasonable course of action in relation to the relevant tax provisions having regard to those circumstances and taking account of those subsections, or

(c) it is not possible, on the information available, to reach a view on that matter,

and the reasons for that opinion.” [Paragraph 11(3) Schedule 43 FA 2013]

“For the purposes of the giving of an opinion under this paragraph, the arrangements are to be assumed to be tax arrangements.” [Paragraph 11(4) Schedule 43 FA 2013]

Terms used in this opinion

Term	Description
‘Advisers’	The firm was an LLP in 2015 and 2016; more recently we have correspondence from an entity, described as the trading name of A Ltd. As far as we can tell, the proprietors/partners are the same throughout. We will regard them all as effectively the same Advisers
‘D’	Daughter of PR2 and PR1
‘DO’	HMRC’s designated officer
‘FA13’	Finance Act 2013
‘FA13 GAAR Provisions’	Part 5 of the Act, sections 206-215 and Schedule 43 (as amended)
‘GAAR guidance’	the guidance published by HMRC (of which sections A-D are approved by the Panel before issue) setting out their view on how the GAAR provisions apply and operate and including various examples
‘IHTA’	the Inheritance Tax Act 1984
‘IHT’	Inheritance Tax
‘para 3 arrangements’	the arrangements specified by the para 3 notice
‘para 3 notice’	the notice issued under paragraph 3 Schedule 43 FA 2013
‘para 6/8 notice’	the referral notice issued under paragraphs 6 and 8 Schedule 43 FA 2013
‘PR1’	Mrs Y, joint personal representative (and daughter) of the Deceased
‘PR2’	Mr W, joint personal representative of the Deceased (and husband of PR1)
‘previous case’	the case considered by the Panel which led to the opinion published on 2 March 2020
‘S’	Daughter of the Deceased and sister to PR1
's28’	Section 28 IHTA
‘the company’	V Ltd, the company incorporated by the Deceased and of which the Deceased was the initial shareholder
‘the Deceased’	the late Mrs Z
‘the estate’	the estate of the Deceased
‘the representations’ and ‘the further representations’	the comments submitted by Counsel on behalf of PR1, PR2 and the Trustee on 7 August 2023 (in response to the paragraph 3 notice) and 1 July 2024 (in response to the referral to the GAAR Panel) respectively
‘the Trust’	the V Limited Succession Trust
‘Trustee’	X Ltd

Introduction

This case concerns the IHT applicable to the Deceased’s estate.

In outline, a few months before her death, the Deceased put a significant amount of money into a company she had set up. The company set up an employee trust and separately allocated shares to the Deceased which were gifted to the trust. Gifts to employee trusts are in effect encouraged by s28; if these arrangements are effective, the amount of IHT payable in relation to the Deceased’s estate would be significantly reduced.

There are various technical arguments between the parties in relation to s28. However, the Panel is not concerned with such technical arguments: our role is to consider the reasonableness of the arrangements, in accordance with the FA13 GAAR provisions.

We are satisfied that the proper GAAR procedures have been followed with para 3 and para 6/8 notices with proper time for representations; accordingly, this is a valid referral to the Panel. The representations argue that the referral to the Panel is inappropriate, partly because of the technical arguments. But as the Panel has noted in a number of opinions, a GAAR referral can be made irrespective of continuing technical issues between the parties.

The Facts

We take the facts of the case from the para 3 notice, amplified by some additional points in the representations. We have not seen any disputes as to these facts, though we note that an issue did arise in relation to the shareholdings in the company which led to an exchange between HMRC and the Advisers. The Advisers conceded that the representations (which were prepared by Counsel) had proceeded on the basis of a misunderstanding over the shareholdings for which they apologised. Although this does make the representations slightly confusing in parts, we do not consider that this has affected the messages given in the various documents, nor our ability to draw points and conclusions from them.

On 10 December 2015 the company was incorporated. PR1 became its sole director; the Deceased subscribed for the single ordinary share issued. The Advisers acted in relation to the company’s establishment.

At some point before 5 February 2016, the Deceased transferred £995,341.58 into the company, reflected in a loan account.

Following a contact from the Advisers, PR2 and D were appointed directors of the company on 9 February 2016.

Also on 9 February, the Deceased was allotted shares in the company as follows:

695,999 ordinary £1 shares and 29,000 A ordinary £1 shares, in exchange for a property she transferred to the company

384,000 ordinary £1 shares and 16,000 A ordinary £1 shares, for cash of £400,000

At this point the company’s issued shares were 1,080,000 ordinary £1 shares and 45,000 A ordinary £1 shares. We are not aware of any practical difference between the two categories of shares.

