Revenue publishes avoidance disclosure guidance

The Inland Revenue has published new guidance on the disclosure rules for tax avoidance schemes, which take effect on 1 August.

The Revenue said the rules would provide it with earlier information about potential avoidance schemes and enable the Government to make a swifter and better-targeted response. They would "deter the creation of contrived and artificial schemes whose main purpose is to avoid tax".

The aim of the guidance is to clarify who is within the disclosure rules and the steps required to comply. The Revenue said it would "continue to work with stakeholders to develop this guidance in the light of practical experience of using and operating the rules".

Paymaster General Dawn Primarolo said the new guidance would help provide certainty for businesses and tax advisers, following consultation with them. She added:

"The disclosure rules are a vital part of the battle against tax avoidance and will help stop the small minority of individuals and businesses who abuse the tax system at the expense of those who pay their fair share. Today's guidelines have been developed in consultation with business and tax advisers and will make it easier for them to comply with the new rules."

The rules are, said the Revenue, targeted at certain schemes and arrangements based on financial and employment products. These were "areas where experience shows the Exchequer to be at greatest risk of serious tax avoidance."

The disclosure rules are contained in Finance Act 2004, sections 306-319 and in the following regulations:

• SI 2004/1865 - The Tax Avoidance Schemes (Promoters and Prescribed Circumstances) Regulations 2004 (PDF 21K)
  
• SI 2004/1864 - The Tax Avoidance Schemes (Information) Regulations 2004 (PDF 45K)
  
• SI 2004/1863 - The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2004 (PDF 41K)

The guidance is available on the Revenue's Avoidance Intelligence Unit pages.

TAX AVOIDANCE - DON'T EVEN THINK ABOUT IT CHANCELLOR ANNOUNCES LANDMARK POLICY SHIFT

As widely predicted, the Chancellor has announced a wide range of anti-avoidance measures designed to counter employer/employee tax schemes.

Some of such schemes have been brought to the Chancellor's attention as a result of information received under the Disclosure of Tax Avoidance Schemes (DOTAS) arrangements introduced in the last Budget.

It is quite clear that the Chancellor means business. His intention is that "employers and employees should pay the proper amount of tax and National Insurance Contributions on rewards from employment." However, he has also confirmed that he will once again not hesitate to use retrospective legislation to achieve his ends.

In a landmark change of policy, the Chancellor has announced that any newly devised avoidance schemes could be blocked immediately.

Chiltern's Managing Director of Tax Services, David Pert said: "The Chancellor's announcement leaves taxpayers in an impossible position. Indicating that the tax legislation may be changed in the future retrospectively is tantamount to saying that it cannot be relied upon and that is not a satisfactory state of affairs."