Tax administration: new threshold condition for promoters of tax avoidance schemes
Published 9 December 2015
© Crown copyright 2015
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/tax-administration-new-threshold-condition-for-promoters-of-tax-avoidance-schemes/tax-administration-new-threshold-condition-for-promoters-of-tax-avoidance-schemes
Who is likely to be affected
Those who promote tax avoidance.
General description of the measure
Following a consultation that closed in October 2015, this measure will legislate to enable HM Revenue and Customs (HMRC) to consider issuing Conduct Notices to a broader range of promoters under the Promoters of Tax Avoidance Scheme (POTAS) regime.
Policy objective
This threshold condition is one of several measures (Serial Avoiders Special Regime, Penalties for the General Anti-Abuse Rule (GAAR)) being introduced that seek to clamp down on the appetite for and supply of avoidance schemes by increasing the deterrent effect of engaging in tax avoidance. The intention is to change the behaviours of promoters who repeatedly market schemes that HMRC defeat.
Background to the measure
As announced at March Budget 2015, and following a consultation in February 2015, the government announced that it would introduce a new threshold condition for POTAS so that those who promote tax avoidance schemes that HMRC repeatedly defeat will be brought within its scope. A further consultation in July 2015 on the details of the measure ended in October 2015.
Detailed proposal
Operative date
The measure will have effect from the date of Royal Assent to Finance Bill 2016.
Current law
Current legislation for POTAS can be found in Part 5 and Schedules 34 to 36 to Finance Act 2014 (as amended).
Proposed revisions
Legislation will be introduced in Finance Bill 2016 to provide a new threshold condition for the POTAS regime. The July 2015 consultation proposed the detail for a new threshold condition for promoters who have marketed multiple tax avoidance schemes that are regularly defeated.
Three such defeats over an eight-year period will trigger the threshold condition and bring the scheme promoter into consideration for a Conduct Notice. For this threshold condition, a defeat is defined as: litigation finally being in HMRC’s favour; the user of the scheme reaches agreement with HMRC about their case or makes no appeal against an assessment; a GAAR counteraction has been issued; or the user of the scheme corrects their return on receipt of a Follower Notice. Where there are multiple users of a defeated scheme, a scheme will be defeated if litigation is finally found in HMRC’s favour or 75% of the scheme users agree with HMRC that the scheme does not provide the asserted tax advantage.
Summary of impacts
Exchequer impact (£m)
| 2015 to 2016 | 2016 to 2017 | 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 |
|---|---|---|---|---|---|
| - | negligible | negligible | negligible | negligible | negligible |
This measure is expected to have a negligible impact on the Exchequer.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
The measure will impact on taxpayers who promote tax avoidance.
This measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
This measure will affect individuals who are likely to share protected characteristics with others of above average means. It is anticipated that equality groups represented in lower income groups are less likely to be affected.
Impact on business including civil society organisations
This measure will have no impact on businesses and civil society organisations who are undertaking normal commercial transactions; it will only impact on the businesses that are engaging in or promoting tax avoidance.
Operational impact (£m) (HMRC or other)
There will be no significant operational impact arising from this measure.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be monitored using information collected from the limited population of designated promoters and their users.
Further advice
If you have any questions about this change, please contact Clare Yiannakou on Telephone: 03000 561904 or email: clare.yiannakou@hmrc.gov.uk.