Guidance

Publication by HMRC of information about tax avoidance schemes — section 86 Part 6 Finance Act 2022

Updated 11 April 2022

Overview

This guidance is intended to help people understand the new measure ‘publication by HMRC of information about tax avoidance schemes’ and how this will be applied in practice.

New legislation will enable HMRC to publish information about tax avoidance schemes and about persons suspected to be promoters of those schemes and other specified categories of person, to better inform taxpayers of the risks involved so that they can identify and steer clear of the schemes or exit them.

The legislation will enable HMRC to publish details of schemes they suspect to be tax avoidance schemes and to name suspected promoters of such schemes at an earlier stage than currently possible under existing anti-avoidance legislation. It will also allow HMRC to challenge misleading information that promoters of tax avoidance communicate to taxpayers and release into the public domain.

Examples of the type of information that HMRC might publish include:

• details of tax avoidance schemes where HMRC have a suspicion that a scheme is being sold through a website or other channel
• actions HMRC are taking under the disclosure of tax avoidance schemes (DOTAS) rules, including, where relevant, whether HMRC believe that the scheme is disclosable under DOTAS
• confirmation that similar schemes have been found not to produce the tax benefits claimed
• where a promoter of a scheme has suggested that their schemes always work, details of other schemes they have promoted that have been defeated
• details of where a promoter had been successfully challenged under the promoters of tax avoidance schemes (POTAS) rules, the enablers penalty regime, or DOTAS
• details of a promoter’s previous defeats under different names, or organisational structures, where they claimed to be a new promoter or fail to draw attention to their previous failure

1. Definitions

A person is a promoter in relation to arrangements or a proposal that are relevant arrangements or a relevant proposal under section 234 of Finance Act 2014 if the person does anything that would cause the person to be carrying on a business as a promoter in relation to the arrangements or proposal under section 235 of Finance Act 2014, or, where the person is a member of a promotion structure, to be treated as doing so.

See:

• section 234 of Finance Act 2014 for the meanings of ‘relevant proposal’ and ‘relevant arrangements’
• section 235 of Finance Act 2014 for the meanings of ‘promoter’ and ‘as a promoter’
• schedule 33A of Finance Act 2014 which describes the cases in which a person is a ‘member of a promotion structure’

More information can be found at paragraph 3 and section 7 of the POTAS guidance.

In the rest of this guidance, references are to ‘tax avoidance schemes’ or ‘scheme’ instead of ‘relevant proposal’, or ‘relevant arrangements’, as defined in section 234 of Finance Act 2014.

2. When details may be published

Where an authorised officer suspects that a proposal or arrangements are a tax avoidance scheme the officer may arrange for the publication of any information the officer considers appropriate for the purposes of:

• informing taxpayers about risks associated with, or concerns the officer has about, the scheme
• protecting the public revenue

2.1 Authorised officer

An authorised officer is a person that has been authorised by the Commissioners for HMRC for the purposes of section 86. Only authorised officers can authorise the publication of information under the section.

For the purposes of this legislation, authorised officers will be senior civil servants and independent of any compliance activity relating to the tax avoidance scheme in question.

3. Information that may be published

The information, including documents, that may be published about a suspected tax avoidance scheme includes information identifying or about any person who has or has had, or who the officer suspects has or has had, any other role in relation to making the tax avoidance scheme available for implementation, or a person who is, who has been, or who the officer suspects is or has been:

• a promoter of the scheme
• a connected person in relation to the scheme
• a connected person in relation to a promoter of the scheme
• a member of a promotion structure any member of which has or has had or is suspected by the officer of having or having had a role in relation to making the scheme available for implementation

No information may be published that identifies a person who does not fall within one of these categories.

Information about a person may only be published where the authorised officer considers it appropriate for the purposes of informing taxpayers about the risks or concerns the officer has about a scheme, or of protecting the public revenue in relation to a scheme.

