Tax avoidance schemes:
The Chartered Institute of Taxation (CIOT) is disappointed that the Government has announced in today’s Budget that it has decided to go ahead with controversial proposals to demand that users of existing Disclosure of Tax Avoidance Schemes (DOTAS) pay the tax in dispute up front without a right of appeal. The Institute understands and sympathises with the Government’s need to strike down mass-marketed tax avoidance schemes, but allowing HMRC to act as prosecutor, judge and jury based on the DOTAS regime, which was not meant to be used for these purposes, is going too far.
On the other hand, the equivalent rules applying to follower cases where an example case has lost before the courts, seem acceptable given the backlog of unsettled avoidance cases.
CIOT President Stephen Coleclough commented:
”These measures introduce a significant retrospective change to the DOTAS regime without providing adequate taxpayer safeguards in the collection of the disputed tax in advance. Extending these measures beyond follower cases to DOTAS schemes raises serious questions about the breadth and proportionality of these proposals.
“The fact that there has been disclosure under DOTAS indicates an intention to be open and transparent with HMRC. It is unreasonable to now introduce a retrospective change of law leading to an accelerated payment of tax.
“It is now incumbent on HMRC to publish a list of DOTAS schemes to which this legislation will apply as quickly as possible”.
Notes to editors:
1. Disclosure of Tax Avoidance Schemes (DOTAS) was first introduced by Finance Act 2004. The rules place obligations on promoters of various tax arrangements to disclose details of the arrangements to HMRC. The purpose of the legislation is to identify the schemes seeking to avoid tax and those who use such schemes. It enables HMRC to react quickly to avoidance schemes by introducing countering legislation and targeting resources into investigating users’ tax returns, and where necessary pursuing the matter through the Courts.
2. The Chartered Institute of Taxation
The Chartered Institute of Taxation (CIOT) is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.
The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.
The CIOT’s 17,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.
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