On 28 January 2016, the Advisers wrote to the company about the establishment of a ‘Succession Trust’ by the company. Their letter set out the tax implications for the company and the Deceased and the steps which would have to be taken. Following a board meeting on 10 February 2016 attended by PR1 and PR2 in their capacity of directors, the company resolved to establish the Trust with an initial cash contribution from the company of £100. This led to the establishment of the Trust in a deed dated 16 February 2016. The Trust was ‘…to be constituted as an employees’ share scheme…’ with the purpose ‘…to allow the Employees from time to time to share in the ownership of the Group’.

The 10 February board meeting also approved the transfer by way of gift of 1,080,000 ordinary £1 shares by the Deceased to the Trust, the shares to be held by the Trustee.

On 12 February 2016, the Advisers emailed PR1, as director of the company, about a further allotment of shares to the Deceased. Reference was made to an earlier discussion and an additional 336,000 ordinary £1 shares and 14,000 A ordinary £1 shares were allotted to the Deceased. The ordinary shares were then gifted to the Trust.

The Trustee met on 16 February 2016 and resolved to accept appointment as Trustee and that the trust deed be approved. The Trustee also resolved to accept the initial £100 contribution from the company and the total of 1,416,000 ordinary £1 shares in the company.

As well as the points made above about the aims of the Trust, we should note that the trust deed provided that:

The Trust would be an irrevocable discretionary trust and the beneficiaries of the Trust would constitute present and future employees and directors of the company and members of their families

Employees included directors

Clause 5.1 of the trust deed provided that certain categories of persons ‘shall be excluded from benefitting from any part of…the Trust fund other than by means of a Permitted Payment’. A Permitted Payment is then defined as effectively a payment which would be taxed to income tax on the recipient.

The key exclusion from benefitting appears to be participators, defined as someone owning 5% or more of the company’s issued share capital. That would apply to the Deceased; the provision then excludes persons connected with such a participator. Hence the provision would appear to exclude PR1, PR2 and D from benefitting from the Trust. However, the provision then goes on to state ‘for the avoidance of doubt’ that these connected persons are not excluded if (in effect) they are no longer connected with the participator by reason of that person’s death (emphasis added). In other words, it appears that the family of the Deceased would be able to benefit from the Trust (assuming they qualify as employees, which included being directors, and are not excluded by being participators) following her death, though this is subject to some dispute.

The trust deed was in effect amplified in the company’s board meeting of 10 February 2016 the minutes of which recorded that:

The purpose of the Trust was to hold the shares for the long term

To comply with the conditions of certain tax legislative provisions (to ensure that there were no IHT liabilities for the Shareholder(s) on the making of the contribution) broadly any Shareholder or former shareholder who holds 5% or more of the ordinary shares in the company, and persons connected with them, form a special class of beneficiaries.

On 5 April 2016 the Deceased made a will, appointing PR1 and PR2 as her trustees and executors. The Deceased passed away on 3 June 2016. It appears that under her will she left the 59,000 A ordinary £1 shares equally to PR1 and S.

The company accounts from incorporation to 31 March 2017 show that it held an investment property worth £900,000 and cash of £868,177. HMRC say (para 27 of their paragraph 3 notice) that the turnover reported was some £30,000, described as income from property. As far as we can tell, the company had no employees other than directors, with the average number of employees disclosed in the accounts for the year ended 31 March 2019 being “nil”.

Further information request

The sub-panel considered the documentation provided to us and met twice to discuss the case. It seemed to us that the documentation provided (perhaps inevitably) lacked information on the aims of the Deceased in undertaking the actions she did. The Panel is not a fact-finding body but believes that in the context of the arrangements it is potentially helpful to understand the background as to the Deceased’s intentions; the representations mention advice that the Deceased took. Accordingly, we wrote to the parties requesting sight of any relevant further information.

A letter was therefore sent on 9 August 2014 to PR1, PR2, the Advisers and HMRC, saying:

“Whilst the sub-panel has [the Advisers’] advice letter of 28 January 2016, we have not seen any advice or background to the incorporation of the Company, the subscription of further shares in the Company or [the Deceased’s] subsequent gift of shares to the trust. It would be very helpful to the sub-panel to have sight of any such advisory material, and indeed any correspondence requesting such advice. We would therefore ask the parties to make available any such documents or inform us that no such materials exist.”

The parties were given 30 days to respond; we heard from HMRC on 16 August and the Advisers on 29 August. Both stated that they held no relevant further information or documentation. We did not receive a reply from PR1 or PR2.

In the absence of any contemporaneous or supporting evidence as to the Deceased’s intentions, the sub-panel has to proceed on the documents we have been given.

