Everyday Tax Advice Won't Trigger Disclosure Obligation, Says Inland Revenue

by Robin Pilgrim, LawAndTax-News.com, London

25 August 2004

Following concerns expressed by the UK's accounting community with regard to the government's new rules on the disclosure of tax avoidance arrangements, which came into force at the beginning of this month, the Inland Revenue this week announced that:

"In accordance with assurances given by the Paymaster General during the Finance Bill process, we remain committed to ensuring that everyday tax advice does not trigger a disclosure obligation. From responses we have received since the revised regulations were published, we are confident that the financial product regulations are now more tightly targeted at innovative avoidance schemes."

The tax authority went on to add that:

"We can confirm again that we do not intend promoters or employers to have to disclose everyday advice and arrangements. In the context of employment products this would include: the provision of flexible benefits, such as where employees forgo salary in return for a car or are provided with childcare vouchers; salary sacrifice arrangements for cars, computers, childcare vouchers or pension funds; straightforward incorporations, or dividend payments to employee shareholders; standard dual contract arrangements (although we will require disclosure of innovative arrangements); and the deferral of bonus payments until after the termination of the employment.

Responding to concerns expressed by the Chartered Institute of Taxation on behalf of its members, the Inland Revenue announced that:

"We recognise the concern that the Institute has for its sole practitioner and smaller firm members in relation to the giving of tax advice. We confirm the assurances we have given in the past, that where a person merely provides advice as to how the tax system operates in particular circumstances then that activity on its own does not trigger a disclosure requirement on the part of the adviser," and concluded

"We are continuing to develop the guidance in these and other areas and we will be pleased to meet with you again."

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