Double taxation relief: changes to targeted anti-avoidance rule
Published 22 November 2017
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Who is likely to be affected
Taxpayers who enter into certain types of schemes or arrangements for artificially creating or increasing double taxation relief (DTR) claims.
General description of the measure
The measure will make 2 changes to the DTR targeted anti-avoidance rule (TAAR). The first change removes the requirement for HMRC to issue a counteraction notice before the TAAR applies, and the second change slightly widens the scope of schemes or arrangements to which the DTR TAAR can apply.
Policy objective
The measure will modernise the DTR TAAR as well as making the DTR TAAR consistent with the Government’s general policy on TAARs. It also supports the Government’s objective of promoting fairness in the tax system by deterring taxpayers from entering into abusive DTR arrangements.
Background to the measure
The measure will be announced in the Autumn Budget 2017.
Detailed proposal
Operative date
The first change (counteraction notices) will have effect for returns with a filing date on or after 1 April 2018.
The second change (total tax payable) will have effect for payments of foreign tax made on or after 22 November 2017.
Current law
Current law is contained in sections 81 to 95 Taxation (International and Other Provisions) Act 2010 (TIOPA 2010).
Proposed revisions
Legislation will be introduced in Finance Bill 2017-18 to remove the requirement in section 81 TIOPA 2010 for HM Revenue and Customs (HMRC) to issue a counteraction notice and instead requires the taxpayer to consider whether the DTR TAAR applies as part of the taxpayer’s self-assessment.
Legislation will also be introduced in Finance Bill 2017-18 to extend the reference in section 87 TIOPA 2010 to the total tax payable to include the tax payable by any connected persons for one of the categories of prescribed schemes or arrangements to which the TAAR can apply.
Summary of impacts
Exchequer impact (£m)
| 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2021 to 2022 | 2019 to 2020 | 2022 to 2023 |
|---|---|---|---|---|---|
| nil | nil | nil | nil | nil | nil |
This measure is not expected to have an Exchequer impact. This measure supports the Exchequer in its commitment to protect revenue.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This measure has no impact on compliant individuals. It will only affect those individuals who are artificially creating or increasing DTR claims by requiring them to consider whether the DTR TAAR applies as part of the self-assessment process.
The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that there will be any impact on groups sharing protected characteristics.
Impact on business including civil society organisations
This measure has no impact on compliant businesses. It will only affect those businesses who are artificially creating or increasing DTR claims by requiring the business to consider whether the DTR TAAR applies as part of the self-assessment process. There is no impact on civil society organisations.
Operational impact (£m) (HMRC or other)
HMRC will incur negligible costs implementing this change.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be monitored through monitoring the number of DTR avoidance schemes and through regular communication with taxpayers and practitioners affected by the measure.
Further advice
If you have any questions about this change, please contact Forida Haque on telephone: 03000 594914 or email: forida.haque@hmrc.gsi.gov.uk or Daniel Berry on telephone: 03000 585972 or email: daniel.berry@hmrc.gsi.gov.uk