Relevant legislation

We are concerned with IHT and in particular sections 28 and 86 IHTA.

Generally, tax is to be charged on the value transferred by a chargeable transfer. That included transfers to a settlement without an interest in possession unless the transfer is an exempt transfer. Section 28 (Employee trusts) treats some transfers into trusts as exempt transfers, provided various conditions are met. Section 86 supplements s28 with further conditions and s13 includes some definitions used for the purposes of s28.

There are various arguments between the parties about the applicability, or otherwise, of the s28 exemption. We do not need to concern ourselves with those technical aspects; we are satisfied that the arrangements here are in the ambit of s28 and so will consider the applicability of the GAAR in that context. It is up to the parties to take further their technical arguments if they wish.

We are, though, concerned with Parliament’s aims in enacting s28 and we will return to that aspect of the legislation below.

Previous case

At this point we should make reference to an earlier case considered by the Panel which led to an Opinion being published on 2 March 2020. That was a case with a similar fact pattern to the current case, in that it involved an elderly taxpayer setting up a company, with the company then setting up an employee trust for the company’s employees. That taxpayer similarly passed substantial numbers of shares in the company to the trust shortly before she passed away. The taxpayer’s advisers and the trustee were the same as in the current case and indeed representations were submitted on behalf of the taxpayers by the same Counsel.

Both HMRC and the representations naturally refer to this earlier case. The DO (at para 86 of the paragraph 3 notice) considered that the Panel’s views (which were to hold that the arrangements were not reasonable courses of action) apply equally to the current case, given the similarities. This is disputed by the taxpayers; the Advisers commented in a letter of 9 April 2022 that a Tax Tribunal judge would ‘almost certainly have concluded’ that the GAAR regime did not apply to the transactions in that case. The representations point to differences between the arrangements and also make much of HMRC apparently not having pursued the GAAR in the previous case, suggesting therefore that the Panel’s reasoning was flawed.1 As the same Advisers were involved in both cases, they are able to point to no action having been taken under the GAAR. We have no knowledge of this and do not see it as relevant to our consideration of the case before us.

The current sub-panel can state our position simply. We are naturally aware of the Panel’s earlier opinions and have looked at the previous one on similar facts again. But as in all our cases, we have approached the current case afresh and have considered it on the materials presented to us now.

HMRC’s contentions

In their para 3 notice, HMRC refer to factors about the arrangements pointing to ‘there being no reason other than to seek to obtain exemption from IHT for entering into the arrangements’. Reference is made to such things as:

The company having no employees when the Trust was set up and the office holders all being members of the Deceased’s family

There being no officers or employees other than members of the Deceased’s family since her death

No evidence of the company having significant business activities

No commercial reason for the Deceased to give away virtually her entire shareholding in the company

HMRC also point to the Hansard debates around the passing of what became s28 as making clear the aims of the legislation – that persons connected with a participator in the company should be excluded. The trust should benefit ‘genuine employees’, not enable wealth to be passed to family members without IHT.

HMRC also point to example D29 in the GAAR guidance as being very relevant to the case, making it clear that HMRC consider such arrangements to be subject to the GAAR.

The Representations

The representations argue that the Deceased ‘did nothing more than make use of a relief freely offered by Parliament’. It is argued that the terms of s28 are clear and that the provisions clearly say that ‘…family members of a settlor employed in a business should be in a position to benefit…from assets held on an employee benefit trust’. The representations also state that “the Executors are prepared to accept that it was a main purpose of the arrangements to obtain relief under [s28]”.

The representations argue that HMRC ‘has no policy function to determine when taxes should be gathered or reliefs should be available’ – they should simply apply what Parliament has enacted. They go on to argue that there is no need to refer to Hansard.

The representations also argue that example D29 is not relevant – the facts being different, in particular that the trust in the example was only a short term one whereas the current case has a trust established for the long term.

The representations raise the point that delays in HMRC’s pursuit of the case have impacted the ability of the company to develop its business. This issue is returned to in the further representations when it is also argued that there is a genuine business within the company and that the whole arrangement is a long term one ‘but until the issue with IHT has been sorted out there is a limit on what the company can realistically do’.

Reference is made to an amending deed appointing new trusts on 31 January 2020. HMRC had apparently argued that there were issues as to whether the original Trust was effective; the new trusts were appointed ‘to put the matter beyond doubt’. We are not persuaded that this is relevant to our consideration of the 2016 arrangements though it does seem to imply some concern about the effectiveness of the arrangements.

