Revenue publishes disclosure guidance and creates Avoidance Intelligence Unit

The Inland Revenue has published its latest guidance on the type of 'tax avoidance' schemes which need to be disclosed.

The new disclosure rules, which come into effect on August 1, 2004, will provide the Revenue with earlier information about what it sees as 'potential tax avoidance schemes', which, it claims will 'enable the Government to make a swifter and better-targeted response, and will deter the creation of contrived and artificial schemes whose main purpose is to avoid tax.

The Revenue said that the guidance, which was published on Friday afternoon (June 30), aims to provide a practical guide to make clear who is within the disclosure rules and the steps they must take to comply with them.

It claimed that it consulted with businesses and tax advisers to formulate the guidance and would continue to work with them to develop it in the light of practical experience of using and operating the rules.

Announcing the new guidance, Paymaster General, Dawn Primarolo said: "The disclosure rules are a vital part of the battle against tax avoidance and will help stop the small minority of individuals and businesses who abuse the tax system at the expense of those who pay their fair share. Today's guidelines have been developed in consultation with business and tax advisers and will make it easier for them to comply with the new rules."

Avoidance industry

The Revenue has created a new 'Avoidance Intelligence Unit', to monitor what it describes as the 'avoidance industry'. As part of that role, the AIU is responsible for handling and policing of the new disclosure rules.

Disclosure rules

The summary of the rules says that the rules require disclosure of transactions or arrangements which:

• are expected to contain a tax advantage
  
• as a main benefit and
  
• involve certain employment or financial products.

The person responsible for making the disclosure is normally the person who designed or marketed the scheme (known as 'the promoter') but in some circumstances can be the scheme user.

Disclosure must be made within five working days of the scheme being made available for implementation or when the transaction takes place. Only one disclosure per scheme is required.

The Revenue will issue a reference number for each disclosure scheme and promoters must provide this number to their clients. Taxpayers who use the scheme must provide that number on their tax returns.

The guidance is available: Revenue guidance on tax avoidance