The purpose of the new measures are to ensure that promoters of tax avoidance schemes can’t circumvent the POTAS regime by re-organising their business so that they either share control of a promoting business or put a person or persons between themselves and the promoting business. This will ensure HM Revenue and Customs (HMRC) can apply the POTAS regime as intended when originally introduced as part of the Finance Act (FA) 2015.
This latest change isn’t expected to have additional Exchequer impact in terms of increasing tax collected from business, it will only impact on the businesses that are engaging in or promoting tax avoidance.
We’ll read with interest the detail that will be provided through the legislation for the Finance Bill 2017 to amend the control definitions in paragraph 13A of Schedule 34 to FA 2014. These amendments introduce the term ‘significant influence’ to ensure promoters cannot reorganise their business so that they put a person or persons between themselves and the promoting business. The amendment also ensures that the control definitions apply where 2 or more persons together have control or significant influence over a business.
HRMC has stated that consequential amendments will be made in paragraphs 13B to 13D of Schedule 34. These are only consequential amendments and will not change how these paragraphs operate. Equivalent amendments will be made to the corresponding paragraphs in Schedule 34A.
More details can be found on the .Gov website and will update our blogs on the subject as detail becomes available.