3.1 Connected persons

For the purposes of this legislation, a person is a connected person in relation to a scheme, or to a promoter of a scheme, if the person is:

• involved in the promotion of the scheme — this would include those involved in the design, marketing, sale, organising or managing of the scheme
• in the case of a scheme that involves a trust, a settlor, trustee or beneficiary of the trust, or other person involved in the administration of the trust
• a director, manager, secretary or other similar officer of a person who is or has been or who the authorised officer suspects is or has been, a promoter in relation to the scheme
• a person who controls or has significant influence over (within the meaning of Part 2 of Schedule 34 to Finance Act 2014) a person who is a promoter in relation to the scheme
• an employee or shareholder of a person who is a promoter in relation to the scheme

3.2 Updating published information

An authorised officer may arrange for additional information to be added to previously published information about a tax avoidance scheme. HMRC investigations into the scheme may provide additional information that the officer considers appropriate for publication in order to inform taxpayers about the ongoing risks of the scheme.

3.3 Persons who use tax avoidance schemes

Persons who use a tax avoidance scheme will not have their details published unless the authorised officer suspects that they are also involved in its promotion. However, the information that is published in these circumstances will not include the fact that they are using the scheme to avoid their own tax liabilities.

4. Where the information will be published

The information may be published in such a manner as an authorised officer considers appropriate for the purposes of informing taxpayers about the risks of tax avoidance schemes and protecting the public revenue.

In general, the intention is to publish information on the GOV.UK website and to communicate information directly to taxpayers, for example users of publicised schemes may be contacted by letter to warn of the risks of continuing in such arrangements or to inform them about the actions that HMRC are taking in relation to a scheme.

Other appropriate channels may also be used to publish information about tax avoidance schemes so that information reaches the widest audience possible.

5. Opportunity for representations

Where an authorised officer intends to publish information that identifies a person, an officer must notify the person and give the person 30 days from the date of notification in which to make representations about whether or not the information should be published.

The authorised officer will carefully consider any representations made before making a final decision about whether to publish information that identifies a person.

Where a person fails to respond to HMRC’s queries about claims made in representations, or where claims are made within representations that are false, inaccurate or not supported by any evidence, an authorised officer is likely to proceed in arranging for the information to be published.

Notifying the person, giving the person reasonable opportunity to make representations and fully considering all representations will help to ensure that the information HMRC publishes is accurate and that information identifying a person is published only where it is appropriate to do so for the purposes of informing taxpayers about the risks associated with a scheme, or protecting the public revenue.

6.Examples

Example 1

HMRC are aware of a scheme targeting taxpayers in a certain industry. The company promoting the scheme designed similar schemes in the past which failed to deliver the expected tax benefits and resulted in users of the schemes becoming liable to additional tax.

A letter is issued to the promoter to inform them that HMRC do not accept that the scheme works and are investigating it.

Information is referred to an independent authorised officer to consider for the purposes of publishing information about the scheme. Following a review of all the information, the authorised officer suspects that the scheme is a tax avoidance scheme, and the officer intends to arrange for the publishing of information to warn taxpayers about the risks of entering into the scheme. This includes the name of the company and names of the company directors as connected persons to the promoter. The authorised officer notifies the company and the company directors that the officer intends to arrange for the publication of information that will identify them.

Representations are not received within 30 days of the date of notification and the officer arranges for the information to be published on GOV.UK. The name of the promoting company and the names of the company directors are published, and the fact that HMRC have written to the promoter, to inform them of HMRC’s investigations into the scheme and views on why the scheme does not work, is also published. Information and documents about previous schemes sold by the promoter are published on GOV.UK to highlight that similar schemes sold by the same promoter have been successfully challenged by HMRC.

Where appropriate, HMRC will look to contact taxpayers directly, highlighting information listed on GOV.UK and making them aware of the risks involved with the scheme.

Additional information and documents may be published on GOV.UK as HMRC progresses its investigations into the scheme, providing taxpayers with even more information about the risks involved.

Example 2

A non-resident promoter has designed a scheme and intends to sell this to UK taxpayers. The non-resident promoter uses a network of UK intermediaries to market the scheme in the knowledge that UK taxpayers are likely to want to deal with UK based entities.

