Disclosure of tax avoidance schemes: Revised guidance

Disclosure of tax avoidance schemes: Revised guidance

Published:

Author: Niall Murphy

The Revenue has recently published revised guidance on the disclosure of tax avoidance schemes.

The guidance applies from 1 November and replaces all previous guidance.

This guidance has been updated to reflect legislative changes in relation to the disclosure of Stamp Duty Land Tax Schemes, which came into force on 1 November 2012, and the consolidation of the regulations relating to National Insurance Contributions (NIC).

Detail of Main Changes

The rules for disclosing hallmarked NIC schemes now mirror those that apply to income tax hallmarked schemes with some minor differences explained in the relevant paragraphs of the guidance. Where there is both a NIC advantage and an income tax advantage, only one disclosure need be made but it must identify both advantages.

From 1 November 2012 the descriptions of stamp duty land tax arrangements required to be disclosed were extended so that they now cover schemes intended to be used for non-residential and/or residential property of any value, subject to the following exceptions:

  • Arrangements that were first made available for implementation before 1 April 2010 unless those arrangements fall within what are referred to as the 'transfer of rights rules'. The transfer of rights rules are relieving provisions of the SDLT legislation which have been widely used in SDLT avoidance schemes
  • Arrangements falling within a 'white list', which includes the single use of a number of statutory reliefs

With effect from 1 November 2012, the normal rule that a promoter has to disclose a scheme only once (unless it changes substantially), is overridden where: 

  • The scheme falls within certain descriptions
  • It was disclosed before 1 April 2010

so as to require one further disclosure if the promoter continues to sell the scheme.

The purpose of this change is to enable the scheme to be issued with a scheme reference number so that its users are identified. The reason for this change appears to be that despite their best efforts the Revenue is still trying to catch up with the multiplicity of SDLT schemes, which are still in use.

Conclusion

This is a reminder of the need to ensure that you comply with the Revenue's disclosure requirements, particularly in light of the fact that failure to comply can result in significant financial penalties both for promoters of tax avoidance schemes and their users.