Behavioural difficulties

Our experience with disclosure has shown that, in general, major firms have
introduced a culture of compliance with the regime within their organisations
and staff.

But there are some tax boutiques, at the ‘spivy’ end of the market, that
specialise in promoting the kind of tax avoidance schemes others would not
touch. Indeed, whereas reputable and responsible firms have set their faces
against avoidance schemes involving charities, some boutiques are less
discerning. Their staff may find the risk management systems of reputable firms
too constraining for their taste.

They may be firms of lawyers who will try to market their products on the
back of claims (incorrect) that there is no need to disclose the scheme to HM
Revenue & Customs.

Sometimes their aim is to not only avoid tax but also to avoid the operation
of the disclosure regime rules. We have come across boutiques which do share a
culture of compliance together with instances of inadequate or late disclosures,
disclosures made on the wrong forms or to the wrong office, or even failures to
disclose what appear to be notifiable schemes.

Such failures are not always innocent error with the evidence pointing to a
conscious attempt to delay disclosure purely in order to prolong the life of the

In some cases our initial attempts to clarify the situation have been
rebuffed because the boutique’s legal advisers have counselled that disclosure
is unnecessary whilst refusing to provide either the opinion or the associated

An additional risk presented by boutiques is the frequently poor technical
quality of the work we see. From time to time our disclosure handling team finds
examples of avoidance schemes which simply do not work because the scheme is

That is bad news for the client because he or she may have paid fees for a
product which is not fit for purpose. And the absence of risk and quality
controls mean that clients of some boutiques take on a scale of risk they simply
do not understand.

Finally, your comment section of 11 January suggests that the measures to
reinforce the disclosure regime is an attack on business. It is not. It is
action designed to change the behaviours of a few boutiques and raise the
compliance bar.

Dave Hartnett, director general of HMRC

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