The guidance was reissued on 20 February 2014 and applies from 4 November 2013. It has been updated to reflect legislative changes, in particular in relation to the employment and confidentiality hallmarks and the extension of DOTAS to the new annual tax on enveloped dwellings (ATED).
The guidance was reissued on 20 February 2014 and applies from 4 November 2013. It has been updated to reflect legislative changes, in particular in relation to the employment and confidentiality hallmarks and the extension of DOTAS to the new annual tax on enveloped dwellings (ATED).
Employment income hallmark: The new employment income hallmark applies for the purposes of income tax and NIC, to promoters and those designing notifiable arrangements for use ‘in-house’. Unlike other hallmarks for ‘in-house’ notifiable arrangements, this hallmark applies to all sizes of business.
The guidance confirms that if arrangements have the benefit of reducing or eliminating employment income, but this benefit is peripheral and the main benefit (or main benefits) of the arrangements do not include either a tax advantage or a NIC advantage, the arrangements will not satisfy the ‘main benefit’ condition.
In relation to the ‘contrived or abnormal step’ condition (which is the same as for the GAAR), the guidance recognises that the legislation on employment income is complex, and that taxpayers may therefore enter into complex arrangements in order to comply with the provisions. In that context, the detail and complexity of particular arrangements will not, in themselves, mean that such arrangements are regarded as contrived or abnormal.
Confidentiality hallmark: A new test requires the person with a prima facie duty to disclose the arrangements to ask themselves the hypothetical question: ‘Might it reasonably be expected that any promoter of the arrangements would wish the way in which any element of those arrangements (including the way in which they are structured) gives rise to and secures, or might secure, the expected tax advantage to be kept confidential from HMRC?’
The guidance explains that the test applies to any scheme that HMRC would be likely to challenge (legislatively or operationally) if it knew about it and confirms that there does not need to be an explicit confidentiality agreement between the promoter and user about the arrangement before the test is met.
Users of in-house schemes: The new test requires the user of the in-house scheme to consider, hypothetically, whether or not a promoter would disclose the arrangements in question.
The new obligations do not apply where the person intended to obtain the tax advantage is a small or medium enterprise.
ATED: The guidance includes a useful flowchart to assist taxpayers in determining whether a transaction is notifiable as a result of the extension of DOTAS to ATED. It notes the confidentiality and premium fee hallmarks do not apply to ATED.
The guidance was reissued on 20 February 2014 and applies from 4 November 2013. It has been updated to reflect legislative changes, in particular in relation to the employment and confidentiality hallmarks and the extension of DOTAS to the new annual tax on enveloped dwellings (ATED).
The guidance was reissued on 20 February 2014 and applies from 4 November 2013. It has been updated to reflect legislative changes, in particular in relation to the employment and confidentiality hallmarks and the extension of DOTAS to the new annual tax on enveloped dwellings (ATED).
Employment income hallmark: The new employment income hallmark applies for the purposes of income tax and NIC, to promoters and those designing notifiable arrangements for use ‘in-house’. Unlike other hallmarks for ‘in-house’ notifiable arrangements, this hallmark applies to all sizes of business.
The guidance confirms that if arrangements have the benefit of reducing or eliminating employment income, but this benefit is peripheral and the main benefit (or main benefits) of the arrangements do not include either a tax advantage or a NIC advantage, the arrangements will not satisfy the ‘main benefit’ condition.
In relation to the ‘contrived or abnormal step’ condition (which is the same as for the GAAR), the guidance recognises that the legislation on employment income is complex, and that taxpayers may therefore enter into complex arrangements in order to comply with the provisions. In that context, the detail and complexity of particular arrangements will not, in themselves, mean that such arrangements are regarded as contrived or abnormal.
Confidentiality hallmark: A new test requires the person with a prima facie duty to disclose the arrangements to ask themselves the hypothetical question: ‘Might it reasonably be expected that any promoter of the arrangements would wish the way in which any element of those arrangements (including the way in which they are structured) gives rise to and secures, or might secure, the expected tax advantage to be kept confidential from HMRC?’
The guidance explains that the test applies to any scheme that HMRC would be likely to challenge (legislatively or operationally) if it knew about it and confirms that there does not need to be an explicit confidentiality agreement between the promoter and user about the arrangement before the test is met.
Users of in-house schemes: The new test requires the user of the in-house scheme to consider, hypothetically, whether or not a promoter would disclose the arrangements in question.
The new obligations do not apply where the person intended to obtain the tax advantage is a small or medium enterprise.
ATED: The guidance includes a useful flowchart to assist taxpayers in determining whether a transaction is notifiable as a result of the extension of DOTAS to ATED. It notes the confidentiality and premium fee hallmarks do not apply to ATED.
