Lifting the Lid on Tax Avoidance Schemes

The Government has introduced consultation “Lifting the Lid on Tax Avoidance Schemes” to extend HMRC’s powers to tackle aggressive, artificial tax avoidance schemes.  The proposals are aimed at improving public information available on tax avoidance schemes and the risks associated with using them.

The proposals include extending the Disclosure of Tax Avoidance Schemes (DOTAS) rules and introducing further measures to be imposed on scheme promoters to ensure that schemes are adequately disclosed to HMRC.  There are also plans to publish warnings about tax avoidance schemes that are effectively being mis-sold by less reputable promoters.

The consultation document is light on detail and it is yet to be seen how the proposals deal with determining where the boundary is drawn between legitimate tax planning, as opposed to contrived avoidance.  This is clearly a difficult issue underpinning tax avoidance.  The Exchequer Secretary acknowledges “it is up to us as Government to make clear the features of dodgy schemes”.  However, this is very difficult to combat and, realistically, only well written law can achieve this with any certainty.  Unfortunately the proposed General Anti-Abuse Rule fails to offer any certainty on the position and is open to wide interpretation.

For any further information on the proposals, please contact your local Burgis & Bullock office.