The UK entities are acting under the guidance of the non-resident promoter and carrying out tasks that are designated to them in order to support the scheme. As a result, the UK entities and the non-resident promoter are members of the same promotion structure in relation to the scheme.

HMRC become aware of this scheme after enquiries into the tax returns of users provide evidence of its existence, and the scheme is being challenged as disclosable under DOTAS. For the purpose of publishing information about the scheme, the authorised officer suspects this is a tax avoidance scheme.

The officer notifies the UK entities and the non-resident promoter of the intention to publish information about the scheme, including their names. One of the UK entities, A Ltd, makes representations on the basis that they have never been a member of the promotion structure in relation to the scheme. The officer reviews the case and finds that A Ltd is part of a promotion structure with the other members in relation to a separate unrelated scheme but is not a member of the promotion structure in relation to the scheme in question. The officer agrees not to publish information identifying A Ltd in connection with this particular scheme.

No other representations are made by the other members of the promotion structure and the authorised officer arranges for information about the scheme to be published on GOV.UK, including the names of the UK entities (apart from A Ltd) and the name of the non-resident promoter to help taxpayers identify the persons responsible for making the scheme available. Publishing the names of the UK entities as well as that of the non-resident promoter is more effective in these circumstances because the users and potential users of the scheme will be more likely to recognise these entities than the promoter who ultimately controls the scheme from offshore but with whom taxpayers may have had no direct interaction.

The officer also arranges for information about HMRC’s DOTAS challenge to be published on GOV.UK to highlight the concerns about the scheme, and scheme users are contacted by letter to inform them of HMRC’s views as to why the scheme does not work.

Example 3

HMRC identify a website advertising a ‘tax saving scheme’. The information on the website is sufficient for an authorised officer to suspect that the scheme being advertised is a tax avoidance scheme.

The website includes details of a named person who potential customers are directed to contact. However, the exact role of this person in relation to the scheme is unclear. The scheme is relatively new meaning that HMRC investigations are at an early stage and HMRC do not have enough information to find a suspicion that the person is a promoter, or a person connected to the promoter or the scheme.

However, the authorised officer suspects that the person listed on the website is playing a role in making the arrangements available for implementation. The officer notifies the person of the intention to publish information about the scheme, including the name of the person, and provides the opportunity for the person to make representations.

Representations are received from the person, who states that they are not involved in promoting the scheme or in making the scheme available. In response to the representations the officer asks the person to clarify their role in relation to the scheme and to explain why they are named as a point of contact for potential customers on the website. The person does not respond to the officer’s queries.

Based on the officer’s suspicions that the person is playing a role in making the scheme available for implementation and given the failure of the person to explain their role, the officer arranges for information to be published on GOV.UK, naming the person and explaining that HMRC do not accept that the scheme is effective to avoid tax and are investigating it. At this stage of HMRC’s investigations, where the promoter is unknown, the authorised officer considers it appropriate to publish the name of the only identifiable person who can be linked to the scheme to help taxpayers identify the scheme.

If HMRC learn more information about the scheme through its investigations, such as the identity of the promoter, and if this information would better inform taxpayers about the risks involved with the scheme, an authorised officer will consider whether to publish the additional information. However, the officer would only be able to publish information identifying the promoter having first given them the opportunity to make representations.

Where appropriate, HMRC will look to contact taxpayers directly, highlighting information listed on GOV.UK and making them aware of the risks involved with the scheme.

7. Representations and legal professional privilege

No information may be published under this legislation that identifies a person where there are reasonable grounds for believing that the person’s role in relation to the scheme in question is limited to activities subject to legal professional privilege (LPP).

Where HMRC notify a person who is a professional legal advisor (lawyer) that an authorised officer intends to publish information identifying them, the person may take the view that their client’s entitlement to LPP means they are unable to make effective representations about why the information should not be published.

Where this is the case, the person should consider making a representation explaining that any representations they would otherwise be able to make would rely on disclosing privileged information, which they cannot do.

