Weekly Tax Update – Monday 21 October 2013

1 GENERAL NEWS

1.1 DOTAS regulations

Regulations have been published amending the DOTAS regime as noted below. The changes come into force on 4 November 2013, and the notes below highlight any transitional rules:

Amendment to confidentiality hallmark and new disguised remuneration hallmark

SI 2013/2595 applies where on or after 4 November 2013 the promoter either (i) makes a scheme available to someone, or (ii) first becomes aware of the existence of a transaction forming part of the notifiable arrangements and the arrangement has not already been notified.

Instead of the requirement to disclose being where the promoter would (but for the regulations) keep confidential from HMRC the element of the arrangements giving rise to the tax advantage, this condition is being changed to one where the promoter might reasonably expect a promoter would keep it confidential from HMRC. This includes where the promoter does not provide promotional material to the user or discourages them from keeping such material and any written professional advice on the arrangements. A similar expansion to the scope of the disclosure requirement for this hallmark is introduced where there is an intermediary involved subject to legal professional privilege.

The move away from the focus of the person to whom the immediate arrangement is relevant, to consider others who might use the scheme, is also introduced into the confidentiality hallmark where no promoter is involved (in-house schemes, or where there may in the future be a promoter).

The new disguised remuneration hallmark (hallmark 8) applies if:

Steps are taken by the specified person under ITEPA s554B (relevant third person), s554C or s554D (any person), or s554Z18-554Z19 (the current, former or prospective employer); and The main, or one of the main, benefit(s) of the arrangements is that an amount that would count as relevant employment income under the disguised remuneration rules (s554Z2(1)) is reduced or eliminated; And either:

The disguised remuneration rules do not apply by virtue of at least one of s554E to s554X or regulations under s554Y, or; if one of s554E to s554X or regulations under s554Y do apply, then at least one of the following applies: there are contrived or abnormal steps without which the arrangements would not achieve the main benefit; or a relevant step is treated as having taken place and as a result chapter 2 of part 7A applies (treating the amount as employment income, or remittance basis income if remitted). www.legislation.gov.uk/uksi/2013/2595/pdfs/uksi_20132595_en.pdf

DOTAS and time for providing information

SI 2013/2592 specifies the information that must be supplied by a user to a promoter within a 10 day period (from the later of the receipt of the SRN number or first entering into a transaction forming part of the notifiable arrangements), which includes:

the unique taxpayer number, or (if no UTR) the NI number, or confirmation that the individual has neither; It also imposes the obligation on the promoter to include this information in its quarterly reports to HMRC (permitting a 60 day reporting requirement instead of a 30 day reporting requirement in respect of the UTR or NI number requirement where the user's 10 day reporting requirement to the promoter has not expired).

It also imposes a 10 day time limit for a promoter to provide further information to HMRC where HMRC request it in respect of a suspected other person who is a scheme user.

SI 2013/2600 makes similar changes for reporting in respect of NIC arrangements.

www.legislation.gov.uk/uksi/2013/2592/pdfs/uksi_20132592_en.pdf

www.legislation.gov.uk/uksi/2013/2600/pdfs/uksi_20132600_en.pdf

ATED DOTAS reporting

SI 2013/2571 introduces DOTAS reporting for ATED arrangements. ATED arrangements are disclosable if they are not excluded and any element of the arrangements causes:

the company, partnership or collective investment scheme to cease to meet the ownership condition; or the taxable value of the chargeable interest to fall below £2m; or the taxable value of the chargeable interest to come into a lower ATED band. Excluded arrangements are:

Arrangements on terms that would be expected to be agreed between unconnected persons; Where the transferor and transferee are members of the same group (as defined for CTA10 s152) and the transferee meets the ownership condition; The transfer is a settlement (as defined for IHTA s43); The transfer is a distribution out of the assets of the transferor and the transferee is one of the following: an individual; a corporation sole; a trustee; a person who meets the ownership condition. Draft guidance on the ATED DOTAS rules was published on 17 October. The ATED DOTAS regulations apply to notifiable arrangements where the relevant date for notification is on or after 4 November 2013. The transitional rules regarding the time for notifying ATED arrangements (included in SI2013/2591) also cover notifable arrangements falling within the period beginning 31 January 2013 and ending on the day before the regulations come into effect (3 November 2013). If the arrangements are covered by this transitional rule then the date by...