Naming tax avoidance promoters
As part of the approach to support taxpayers to steer clear, or move out, of tax avoidance HMRC plans to publish details of those involved in the supply of mass-marketed tax avoidance schemes and details of the schemes they are selling. This will enable taxpayers to spot avoidance schemes more easily and understand the risks of getting involved in them.
HMRC have set out the circumstances when they will publish details under the Promoters of Tax Avoidance Schemes (POTAS), Disclosure of Tax Avoidance Schemes (DOTAS) and the Enablers Penalty regimes.
For arrangements promoted after Royal Assent of Finance Act 2021 (10th June 2021)
Finance Act 2021 made changes to the POTAS, DOTAS and the Enablers Penalty regimes that allows HMRC to take action quickly against promoters. It will also enable publication of the promoter’s details earlier in the process than currently.
Where HMRC identifies a new avoidance scheme or a scheme that continued being sold after 10th June 2021, and suspects the scheme should have been disclosed under DOTAS, the promoter will receive a notice giving them 30 days to demonstrate the arrangement is not notifiable under DOTAS. If the promoter does not satisfactorily reply, then HMRC can issue a Scheme Reference Number (SRN) to the promoter. At that point HMRC can name the promoter and/or the supplier(s), after considering any representations.
For arrangements where HMRC are taking action under the pre- Finance Act 2021 legislation
Where HMRC has received a declaration under DOTAS, they can publish information about schemes to which it has issued an SRN. They intends to publish information in respect of SRNs issued under these provisions (s316C FA 2004) in future, subject to considering any representations.
HMRC is planning to start naming promoters under the pre-Finance Act 2021 DOTAS provisions, is in line with the commitment to tackle promoters much earlier and deter them from continuing to sell schemes, and to better support taxpayers by providing them with up-to-date information to help them steer clear of avoidance. It is also in line with the new provisions that have been introduced in FA 21.
HMRC will publish the following information:
- the name and address of the promoter
- the name of the scheme
- a brief description of the scheme and how the scheme purports to operate
- any judicial rulings relating to the scheme or promoter
- whether or not the scheme is eligible for an Accelerated Payment Notice (APN) and whether HMRC has published an indication that it may issue APNs to users of the scheme
- entities that are under common control that link the schemes and any information concerning the number of persons who help implement the scheme
Anybody who is being named under the DOTAS legislation will have the opportunity to make representations about whether this information should be published.
Support for clients
This information will be published on GOV.UK in the new year. This will include the legislative provisions under which any information is being published.
Agents are recommended to make clients aware of the information when it becomes available, to help identify tax avoidance schemes and those promoting them, so they don’t get caught out.
Tax avoidance – don’t get caught out update
HMRC have refreshed their ‘Tax avoidance – don’t get caught out’ campaign. This helps contractors who are self-employed or employed through an agency or umbrella company to understand their pay arrangements, so they do not get an unexpected tax bill.
Agents are encouraged to keep sharing the ‘Tax avoidance – don’t get caught out’ campaign page with clients to help them recognise and understand the financial risks of tax avoidance.
Some ‘umbrella companies’ try to break the tax rules. Contractors or agency workers who may be employed through an ‘umbrella company’ can read our guide what it’s like to work through an umbrella company to see if they are at risk of tax avoidance.
Contractors can check they’re not caught up in tax avoidance by understanding how they’re being paid and making sure they are paying the right amount of Income tax and National Insurance contributions. The new payslip guide helps explain what the payslip should look like and the new interactive risk checker helps contractors see if their current contract could involve tax avoidance.
Agents are asked that they signpost:
- personal stories of people who have been affected by getting caught up in tax avoidance
- how to spot the signs of tax avoidance quick guide
- how to report a tax avoidance scheme to HMRC if they are worried about becoming involved or want help to get out of a scheme
A ‘contractor’ is someone who provides services to clients that do not directly engage them. This may be through an ‘umbrella company’, an agency, a partnership, or their own company, such as a Personal Service Company. This applies to employed and self-employed individuals.
HMRC want to help clients understand their pay arrangements, so they do not end up with an unexpected tax bill.