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HMRC internal manual

Employment Related Securities Manual



Legislation introducing disclosure of tax avoidance schemes was introduced in FA 2004. The main legislation is at FA04/S309 - 316 and is supported (as at February 2006) by 5 sets of regulations:

  1. The Tax Avoidance Schemes (Information) Regulations 2004 SI 2004/1864 which set out the information to be disclosed.
  2. The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2004 SI 2004/1863 which prescribe the characteristics where there is a disclosure requirement and also lay down tests which disapply disclosure.
  3. The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2004 SI 2004/2429, which amend the above Regulations by introducing tests for employment products.
  4. The Tax Avoidance Schemes (Promoters and Prescribed Circumstances) Regulations 2004 SI 2004/1865 which set out the circumstances when persons are not to be treated as promoters.

The Tax Avoidance Schemes (Promoters, Prescribed Circumstances and Information)(Amendment) Regulations 2004 SI 2004/ 2613 which amend the above Regulations for promoters and legal and professional privilege.

The legislation is aimed at both UK and off shore promoters of such schemes requiring them to provide to HMRC details of notifiable proposals or arrangements within 5 days of making them available to a prospective client. The rules also provide for users of schemes to notify details within 5 days of the first transaction where the promoter is offshore and has not made a disclosure or the promoter is a lawyer who has invoked legal and professional privilege. Where a scheme is devised in house (usually by financial institutions) then notifiable arrangements are to be disclosed to HMRC on the filing date of the relevant return.

The administration of the disclosure rules is the responsibility of the Anti Avoidance Group (Intelligence) - Contact details 020 7438 6073. Internet Guidance Notes on the rules can be found at

Having received a disclosure the AAG will issue a random 8 digit Scheme Reference Number(SRN) to the promoter who is then obliged to provide this number to any client who implements the scheme. There are penalties for failing to disclose notifiable proposals or arrangements and for failing to provide a client with the SRN. If you suspect you are dealing with a scheme that should have been disclosed you should contact the AAG for advice.

Clients who have received a SRN will then be obliged to report this on their tax return or on form AIU4 depending on the type of tax advantage sought. Again there are penalties if the SRN is not reported or if there is a late notification. AAG should be notified of such circumstances.