Track the Finance Bill 2020-21 here

[dammit chloe]

That's not how GAAR works and whilst I suspect that HMRC would dearly love to use it to deliver high penalties, they cannot at the moment.

I get the point you are making, but throwing around threats of huge penalties which have no application is as likely to cause anxiety and stress as act as a caution for those contemplating their situation.

In order for GAAR to apply, HMRC must take an example of the "offending" structure or claim to the GAAR Panel. That panel will measure the structure/claim against the "double reasonableness" test and (inevitably) produce an HMRC friendly report.

(As far as I can see the Panel is not required to publish reports on structures/claims that are seen as reasonable - only those that are not.)

The opinion is published. HMRC will approach those taxpayers it sees as having used the structure/claim, wave the GAAR report in their faces and ask them (by way of various counteraction notices) to reverse their claims.

If the the taxpayer has the temerity to say "no" and goes to a Tribunal, then a loss there which is final WILL carry a heavy penalty. (I confess I thought it was 50% but I have not had time to check).

If the taxpayer wins and the GAAR opinion is therefore incorrect, then clearly no penalty.

Hope this clarifies.

That panel, as you well know, is HMRC asking HMRC for permission. IIR I think the LC has penalties for non-payment built in.

[webberg]

That panel, as you well know, is HMRC asking HMRC for permission. IIR I think the LC has penalties for non-payment built in.

Do not confuse a surcharge for non or late payment with a penalty for making an incomplete return or other document.

Very different.

The first is for a failure to pay an amount that is due. ALL taxes have some form of surcharge for late payment and the LC is no different.

The second is to punish you for making an error, being careless, being negligent, deliberately hiding information or at its worst, fraud.

The GAAR Panel is what it is. It was clear from the very outset (denied of course) that the Panel would turn into a rubber stamp for HMRC and a means to make access to justice riskier and more expensive.

Mission creep was build into the process and is happening.

[DealorNoDeal]

That's not how GAAR works and whilst I suspect that HMRC would dearly love to use it to deliver high penalties, they cannot at the moment.

I get the point you are making, but throwing around threats of huge penalties which have no application is as likely to cause anxiety and stress as act as a caution for those contemplating their situation.

In order for GAAR to apply, HMRC must take an example of the "offending" structure or claim to the GAAR Panel. That panel will measure the structure/claim against the "double reasonableness" test and (inevitably) produce an HMRC friendly report.

(As far as I can see the Panel is not required to publish reports on structures/claims that are seen as reasonable - only those that are not.)

The opinion is published. HMRC will approach those taxpayers it sees as having used the structure/claim, wave the GAAR report in their faces and ask them (by way of various counteraction notices) to reverse their claims.

If the the taxpayer has the temerity to say "no" and goes to a Tribunal, then a loss there which is final WILL carry a heavy penalty. (I confess I thought it was 50% but I have not had time to check).

If the taxpayer wins and the GAAR opinion is therefore incorrect, then clearly no penalty.

Hope this clarifies.

Maybe you don't consider there's much risk of what you're advising your clients to do being referred to the GAAR panel.

But, if anyone uses an arrangement (scheme) to avoid the LC (which in itself is primary anti-avoidance legislation) then that would seem to be a prime candidate for the GAAR. I'm sure HMRC will treat this as a flagrant flouting of the law.

[webberg]

Maybe you don't consider there's much risk of what you're advising your clients to do being referred to the GAAR panel.

But, if anyone uses an arrangement (scheme) to avoid the LC (which in itself is primary anti-avoidance legislation) then that would seem to be a prime candidate for the GAAR. I'm sure HMRC will treat this as a flagrant flouting of the law.

I think I've not said anything about whether what we are advising clients to do will be referred to the GAAR Panel or not?

The LC is not "primary anti avoidance legislation". It is a "new tax on a new source". It is a tax designed to deter individuals from entering avoidance schemes. It is not in itself anti avoidance law.

A GAAR Panel hears submissions about "abuse" - not avoidance. (No, I don't know where one ends and the other begins.) Given however that the LC was a tax that arose on one day - 5th April 2019 - and that day is long gone, it's really quite difficult to see what could happen in terms of structures now to a) prevent the LC arising and b) get the GAAR Panel excited?

[DealorNoDeal]

The LC is not "primary anti avoidance legislation". It is a "new tax on a new source". It is a tax designed to deter individuals from entering avoidance schemes. It is not in itself anti avoidance law.

That's splitting hairs. Technically it may be a new tax but it's intended to tax those who, in HMRC's view, circumvented the 2010 DR anti-avoidance legislation.

I think I can confidently predict that HMRC will treat any attempt to avoid the LC as abuse.

A GAAR Panel hears submissions about "abuse" - not avoidance. (No, I don't know where one ends and the other begins.) Given however that the LC was a tax that arose on one day - 5th April 2019 - and that day is long gone, it's really quite difficult to see what could happen in terms of structures now to a) prevent the LC arising and b) get the GAAR Panel excited?

Oh, I think they may take a very keen interest in anything dreamt up by Mr Venables.

[webberg]

Whatever.

I only wish that I could predict HMRC as confidently as you.

[DealorNoDeal]

Whatever.

I only wish that I could predict HMRC as confidently as you.

The consequences of using an LC avoidance arrangement don't require much predictive power.

[webberg]

The consequences of using an LC avoidance arrangement don't require much predictive power.

Especially as an "LC avoidance arrangement" would have had to have been completed prior to 5th April 2019.

[DealorNoDeal]

Especially as an "LC avoidance arrangement" would have had to have been completed prior to 5th April 2019.

Well, on the face of it, it sounds like Mr Venables has come up with something that can be done NOW.

I don't know whether it's strictly speaking an avoidance arrangement but it involves a declaration on the 2018/19 return which produces £0 liability.

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I get the feeling you're quite defensive about all this. I hope you're not leading your members over a cliff.

[luxCon]

Anybody looking to make a disclosure in their 2018/19 tax return that is anything less than committing themselves to a tax charge (loan charge), needs to understand:

1. HMRC will consider the disclosure made as inadequate
2. Chances are that they will open an enquiry in 2018/19
3. HMRC will interpret "reasonable" as being "full disclosure of every nuance and value in a scheme"
4. The gap between "reasonable" as intended in the legislation and "reasonable" as interpreted by HMRC will inevitably end in a Tribunal or Court
5. That is unlikely to happen before the end of next year

Further, any disclosure that is less than a full confession and acceptance of liability carries a risk.

Question to clarify: Is the disclosure for the loan amounts drawn after 9 December 2010, and so if entered the scheme pre December 2010, I only disclose the amounts that were paid after this date, not those before it from the same scheme?