Posted by James Pearson on 09 Jan 2013

Artificial Tax Schemes

HMRC has made no secret of its intention to attack contrived tax avoidance schemes and recently published draft legislation highlights the speed with which HMRC now intends to attack these arrangements.

New Tax Avoidance Scheme

Within days of being notified of the existence of a new tax avoidance scheme HMRC published draft legislation to prevent the scheme’s operation, to be introduced in the 2013 Finance Bill but with effect from 21 December. They have also announced their intention to challenge any attempts that have been made to use the scheme prior to 21 December 2012 under existing legislation.

This highlights two aspects of tax avoidance. Firstly, HMRC were notified of this scheme under the Disclosure of Tax Avoidance Scheme rules. This is legislation that makes it a legal requirement for promoters of schemes that have certain characteristics to inform HMRC of the scheme’s existence. This enables HMRC to provide a reference number for the scheme which must be quoted on the tax return of anyone making use of that scheme. Promoters have been known to misrepresent the existence of this reference number as some form of HMRC approval which it certainly is not, it simply shows that HMRC has been made aware of the scheme and how it operates.

Secondly, HMRC are likely to challenge schemes that are uncommercial and contrived, both under existing law and through the introduction of new legislation. For tax planning to be successful it should be closely allied to your wider financial situation and requirements. Tax planning that involves steps being taken for artificial reasons, or solely with the intention of avoiding tax is vulnerable to HMRC challenge.

Tax Innovations Tax Schemes

At Tax Innovations we do not sell “off the shelf” tax schemes; we look at your current position, your future intentions and your financial needs to arrive at tax solutions with a sound commercial basis with the aim of ensuring a trouble free strategy that does not provoke a draconian enquiry from HMRC

Contact us

If you would like any advice regarding the above article or would simply like to discuss other ways in which we could help you or your business, please contact us on 01962 856 990 or


See also…

The Media and Tax Avoidance

Independent Study on General Anti-Avoidance Rule (GAAR) Published

Tax Avoidance Schemes: Too Good To Be True?

Tax Avoidance Schemes: Accelerated Payment of Disputed Tax

Tax Avoidance versus Tax Evasion

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