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This analysis is part of the Lexis®PSL Tax team’s summary of the Spring Budget 2017.
Some of the links require a LexisPSL subscription. If you are not a subscriber, you can take a free trial here.
The government is introducing legislation with immediate effect (from 8 March 2017) to prevent promoters from getting around the POTAS rules by restructuring how their business is owned. The POTAS rules are triggered where, within
the previous three years, the promoter has met any one of a number of threshold conditions set out in the legislation. Threshold conditions include: being found guilty of certain types of misconduct by a professional body; imposing provisions on clients
that restrict the disclosure of information to HMRC; and repeatedly promoting tax avoidance schemes that do not work ('defeated' avoidance schemes).
The POTAS rules were introduced by Finance Act 2014 and were changed by Finance Act 2015 to catch situations where a threshold condition has been met by someone with a defined type of connection, via a company or partnership, to the promoter.
The new measures announced at Spring Budget 2017 extend these provisions by amending the definition of control, and introducing the term ‘significant influence’ to ensure promoters cannot get around the rules by inserting a person
or persons between themselves and the promoting business.
The OOTLAR refers to this latest measure as having been previously announced at AS 2016 but so far as we are aware this was not the case.
For information on the POTAS rules, see Practice Note: Promoters of tax avoidance schemes.
See: Spring Budget 2017 (para 3.43), OOTLAR (para 1.40) and TIIN, draft clause and explanatory notes: Promoters of Tax Avoidance Schemes: associated and successor entities rules.
The government has confirmed that FB 2017 will introduce the controversial new 'enablers' rules: penalties for persons who enable other persons or businesses to use tax avoidance arrangements that are later defeated by HMRC. This measure was consulted
on from August to October 2016 and was included in draft FB 2017 as published on 5 December 2016.
There has been widespread concern in the tax profession that these measures would potentially be relevant in many commercial transactions, although the draft legislation published in December 2016 was less broad in scope than was suggested in
the original consultation. At Spring Budget 2017 the government announced further revisions, following 'extensive consultation and input from stakeholders'. The revisions:
The revisions will be in FB 2017 when it is published on 20 March 2017, and the rules will come into effect from Royal Assent (expected in July 2017).
For more information on the enablers rules, see News Analysis: Draft Finance Bill 2017—enablers of tax avoidance.
See: Spring Budget 2017 (para 3.44) and OOTLAR (para 1.41).
Further analysis on this Spring Budget:
LexisPSL subscribers can access all analysis and insight on the Spring Budget 2017 here. If you are not a subscriber, you can take a free trial here. For further free content on the Spring Budget 2017, sign up to this blog using the sign-up
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