The disclosure regime was introduced with effect from 1 August 2004 and was limited in scope to tax arrangements concerning employment or certain financial products. This was widened with effect from 1 August 2006 to the whole of Income Tax, Corporation Tax and Capital Gains Tax.
A tax arrangement must be disclosed when:
In most situations where a disclosure is required it must be made by the scheme 'promoter' within five days of one of three trigger events, the first of which coincides with actively marketing the scheme. However, the scheme user may need to make the disclosure where:
The hallmarks are:
Upon disclosure, HMRC issues the promoter with an eight-digit scheme reference number for the disclosed scheme. By law the promoter must provide this number to each client that uses the scheme, who in turn must include the number on his or her return or form AAG4. A person who designs and implements their own scheme must disclose it within 30 days of it being implemented.
The disclosure regime was extended from 1 May 2007 to include arrangements relating to National Insurance contributions. The rules broadly mirror those for Income Tax, Corporation Tax and Capital Gains Tax, with appropriate modifications.
Disclosures relating to tax and National Insurance contributions arrangements can be made on the same form but the respective advantages must be explained.
The disclosure regime was extended in 2005 to include tax arrangements relating to Stamp Duty Land Tax (SDLT) where the subject matter of the arrangements is non-residential property with a market value of at least £5 million. It was further extended in 2010 to include arrangements where the subject matter is residential property with a market value of at least £1 million and mixed use property where the subject matter of the arrangements contains non-residential property with a market value of at least £5 million and/or residential property with a market value of at least £1 million. From 1 November 2012 the descriptions of SDLT arrangements required to be disclosed were extended so that they now cover schemes intended to be used for non-residential and/or residential property of any value, subject to certain exceptions.
The scheme reference number system has applied to SDLT since 1 April 2010.
The main differences compared to the disclosure regime for Income Tax, Corporation Tax and Capital Gains Tax are:
The regime was extended with effect from 6 April 2011 to include Inheritance Tax arrangements where the aim of those arrangements is to seek to avoid or reduce the Inheritance Tax entry charge when transferring property into trust.
In order for an Inheritance Tax scheme to be disclosable:
Disclosure is only required for schemes that are new or innovative. Schemes which are the same or substantially the same as arrangements made available before 6 April 2011 are exempted from disclosure.
A disclosure regime was also introduced on 1 August 2004 in relation to arrangements that are intended to give any person a VAT advantage. The main obligation for disclosure rests with those taxable persons who are party to the scheme. However, disclosure is limited to two broad categories:
The listed schemes are certain arrangements that involve:
The hallmarks are:
The obligation to disclose is triggered by:
Disclosure is required to be made within 30 days of (as applicable) the due date of the affected VAT Return; making the claim; or the due date of the VAT Return covering the period in which less non-deductible VAT was incurred.
However, disclosure of listed schemes is not required where the total turnover (including exempt income) for the business plus any associated companies is less than £600,000 per annum. Similarly, disclosure of hallmarked schemes is not required where the total turnover (including exempt income) for the business plus any associated companies is less than £10 million per annum.
In addition, for hallmarked schemes, disclosure is not required where a third party (such as the promoter of the scheme) has registered the scheme with Anti-Avoidance Group and provided the reference number, HMRC allocated to it, to the person who would otherwise be liable to make a disclosure.