UK Law and Practice Contributed by: Russell Warren and Michael Langan, King & Spalding LLP
• a financial institution notice requiring banks and other financial institutions to provide information or documentation relevant to a taxpayer’s tax posi - tion; • an “identity unknown notice” requiring a third party to provide information or documentation relevant to a taxpayer whose identity is not known to HMRC; and • an “identity not fully known notice” requiring a third party to provide the name, address and date of birth of a taxpayer. The UK’s General Anti-Abuse Rule (GAAR) seeks to identify “abusive” tax arrangements. The GAAR applies to any arrangement which cannot reason - ably be regarded as a reasonable course of action in relation to the tax provisions – the so-called “double reasonableness” test. The GAAR empowers HMRC to make just and reasonable adjustments so as to enable it to recover any lost revenue. HM Treasury announced a new whistle-blowing rewards scheme in the Budget 2025. This will replace the existing scheme for reporting tax non-compliance to HMRC. The new scheme will focus on serious non- compliance by large corporate and wealthy individu - als and, where the information provided leads to the collection of at least GBP1.5 million in tax, individuals could receive between 15% and 30% of the tax col - lected (excluding interest and penalties). This brings the UK in line with many international schemes such as those operated in the US and Canada. The Promoters of Tax Avoidance Scheme rules empower HMRC to sanction advisers who engage in promoting tax avoidance arrangements. These include enabling HMRC to issue “stop notices”, pro - hibiting the promotion of an arrangement; “conduct notices”, non-compliance with which can lead to the issuing of “monitoring notices”, which may result in advisers being named and shamed by HMRC; and applying to court for the winding-up of a business promoting avoidance schemes. A taxpayer who has used an avoidance scheme which has, broadly, been defeated by HMRC may be served with a “follower notice” or “accelerated pay - ment notice” requiring it to amend its return or drop its
appeal in accordance with the defeated scheme. If the taxpayer fails to do so, it may be issued with a penalty. HMRC may also issue a penalty under the Enabler Penalties regime on advisers who enable taxpay - ers to enter into abusive tax arrangements that are subsequently defeated. A defeat arises when the tax advantage in question is counteracted, whether by an adjustment to a tax return or an HMRC assessment, and it cannot be further appealed. The definition of “abusive” largely follows the definition in the GAAR. The Serial Tax Avoiders Regime imposes penal - ties on taxpayers who repeatedly use schemes which have been defeated by HMRC under specific regimes. These are the GAAR, “follower notices” or the disclosure of tax avoidance schemes/disclosure of avoidance schemes for VAT and other indirect taxes (DOTAS/DASVOIT). 5.3 Blacklists and Non-Cooperative Jurisdictions The UK does not maintain a list of non-cooperative or high-risk jurisdictions for tax purposes. 5.4 Reporting Obligations and Disclosure Regimes See 5.2 Anti-Avoidance Mechanisms . 5.5 Role of Tax Authorities and Enforcement Measures HMRC is empowered under the Police and Criminal Evidence Act 1984 to: • Undertake searches under warrants issued by a magistrate if there are reasonable grounds to believe an indictable tax offence has been com - mitted and there is material of substantial value or admissible in trial in relation to that offence. HMRC may also seize and retain anything for which a search has been authorised. • Apply to a judge to issue a production order to a third party if there are reasonable grounds to suspect an offence involving serious tax fraud, or an order for documents that are in the power or possession of any person and may be required as evidence for the purposes of any proceedings concerning an offence.
489 CHAMBERS.COM
Powered by FlippingBook