Official Statistics

Tax avoidance disclosure statistics - explanatory guidance

Published 31 October 2006

On 1 August 2004 statutory provisions came into effect requiring arrangements that enable a person to obtain a tax advantage (‘schemes’) to be disclosed to HM Revenue and Customs (HMRC).

The precise rules differ between taxes and result in disclosures that are fundamentally different in nature. In addition, the scope of the rules have widened since they were first introduced. This guidance provides context to the accompanying statistics by explaining the main differences that exist and the changes that have taken place.

1. Income Tax, Corporation Tax, Capital Gains Tax (the main regime) and National Insurance contributions

The obligation to disclose rests principally with promoters of schemes. However, the obligation moves to the scheme user when:

• they devise their own scheme
• the person promoting the scheme is based outside the UK
• the promoter is unable to provide relevant information about the scheme to HMRC because they are bound by legal privilege

The published statistics show the total number of individual schemes that have been reported. Where scheme users, rather than promoters, are required to make the disclosure it is possible that HMRC would receive multiple disclosures of the same scheme. To ensure the comparability of the statistics, the scheme will only be counted as a single disclosure in these circumstances.

When introduced, the disclosure regime was limited in scope to schemes concerning employment or certain financial products (described as ‘employment’ and ‘financial’ in the statistics tables). This was widened with effect from 1 August 2006 to the whole of income tax, corporation tax and capital gains tax. But a series of ‘hallmarks’ limit the need to disclose all tax efficient schemes (described as ‘Main Regime Hallmark’ in the statistics tables) - the intention of the hallmarks being to limit disclosure to only those schemes that are new, innovative, or of specific concern.

With effect from 1 May 2007 arrangements that give a National Insurance Contribution (NIC) advantage also became disclosable providing they are within a hallmark. The number of disclosures that include an NIC advantage are shown within these statistics.

2. Stamp Duty Land Tax (SDLT)

For SDLT the statistics show arrangements disclosed since the disclosure regime was extended in 2005 to include tax arrangements where the subject matter is non-residential property with a market value of at least £5 million.

From 1 April 2010 the regime was further extended to include SDLT arrangements where the subject matter of the arrangements is residential property. Disclosure is now required for schemes where:

• there is wholly non-residential property with a market value of at least £5 million
• there is wholly residential property with a market value of at least £1m
• for mixed use schemes where the value of the residential component is at least £1 million or the non-residential component at least £5 million - in 2010 schemes which HMRC already knew about because they had been disclosed by any person were exempted from disclosure

3. Inheritance Tax

For Inheritance Tax, the statistics show the number of disclosures received since the disclosure regime was extended in April 2011 to include arrangements seeking to avoid or reduce the Inheritance Tax entry charge when transferring property into trust. Disclosure is only required for schemes that are new or innovative. Schemes which are the same, or substantially the same, as arrangements made available before 6 April 2011 are exempted from disclosure.

4. Annual Tax on Enveloped Dwellings (ATED)

For the ATED, the statistics show the number of disclosures received since the disclosure regime was extended with effect from 4 November 2013 to include arrangements seeking to avoid or reduce the ATED charge. The statistics include disclosures made under the transitional rule which requires schemes devised and marketed between 31 January 2013 and 3 November 2013 to be disclosed. Schemes are exempted from disclosure where they meet the conditions set out in the list of excluded arrangements.

5. Value-Added Tax (VAT)

The disclosure regime for VAT was introduced on 1 August 2004. However, disclosure is limited to two broad categories:

• listed schemes
• hallmarked schemes

5.1 Listed schemes

Listed schemes (described as ‘listed’ in the statistics tables) are specific generic schemes that are designated in the relevant legislation. Taxable persons who are party to a listed scheme are required to notify HMRC unless their annual turnover (or, if part of a group, the turnover of the group to which they belong) is below £600,000.

5.2 Hallmarked schemes

Hallmarked schemes (described as ‘hallmark’ in the statistics tables) are schemes that include or are associated with a ‘hallmark’ of avoidance designated in the relevant legislation. Disclosure is not required if:

• a third party, such as the scheme promoter, has voluntarily disclosed it to HMRC and provided the reference number allocated to it to the person who would otherwise be liable to make a disclosure
• the turnover threshold applies - ie the person (or the group to which they belong) has an annual turnover below £10 million