HMRC has launched its collection of guidance on Tax Avoidance: enablers.
The documents give details on who classes as an enabler of tax avoidance, the penalties and what to do if you may be liable to a penalty for enabling tax avoidance.
Tax arrangements are deemed “abusive” if they are entered into or carried out and cannot be regarded as a reasonable course of action in relation to the relevant tax provisions.
Examples of abusive tax arrangements outlined in the Finance Act (No 2) 2017 are:
• The arrangements result in an amount of income, profits or gains for tax purposes that is significantly less than the amount for economic purposes;
• The arrangements result in deductions or losses of an amount for tax purposes that is significantly greater than the amount for economic purposes;
• The arrangements result in a claim for the repayment or crediting of tax (including foreign tax) that has not been, and is unlikely to be, paid.
HMRC’s guidance relates specifically to the treatment of those who enable these abusive schemes to operate. An enabler is any person who is responsible, to any extent, for the design, marketing or otherwise facilitating another person to enter into abusive tax arrangements.
The General Anti-Abuse Rule (GAAR) Advisory Panel provides an important safeguard for the purpose of applying this legislation. No penalty can be charged unless HMRC has obtained an opinion of the GAAR Advisory Panel in relation to the tax arrangements or equivalent arrangements.