HM Revenue & Customs (HMRC) have issued probably their longest and most comprehensive guidance yet on the disclosure of tax avoidance schemes in order to help taxpayers (and scheme promoters) alike to meet all their obligations. The consists of 178 pages with the index itself being 9 pages. The guidance covers Income Tax, Corporation Tax, Capital Gains Tax, National Insurance contributions (NICs), Stamp Duty Land Tax (SDLT), Annual Tax on Enveloped Dwellings (ATED) and Inheritance Tax (IHT).
Why have HMRC done this?
HMRC are continuing to counter tax avoidance and particularly aggressive tax avoidance. HMRC has made changes in the way that scheme promoters and employers provide information online to HMRC. Not surprisingly, most of the changes are more onerous than before requiring more information to be provided to HMRC.
Most of the guidance is focused on the scheme promoter
Are there any surprises?
No, but taxpayers (and scheme promoters) will need to take note of the requirement or face financial penalties for not doing so. The level of penalty in some cases can be up to £600 per day. In certain circumstances penalties can be up to a £1 million or more.
The penalties themselves fall into 3 categories:
- Disclosure penalties – apply to failure to disclose a scheme. There are variations in cases where a Tribunal has issued a disclosure order.
- Information penalties – apply to all other failures to comply with DOTAS except for those covered by 3 below.
- User penalties – apply to failure by a scheme user to report a scheme reference number to HMRC.
Disclosure penalties and Information penalties involve an initial penalty and a further penalty if non-compliance continues. The initial penalty is determined by a Tribunal.
Taxpayers – an important note
Employers must provide scheme reference numbers to employees. This can often be overlooked where an employer has participated in perhaps an Employee benefit Trust (EBT) or alike. In this case, all employees who have received any money or monies worth by whatever means including a loan from the EBT are caught.
Anyone seeking to exit any form of tax avoidance and not worry about such guidance can contact me at firstname.lastname@example.org or Andy at email@example.com to explore their options.