Today the Exchequer Secretary, David Gauke MP, has announced a consultation, entitled "Lifting the Lid on Tax Avoidance Schemes", on extending HMRC's powers to tackle abusive and artificial avoidance schemes. The new proposals include: possible wider and more detailed publication of the details of avoidance schemes and their promoters and a tightening of the regime for the disclosure of tax avoidance schemes (DOTAS) including new hallmarks for disguised remuneration schemes and schemes involving financial products to reduce corporation tax liabilities.
The revision of the DOTAS regime has been discussed for some time. At the time of the Budget, the Government promised a consultation on the extension of DOTAS hallmarks. The Government has taken the opportunity to announce some additional measures to demonstrate its commitment to tackling aggressive tax avoidance schemes and their promoters. It also allowed the Exchequer Secretary to indulge in some anti-scheme promoter rhetoric. For the most part, mainstream tax advisers will welcome the attack on mass-marketed schemes. But there will always be some sense of unease. It all turns on the definitions. The Exchequer Secretary acknowledges "For the taxpayer, there may be times when it is not clear if an arrangement is legitimate tax planning or contrived avoidance." He continues, "It is up to us as Government to make clear the features of dodgy schemes". But he knows that it is a very difficult thing to achieve. The current proposal for a General Anti-Abuse Rule (GAAR) fails to do so. It merely asks whether an arrangement is "reasonable" a concept which itself is open to widely differing interpretation.
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