The representations also refer to the July 2023 HMRC consultation on amending the provisions around employee trusts as supporting evidence for their views. Whilst of interest, we do not think this is relevant to how we should approach transactions undertaken 7½ years earlier.

Arrangements and tax arrangements

It is clear that there are arrangements (the various actions in early 2016) and that a tax advantage ensues. All parties agree on that – the representations do of course argue that the tax advantage is simply as intended by Parliament.

HMRC and the representations go into various arguments as to whether there are ‘tax arrangements’. This does not concern the sub-panel, as we are directed by paragraph 11(4) of Schedule 43 FA 2013 to assume that the arrangements are tax arrangements.

Reasonable Course of Action

We are required to consider whether the entering into and or carrying out of the arrangements, which we take to mean the para 3 arrangements, are a reasonable course of action in relation to the relevant tax provisions by reference to factors listed below.

Section 207(2)

(a) whether the substantive results of the arrangements are consistent with any principles on which those provisions are based (whether express or implied) and the policy objectives of those provisions,

The tax principles that we are concerned with centre on the point that under the IHTA, IHT is chargeable on transfers of value and on the value of an estate on death; that there are various exemptions available to taxpayers; and that in particular there is an exemption for transfers to employee trusts.

As we have noted, there are technical arguments between the parties as to whether s28 applies. We note those but we need to look at the principles behind s28. We disagree with the argument in the representations that the wording of the legislation is clear and so there is no need to look at Hansard; that misses the clear instruction to the Panel that the GAAR legislation contains.

The overall policy aim of what is now s28 is clear – to give an exemption for transfers of shares to trusts for the benefit of employees. But we need to dig deeper and the Standing Committee debates for 21 June 1978 (on the predecessor legislation to s28) helpfully contain discussion of amendments around who exactly should be allowed to benefit from the trust. The responsible Minister makes various points in responding to proposed amendments including what seems to us to be the very important one that distributions cannot be made to shareholders of the company and persons connected with them ‘otherwise close relatives of shareholders would be able to get capital out of the company’…‘It would be possible to use an employee trust as a tax-free money box in which the family’s fortune could build up tax-free…and ultimately be paid out to its members instead of being applied for the benefit of the employees’ (column 1596).

We take from the exchanges recorded in Hansard that the aims of the legislation are that the exemption should not be used to benefit family members (unless the exemption in s28(6) applies in respects of payments of income taxed as income).

(b) whether the means of achieving those results involves one or more contrived or abnormal steps

We need to say at the outset that setting up a company is unexceptional; establishing a trust for the employees of that company is entirely acceptable; and that doing so potentially makes available an IHT relief laid down in the legislation. We agree with the representations to the effect that the Deceased was trying to take advantage of a relief offered by Parliament. As such, taken individually, in isolation, these are not contrived or abnormal steps as things stand.

We are, however, concerned with the route that the Deceased took and the surrounding circumstances. We note some factors about the arrangements:

At the time of the Trust’s establishment, the company had no employees other than the (family member) directors.

As far as we are aware, there are still no employees beyond the family directors.

There is no business in the company beyond what we assume to be the rental property that was initially transferred into the company. We note the argument in the further representations about there being a limit on what the company can do until the IHT has been sorted out but with respect we think that there is surely plenty of opportunity for the company to undertake some activities and plan to expand them when the IHT issue is resolved.

The additional wording in the trust deed (see paragraph 14 above) seems to result in the Deceased’s family benefiting from the Trust after her death (without there being a payment that is income and subject to income tax), having been excluded from benefit during her life. We note the arguments in the representations that other provisions in the trust deed prevent this.

The A ordinary shares which remain with family members; we do not see any differing rights between these shares and the actual ordinary shares.

The Trust has been established with ‘protectors’, being PR1 and PR2. The protectors can replace the trustees of the Trust.

The Trust is required to waive dividends unless the company directs otherwise, while the A shareholders can still receive them.

All of these points are at least unusual even if they are not by themselves contrived or abnormal. In relation to the waiver of dividends, it is not unusual for employee trusts designed to hedge share plans to waive dividends. However, here the Trust holds 100% of the £1 ordinary shares and 96% of all ordinary shares.

We feel we have to stand back and consider the overall result of the arrangements, in order to determine whether the substantive results of the arrangements are consistent with the principles of the relevant legislation. The result is to allow a considerable part of the wealth of the Deceased to go to the benefit of future employees of the company, whoever they might be. We have no evidence that the Deceased was keen to be altruistic in this way, though we accept it might be the case. Given that the normal thing for a taxpayer to do when they are distributing their estate is to benefit their family members, we have to consider why such a route was taken. There is no suggestion of a family estrangement which might be one reason for the Deceased wishing to benefit others (after all, the arrangements appear to have involved all members of the close family). The ‘protector’ arrangements (with the protectors also being directors) and the dividend waivers seem to mean that the family keeps control of the company and Trust (in the broader sense) and the company income, while still allowing dividends to be paid on the A ordinary shares. We conclude that the steps taken together have to be seen as abnormal.

