Less tax legislation needed as disclosure regime bites

THE GOVERNMENT is enacting far less legislation based on its Disclosure of Tax Avoidance Schemes (DOTAS) facility, figures have shown.

In a parliamentary answer this week , Exchequer secretary to the Treasury David Gauke revealed that 17 pieces of legislation had been enacted from June 2010 to May 2011 based on tax avoidance schemes disclosed through the DOTAS facility. This compares with 18 in 2009/10, 40 in 2008/09 and 101 in 2007/08.

Previous figures have shown that 118 schemes were submitted in 2010/11, 177 in 2009/10 and 130 in 2008/09. Gauke said that 78 promoters had disclosed schemes since May 2010.

Gauke added: “Legislative changes are, of course, just one of the ways in which HMRC may respond to disclosures.

“All disclosures received by HM Revenue & Customs are subject to close examination. It is the returns of scheme users that are potentially subject to enquiry rather than the scheme disclosure itself and each disclosed scheme may have multiple users. Many users of the schemes are subject to further investigation by HMRC’s teams of tax specialists,” he said.

Ray McCann, tax director at McGrigors, said that the rhetoric around tax avoidance had got stronger in the past couple of years, yet these figures show that tax avoidance is less prevalent than in previous years.

Derek Allen, head of tax at ICAS, said there has been success in tackling schemes using Spotlights, the the HMRC initiative to name what it believes to be unworkable tax avoidance schemes.

“I suspect that it takes a brave individual to proceed with a scheme if the HMRC have featured it in a spotlight,” he said. “Further, HMRC have been successful in taking appeals to the Courts. Drummond in 2007 showed that second hand insurance policy schemes (SHIPS) did not work. Similarly the relevant discounted security scheme (RDS) failed before the courts.”

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