HMRC will not publish information identifying a lawyer where there are reasonable grounds to believe that their role in relation to a scheme is limited to activities that are subject to LPP.

However, HMRC may publish information identifying a lawyer where the lawyer has carried out activities relating to the promotion of a scheme and there are not reasonable grounds to believe those activities are subject to LPP.

In such cases, HMRC may publish information even when a lawyer has also provided legal advice that would be subject to LPP.

Example

An authorised officer notifies a lawyer of the intention to publish information about a tax avoidance scheme that HMRC are challenging including the name of the lawyer. Information referred to the officer provides evidence of the lawyer’s role in making the scheme available to a number of clients.

The lawyer makes representations stating that due to LPP they are unable to disclose confidential communications between the lawyer and their clients, therefore the information identifying the lawyer should not be published.

The officer reviews the representations in light of what they already know about the lawyer’s role in the promotion of the scheme and concludes that whilst LPP may apply to advice provided to the clients once they had decided to implement the scheme, the lawyer’s role in making the scheme available for implementation — which included activities that took place prior to the relevant persons becoming clients — was not covered by LPP.

In the absence of representations other than those relying on LPP, the officer would be able to publish the information identifying the lawyer on the basis of his view that the lawyer has played a role in the promotion of a tax avoidance scheme which is not covered by LPP.

8. Amendments and withdrawals

Because the legislation allows for information to be published at an early stage where HMRC may know little about the detail of a scheme, it is possible that when HMRC learn more about the scheme they will find that information which has been published is incorrect or misleading.

An authorised officer must amend or withdraw published information if the officer subsequently considers it to be incorrect or misleading in a significant respect.

Example

An authorised officer suspects that a tax avoidance scheme is being promoted by Person A.

The officer intends for information to be published about the scheme, including the name of Person A as a promoter, to inform taxpayers about the concerns that the officer has about the scheme.

The authorised officer notifies Person A and provides an opportunity for representations to be made within 30 days from the date of notification.

Person A does not respond and the officer arranges for the information to be published on GOV.UK.

Subsequent HMRC enquiries provide evidence that Person B was in fact the promoter of the scheme and that Person A had no involvement as a promoter of the scheme, as a connected person in relation to the scheme or scheme promoter, as a member of a promotion structure through which the scheme was promoted, or in making the scheme available for implementation.

The information previously published on GOV.UK would be incorrect in a significant respect and the authorised officer must arrange for its withdrawal.

The authorised officer in this case would proceed to notify Person B of the intention to publish their name as the promoter of the scheme.

9. Data protection and Investigatory powers

Data Protection Act 2018 and Investigatory Powers Act 2016

Disclosure of information about tax avoidance schemes is not authorised where the disclosure would contravene the data protection legislation or would be prohibited by the investigatory powers legislation:

• the data protection legislation has the same meaning as in section 3 of the Data Protection Act 2018
• the investigatory powers legislation means Parts 1 to 7 and Chapter 1 of Part 9 of the Investigatory Powers Act 2016

HMRC is committed to the privacy of personal data and an authorised officer will only arrange for information to be published under the new measure if and to the extent the officer considers appropriate for the purpose of informing taxpayers about the risks associated with, or concerns the officer has about a scheme, or for the purpose of protecting the public revenue.

Information about HMRC’s data protection policy and procedures can be found in the HMRC Privacy Notice.

10. Application

Information may be published from 24 February 2022, when the Finance Act 2022 received Royal Assent.

The information that can be published includes information relating to matters that pre-date Royal Assent provided the information is published for the purpose of informing taxpayers of the risks associated with their present and potential future involvement as users of a scheme, or for the purpose of protecting the public revenue.

As set out throughout this guidance, information about tax avoidance schemes includes information about any person who is or has been or the officer suspects is or has been a promoter, a connected person, a member of a promotion structure in relation to a scheme, or any other person who has or has had or who the officer suspects has or has had any other role in relation to making the proposal or arrangements available for implementation.