Spotlights has been updated to include schemes recently disclosed under the DOTAS rules and make it clear that such disclosed schemes are not HMRC approved. The intention of 'Spotlights' is to provide an understanding of what HMRC are likely to see as tax avoidance by identifying the types of arrangements or scheme which HMRC are likely to challenge.
HMRC seek to achieve this by providing details of how they distinguish between artificial avoidance schemes and what they refer to as ‘ordinary sensible tax planning’ and also by describing specific schemes. Where HMRC think there may be particular drawbacks to a scheme that might not otherwise be obvious, they will describe these.
In Spotlights HMRC:
- Provide some advice on tax planning to be wary of, listing some indicators that HMRC see as suggesting that a scheme may involve tax avoidance and which we are likely to investigate.
- Identify specific schemes which, in HMRC's view, are not likely to deliver the tax savings advertised. Where HMRC see such schemes being used, subject to the particular facts, they intend to make a challenge to these and will seek to ensure full payment of the right tax with the right due date.
Recent additions to Spotlights include Spotlight 9 “Gift aid with no real gift” which details a scheme which seeks to exploit the rules which enable a charity to claim a repayment of tax at the basic rate on a qualifying donation by an individual. The individual may claim relief for the donation on the difference between the higher and basic rates of tax.
Spotlight 10 deals with Stamp Duty Land Tax (SDLT) Avoidance where commercial and residential property sales are being carried out in ways intended to avoid SDLT by reducing the purchase price below the SDLT band or threshold. In some cases an intermediate sale, often on the same day, is introduced into the arrangements with the sole intention of removing the true purchase price from tax.
These arrangements seek to exploit 'sub-sale relief'. This relief is intended to ensure that, where a property transaction happens in stages, SDLT is paid once on the full amount paid for the property by the person who ultimately acquires it and no double charge arises. HMRC’s view is that these contrived transactions, including those involving sub-sales, produce a charge to SDLT on the full amount paid for the property. In some cases there is doubt about whether transactions actually meet the conditions for the sub-sale relief.
Further details of these and other specific schemes detailed in Spotlights are available here