Disclosure of Tax Avoidance Schemes

At 12.4.2, replace with:

“Where to send form AAG 4 and due dates”

Insert new 12.4.3:
“Expectation of obtaining a tax advantage”

Delete 12.8:
“Users of NI contribution schemes”

Add as a fifth bullet:

• “Commentary on revised rules, which take effect from 1 April 2009, on how scheme reference numbers and associated information is reported.”

Add to the fifth bullet (The National Insurance Contributions (Application of Part 7 of the Finance Act 2004) Regulations 2007):
“and SI 2009/612”

Replace with:

“As explained at paragraphs 12.2 and 12.3, if you are a party to a scheme, the promoter or his client may provide you with a scheme reference number. Since 1 November 2008 this should be provided to you on form AAG 6. In some cases you may receive the number direct from HMRC as a result of disclosing the scheme yourself (see paragraphs 3.7 to 3.9).

If you expect to obtain a tax advantage as a result of being a party to the scheme; or are an employer of an employee, by reason of whose employment a tax or NI contribution advantage is expected to arise to any person as a result of the scheme; you must:

• include the number on your tax return or form AAG 4 – see paragraph 12.4.1; and
• state the last day of the year of assessment, tax year, accounting period or earnings period (as the case may be) in which, or the date on which, you expect the advantage to be obtained – see paragraph 12.4.3.

If you are a partnership which expects a tax or NI contributions advantage to arise in respect of a partner’s share of partnership profits or gains, the information is to be entered on both your partnership return and the relevant individual, company, or trust & estate return (as the case may be) for the partner in question.

Warning:

You can incur penalties if you fail to notify prescribed information within time (see section 15).”

Replace with:

“The information (at paragraph 12.4) must be entered on the return that relates to the year of assessment, tax year, accounting period or earnings period (as the case may be) in which you first enter into a transaction forming part of the scheme, unless one of the following applies when you must use form AAG 4:

• you are an employer of an employee, by reason of whose employment a tax or NI contribution advantage is expected to arise;
• you expect to obtain a tax or NI contribution advantage but do not have a return on which you would otherwise be required to enter the information. (If you are a partnership which expects a tax or NI contributions advantage to arise in respect of a partner’s share of partnership profits or gains, and do not have either or both the partnership return and the return for the partner in question, form AAG 4 must be completed for each return that you do not have.);
• you are late submitting the return for the relevant period such that it will not be submitted to HMRC before the statutory filing date;
• you have submitted the return for the relevant period but have not included the information at paragraph 12.4 in it;
• you need to notify more scheme reference numbers than there are spaces on the return (you should use form AAG 4 to notify only those numbers that will not fit on the return); or
• the scheme gives rise to a claim to relief made separately from your return under section 261B of TCGA1992 (treating trade loss etc as CGT loss) or any of the various loss relief provisions within Part 4 of ITA2007.

You must continue to do this for every subsequent year or period until the advantage ceases to apply. For example, if losses created by a scheme are expected to be used in a future year, you should enter the information at paragraph 12.4 in the year you first enter into a transaction forming part of the scheme and each subsequent year, including those where the losses are not used, until the losses have been used up.

Where you use a scheme that involves an in-year claim not covered by the last bullet above, for example a coding adjustment, reduction in any payment on account or quarterly payment, there is no statutory requirement to disclose the scheme reference number as part of the claim. Although it will be helpful if you show the number on any such claims, you must nevertheless still include it in your return or on form AAG 4 as appropriate.”

Delete and insert new sub-paragraph:

“Other than for in-year claims, form AAG 4 must be sent to the Anti-Avoidance Group (Disclosure & Risk Team) within HMRC (the address can be found at paragraph 1.8) in sufficient time for it to be received by the appropriate date. That is, following the end of the year of assessment, tax year, accounting period or earnings period in question, it is received no later than 31st October if you are a partnership, or a partner in respect of whom the partnership expects the tax or NI contributions advantage to arise; 31st January if you are an individual, or trustee; or 12 months from the end of the accounting period if you are a corporate body; unless one of the following applies, when the due date is:

• 19th May where a PAYE tax advantage is expected to arise (note: the scheme reference number is reported by the employer rather than individual employees – see paragraph 12.7);
• 19th May where a NI contribution advantage is expected to arise; and
• 6th July where a NI contribution advantage is expected to arise, it only relates to Class 1A contributions and it does not give rise to a tax advantage.

For in-year claims, form AAG 4 must be sent to HMRC with the claim and not to the Anti-Avoidance Group (Disclosure & Risk Team).”

Insert new sub-paragraph:

“You are required to state the last day of the year of assessment, tax year, accounting period or earnings period (as the case may be) in which, or the date on which, you expect the advantage to be obtained. You must continue to do this for every subsequent year or period until the advantage ceases to apply.

In the majority of cases the date will be the same as the period in which you first enter into a transaction forming part of the scheme. However, this is not always the case. For example, where the implementation of a scheme spans the end of a period, with the advantage expected to arise in a subsequent period, you should quote the subsequent period in respect of which the advantage is expected to arise.

For schemes making use of losses, if you use the loss or part of the loss in the period for which a return is being, or would otherwise be, completed, you should quote the last day of that period. If you do not use any of the loss in that period you should quote the last day of the next period in respect of which you it expect it to be used.”

Add final sentence:

“You need only make one entry on your return or form AAG 4.“

Replace last bullet with:

• “where he is a party to the scheme, enter on his tax return or form AAG4 (as appropriate) the scheme reference number and the last day of the year of assessment, tax year, accounting period or earnings period (as the case may be) in which, or the date on which, he expects the advantage to be obtained (see paragraph 12.4).”