Lifting the Lid on Tax Avoidance Schemes - Public consultation

The ATT invites comments on this consultation, which sets out some options for improving public information about tax avoidance schemes and the risks of using them, together with proposals for revising and extending the Disclosure of Tax Avoidance Schemes (DOTAS) regime.

Please send any comments to atttechnical [at] att.org.uk with 'Tax Avoidance Schemes' in the title by 26 September 2012.

The key proposals in the new avoidance condoc include:

Chapter 3 – improvements to the provision of public information about tax avoidance and the risks of using tax avoidance schemes – eg:

  • Publishing more information about ‘failed’ schemes; 
  • Improving ‘spotlights’; and 
  • Building on the financial services mis-selling rules (a suggestion from Patrick Stevens) and sharing more information about tax avoidance with the professional bodies. 
  • See also the separate SDLT consultation published recently.

Chapter 4 - options intended to ensure that HMRC have sufficient information and documents to understand how a scheme works and who is intended to use it, and to ensure that the rules are complied with – to include: 

  • Extending the information disclosed to HMRC about disclosable avoidance schemes; 
  • Extending the information reported to HMRC about users and other parties involved in a disclosable avoidance scheme; 
  • Raising the threshold of ‘reasonable excuse’ for a promoter who fails to notify a disclosable scheme; 
  • Imposing additional reporting obligations on a promoter who incurs a penalty for failure to disclose a scheme; and 
  • Imposing a personal responsibility on an individual, to sit alongside the firm’s obligations, to comply with a promoter’s DOTAS obligations. 

Chapter 5 - describes proposed revisions and extensions to the existing ‘hallmarks’, the descriptions of schemes required to be disclosed under the ‘main regime’ of income tax, capital gains tax and corporation tax.

The questions asked in the condoc are set out in section 7. These are:

7. Summary of Consultation Questions 

Q.1 Do you have any comments on programme of work suggested in Chapter 3 for improving public information about tax avoidance arrangements and the risks associated with using them ? 

Q.2 Do you have any suggestions for improving the communication of information about tax avoidance? 

Q.3 Do you agree that the options suggested in Chapter 4 for widening DOTAS would be feasible ways of achieving the described objectives? 

Q.4 Can you suggest alternative options for achieving the same objectives? 

Q.5 Would the proposed changes to Hallmark 1(paragraphs 5. 16 to 5.18) be proportionate and effective? 

Q.6 Would the proposed changes to Hallmark 2 (paragraph 5.22) be proportionate and effective? 

Q.7 Would the proposed safeguard in Hallmark 6 (paragraph 5.27) address concerns about catching ordinary business start ups? 

Q.8 What types of benign tax planning around corporation tax losses might the proposed change to Hallmark 6 (paragraph 5.34)) catch inadvertently? 

Q.9 Would an employment income via intermediaries hallmark based upon the characteristics described in paragraphs 5.44 to 5.46 be workable? 

Q.10 Would a ‘but for’ test (paragraph 5.54) be reasonable for determining whether a financial product is an active ingredient of an avoidance scheme or merely incidental to it? 

Q.11 Would filters based upon standard products or the amount of the tax advantage (paragraph 5.56) be workable? If not, what are the alternatives? 

Q.12 Do you have any comments or suggestions on the Tax Impact Assessment?

Technical Team

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