In the Budget, the Government announced a significant package of measures to combat tax avoidance through the revision of its current disclosure of tax avoidance scheme legislation.
New measures include a requirement for promoters to provide lists of clients that they have provided the schemes to and increased penalties for those who fail to comply with the disclosure rules.
The Government is extending the “hallmarks” for which avoidance schemes require disclosure to include schemes that involve employee remuneration and those designed to convert inc-ome into capital. It is also bringing forward the timeframe within which disclosure of a scheme is required.
Trust and estate practitioner Paul Willans says that what may appear to be relatively straightforward planning could now fall under the new rules due to the extension in hallmarks.
Willans says: “They are trying to obtain notice of these sch-emes at the earliest opportunity so that they can put in place spoiling regulations.
“Whereas in the past, the IFA could rely on the promoter to notify HMRC, they now have an obligation to advise them of the promoters who are either coming up with planning ideas or the products. This is a new requirement and one which could be quite significant and Draconian.”
Syndaxi Chartered Financial Planners managing director Robert Reid says the new measures will be very difficult to put into practice. He says: “It could be a data protection nightmare for promoters to provide a list of clients.
“You could be promoting schemes to lots of people who do not take them up. Is it right for you to pass out details of those people? It is a bit like holding DNA for people who did not commit a criminal act.”