Background Note
13.Measures requiring the disclosure of tax avoidance schemes falling within descriptions prescribed in regulations were introduced in FA 2004. Initially the prescribed descriptions were limited in scope to income tax, corporation tax (CT) and capital gains tax (CGT), and to schemes which concerned employment or certain financial products. Stamp duty land tax, in relation to commercial property, was added with effect from 1 August 2005, and the regime was extended to the whole of income tax, CT and CGT from 1 August 2006.
14.A separate disclosure regime exists for National Insurance Contributions. Regulations mirroring, with modifications, the tax regime as it applies to income tax came into effect on 1 May 2007.
15.A separate disclosure regime also exists for VAT. That is outside the scope of this measure.
16.The purpose of disclosure is to provide HMRC with early information about tax avoidance schemes, informing risk assessment and selection of schemes for either closure by legislation or operational challenge.
17.Disclosure requires certain persons (normally promoters) to provide information about tax avoidance schemes sufficient for an officer of HMRC to understand how they are intended to work.
18.The scheme reference number (SRN) system is intended to identify the users of notifiable schemes. HMRC allocate a SRN to schemes when they are disclosed, and notify it to the person who makes the disclosure. This is normally a promoter of the scheme. Promoters are required to pass the SRN to clients who implement the scheme, who must report it back to HMRC, normally on a tax return affected by using the scheme.
19.The amendments are designed to advance the time at which information about schemes and users of schemes is to be provided, to enable HMRC to identify the promoter of schemes involving intermediary introducers, and to enhance the effectiveness of penalties as a deterrent against non-compliance.
20.HMRC issued a consultation document Disclosure of Tax Avoidance Schemes (DOTAS) containing draft Finance Bill legislation on 9 December 2009. This section and Schedule revise the draft legislation to reflect comments made by respondents and the outcome of discussions between HMRC and promoters and representative bodies.
