Promoters of tax avoidance schemes (Finance Act 2014, Part 5)
Tax avoidance schemes aim to assist in the acquisition of tax advantages. These schemes are run by what are known as promoters. A promoter can be a bank, building society, securities house or anyone who provides tax services.
In summary, a promoter of a tax avoidance scheme will take part in one or all of the following:
- Be essentially responsible for the design of a tax scheme
- Making schemes available for others to implement into their own tax affairs
- Approaching potential users with an aim to promote the scheme and make it available to them
- Organise and/or manage the implementation of the scheme in individual cases
The scheme designer is not necessarily treated as a promoter. ‘Promotion’ here implies the provision of the scheme for implementation. To be exempt from the responsibilities of promoter, the designer must pass three tests:
- Benign test: the designer provides generally compliant advice in relation to tax legislation when talking about the scheme
- Non-advisor test: except when in regard to banks, the designer of the scheme does not offer direct tax advice
- Ignorance test – in this case, the designer must not be reasonably presumed to have sufficient knowledge for the scheme’s applications under the DOTAS regime to deem whether the scheme could be used for tax evasion
Both the user (client) need to make disclosure on the promoter’s behalf if the promoter is based outside the UK, has access to legal privilege or where there is no promoter involved (for in-house schemes).
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