Avoidance rules 'will be vague'

Speaking last week at a conference staged by Accountancy Age’s
sister publication Financial Director, Chris Tailby spoke of his
intention to publish a set of ‘avoidance’ hallmarks that would provide an
indication of whether tax avoidance was taking place.

But despite the intention of providing clarification for corporate and
personal taxpayers, Tailby said HMRC would hold back. ‘It’s better to have a
grey area where there’s a bit of uncertainty because it does work for our
benefit,’ he said.

HMRC’s hallmarks are intended as points of reference for personal and
corporate taxpayers to allow them to judge whether the schemes or transactions
they are involved in can be classed as tax avoidance.

Recognition of one of the hallmarks could lead to the awarding of a ‘badge’
by HMRC. ‘If you get one of those, we’re probably going to ask more questions,’
said Tailby.

During his appearance at the FD summit Tailby listed three critical
indicators: whether a transaction appears to be motivated by tax advantages;
whether there is a mismatch between the tax and the economic outcomes; and
whether the tax treatment involves some artificiality in interpreting
legislation.

Tailby gave no indication of when the ‘hallmarks’ would be published by HMRC.

The plan is part of moves to try and isolate those involved in complicated
avoidance schemes, with a view to penalising taxpayers and advisers who do not
pay the ‘right tax at the right time’.