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Further HMRC Consultation On Tax Avoidance

Thursday 15th August 2013

Following on from HMRC’s consultation “Lifting the Lid on Tax Avoidance Schemes” published in 2012, HMRC has recently released a further consultative document – “Raising the Stakes on Tax Avoidance” which provides detail on a new information disclosure and penalty regime focused specifically on high risk promoters of tax avoidance.

The condoc covers a number of issues relating to the promotion and use of avoidance schemes, in particular :

  • forcing high risk promoters of avoidance schemes to provide details of their products to HMRC using suitable information powers and penalties;
  • ensuring that users of high risk promoters’ schemes appreciate the risks they are running and understand the consequences;
  • raising the standard of reasonable excuse and reasonable care for high risk promoters and the users of their avoidance schemes;
  • encouraging users of avoidance schemes to settle their tax affairs after similar cases have lost in court; and
  • amending the DOTAS regime to make sure the right information gets to HMRC at the right time.

The condoc puts forward two possible approaches to the identification of high risk promoters and proposes an administrative process for the high risk promoter regime.  It then sets out what consequences will apply to high risk promoters, including new information requirements, penalties and a proposal for naming high risk promoters.  In particular, HMRC proposes higher standards for the defences of reasonable excuse and reasonable care for high risk promoters and users of their schemes.

There are also proposals for new information powers for the intermediaries of high risk promoters and users of their avoidance schemes.

 The condoc then proposes how a new regime for follower cases could be used to encourage people who have used an avoidance scheme to settle their tax affairs once the scheme is defeated in the courts.

In addition, there is a proposal to change the information to be provided under DOTAS so that HMRC has sufficient information when examining a disclosed scheme.

Comments have been requested on the condoc by 4 October 2013 and any changes to legislation in the light of this consultation and responses to it will be put forward in Finance Bill 2014.

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