(c) whether the arrangements are intended to exploit any shortcomings in those provisions.

There are arguments put forward that the arrangements simply follow the provisions of s28; as mentioned, we must leave the parties to take these technical arguments further if they wish. The exact circumstances of the current case (in particular how the family members can benefit after the death of the Deceased) is arguably a gap in the legislation which is being exploited.

Section 207(3) – Where the tax arrangements form part of any other arrangements regard must also be had to those other arrangements.

We have noted the amending deed in 2020 but do not think that can be linked to the 2016 actions. It might be argued that our standing back to consider the overall results of the arrangements, as discussed in paragraph 40 above, brings ‘wider’ arrangements into consideration but we think we are just settling on what the (tax) arrangements effected. Had our additional enquiries elicited further information, that might have led into consideration of wider arrangements but, as noted above, no such extra information about the arrangements was forthcoming.

Section 207(4) – Each of the following is an example of something which might indicate that tax arrangements are abusive—

(a) the arrangements result in an amount of income, profits or gains for tax purposes that is significantly less than the amount for economic purposes,

(b) the arrangements result in deductions or losses of an amount for tax purposes that is significantly greater than the amount for economic purposes, and

(c) the arrangements result in a claim for the repayment or crediting of tax (including foreign tax) that has not been, and is unlikely to be, paid,

but in each case only if it is reasonable to assume that such a result was not the anticipated result when the relevant tax provisions were enacted.

Section 207(4) concerns mismatches between economic results and taxable amounts such as taxable profits, gains or losses. The examples given are not exhaustive: they are illustrations.

The current case is concerned with the availability of an exemption which is laid down by the statute. If it is available, the tax due will be less than it otherwise would be. That is as it should be. However, the way s28 seems to be intended to operate – given the comments in Hansard above – is that the assets put into the Trust should be taken out of the family’s influence. That does not seem to have happened and we feel that brings s207(4) into play.

Section 207(5) – the fact that tax arrangements accord with established practice, and HMRC had, at the time the arrangements were entered into, indicated its acceptance of that practice, is an example of something which might indicate that the arrangements are not abusive.

The para 3 notice states that the arrangements do not accord with any HMRC established practice. HMRC point to example D29 in the GAAR guidance as evidence that they will challenge such arrangements. They also refer to the Barker2 As the same Advisers were involved in both cases, they are able to point to no action having been taken under the GAAR. We have no knowledge of this and do not see it as relevant to our consideration of the case before us. case as evidence that HMRC have been challenging such arrangements for some time.

Discussion

Setting up a company, setting up an employee trust and gifting shares to the trust for employee benefit are all reasonable steps. But we have here a gift of the shares to a trust which (in effect) has no beneficiaries beyond the family. In addition, the family retains an influence on the funds as PR1 and PR2 are both directors of the company and the protectors of the trust. We accept that future employees could benefit but within the timeframe before us there were no other employees, no real business (beyond the rental of the property) nor plans for setting in motion any expansion; we have no evidence that benefitting persons unknown, i.e., anyone who might happen to be an employee, was an aim of the Deceased. The net effect in reality – of allowing the family to benefit – does seem contrary to the aim of the legislation, as amplified by the Hansard debates to which we have referred.

Example D29 in the GAAR guidance does have some relevance to the current case – it was published before the arrangements were put into place. However, the representations fairly point to the example being concerned with a speedy winding up of the trust whereas in this case we are told the company and trust are established for the long term. We do not therefore rely on this example but simply use it as evidence of HMRC’s general stance on s28. Nor do we rely on the previous Panel opinion on similar arrangements.

We consider that the arrangements in this case involve abnormal steps designed to sidestep the restrictions on the s28 exemption and so reduce the intended IHT charge on the value of the Deceased’s estate. We think the requirements in section 207 FA13 are met.

Conclusion

Each of the sub-panel members is of the view, having regard to all the circumstances (including the matters mentioned in subsections 207(2)(a), 207(2)(b), 207(2)(c) and 207(3) FA 2013) and taking account of subsections 207(4), 207(5) and 207(6) FA 2013, that:

(a) The entering into of the tax arrangements was not a reasonable course of action in relation to the relevant tax provisions; and

(b) The carrying out of the tax arrangements was not a reasonable course of action in relation to the relevant tax provisions.