On 23 July HM Revenue & Customs (“HMRC”) issued a consultation document (“Condoc”) called “Lifting the Lid on Tax Avoidance Schemes”.
The issue of the Condoc was accompanied by extensive press coverage that these proposals are targeted at “cowboy” tax advisers. In fact, the Condoc primarily represents a fundamental strengthening and extension of the Disclosure of Tax Avoidance Schemes (“DTAS”) regime. It will therefore impact on all promoters of tax planning and not just “cowboy” promoters.
Although wide-ranging in its impact, the Condoc is relatively short on detail and does not include any proposed legislative wording. It also does not include any timescale as to when the UK Government would anticipate introducing any amendments.
The Condoc describes a range of options covering the following areas.
- Improving information available to the public about the risks of using tax avoidance schemes. This is the only part of the Condoc that is not connected with the DTAS regime and has a general “consumer protection” objective.
- Improving the information received by HMRC about tax avoidance via the DTAS regime by considering strategies such as:
- extending information disclosed by promoters under the regime in connection with the scheme itself or the users and other parties involved;
imposing additional reporting obligations on a promoter who incurs a penalty for not disclosing a scheme;
imposing personal obligations on individuals to sit alongside a firm's obligations to comply with a promoter's DTAS obligations; and
raising the threshold of “reasonable excuse” where a promoter fails to disclose.
- Receiving more information on schemes available in the market by extending the hallmarks including:
- introducing a new hallmark targeting employment income provided via intermediaries;
- introducing a new financial products hallmark;
- extending the loss schemes hallmark to cover corporate losses; and
- amending the confidentiality hallmark so that the test becomes hypothetical in its application.
(Click here for the consultation document itself)
These proposals are very wide ranging and, if enacted, would have a major impact on all tax advisers.