The President of the Chartered Institute of Taxation (CIOT) has welcomed today’s launch of a consultation document on strengthening the Government’s anti-avoidance rules, and accompanying speech by the Exchequer Secretary, but warned of the dangers of not correctly targeting new regulations.
Patrick Stevens, CIOT President, commented:
“These proposals would see a significant tightening of the rules for Disclosure of Tax Avoidance Schemes (DOTAS). The DOTAS regime has been in place since 2004 and has proved a mostly effective way of identifying and dealing with unacceptable avoidance schemes. However some have been playing fast and loose with the disclosure rules and it is understandable that the Government want to target these people – whether they are scheme promoters or their clients.
“The CIOT has regularly said there is a need to enforce the rules that are there rather than impose new rules on those who are already compliant. If more information needs to be disclosed by promoters or their clients in order for HMRC to do this effectively then it is right that this should happen.
“The vast majority of tax advisers and their clients should have nothing to fear about these proposals – assuming they are properly targeted. Most tax advisers will support tackling those who give the profession a bad name – but there will be a need to make sure these really are targeted and there are safeguards to ensure that normal tax planning is not affected. There is a world of difference between taking advantage of legitimate reliefs, such as those for contributions to a pension fund or charitable donations, in the way intended, and promoting a totally artificial scheme which has no realistic chance of working – and indeed should not work. It is the latter that the Government is, quite rightly, targeting.
“It is important that those targeted are promoters and sellers of the schemes and not tax agents who may file the tax returns of the individuals concerned without involvement in, or even any detailed knowledge of, the scheme.
“The idea of using mis-selling rules to target those who promote schemes that have no realistic chance of success is something I suggested in a speech last month. It is good to see the Government intend to look into this.
“This consultation will run alongside those on a general anti-abuse rule and a cap on tax reliefs. Together these raise big questions about our tax system and how the tax authorities ensure taxpaying individuals and companies pay ‘their fair share’. The CIOT will be aiming for the widest possible consultation of our members to inform our response. Changes made to the system over the next 12 months are likely to be far-reaching and long-lasting. It is important that the voice of tax professionals is heard in the policy-making process.”
Notes to editors
- The consultation document, ‘Lifting the Lid on Tax Avoidance Schemes’ can be read at http://www.hmrc.gov.uk/avoidance/tax-avoidance-schemes.pdf. Today’s speech by Exchequer Secretary David Gauke can be read at http://www.hm-treasury.gov.uk/speech_xst_230712.htm.
Technical Team
23 July 2012
