Tougher disclosure regime

Cliona Kirby, Tax Partner, CMS

A consultation document has been released containing draft legislation amending the regime requiring tax avoidance schemes to be disclosed to HMRC.  These proposed measures include revising and extending the hallmarks (which identify the types of schemes that must be disclosed), bringing forward the trigger point for disclosure of marketed schemes, imposing additional information requirements on promoters and on intermediaries (who introduce scheme promoters to clients), as well as enhanced penalties.  

New hallmarks are proposed for employment income schemes, income into capital schemes and offshoring schemes.  These hallmarks no doubt target, in particular, perceived avoidance of the higher rates of income tax as well as the use of tax havens.

The consultation will run from today until 9 February 2010 and HMRC seek views on whether the proposed measures would be effective and proportionate.   This shows the Government’s intention to continue to use the disclosure regime to identify and quickly outlaw perceived avoidance structures.