Spring Budget 2017—Tax administration and avoidance

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.

Promoters of tax avoidance schemes (POTAS)

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.

Enablers of tax avoidance

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