Anti-avoidance ― hallmark schemes ― pre-1 January 2018

By Tolley

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Anti-avoidance ― hallmark schemes ― pre-1 January 2018
  • What is a hallmark scheme?
  • Requirement to notify HMRC
  • Voluntary registration scheme (VRS)
  • Notifying HMRC

This guidance note provides an overview of the disclosure regime that relates to hallmark anti-avoidance schemes. This note should be read in conjunction with the VAT avoidance - introduction, VAT avoidance - listed schemes and Anti-avoidance - analysis of relevant case law guidance notes.

VATA 1994, Schedule 11A; The Finance (No. 2) Act 2005, section 6, (Appointed Day and Savings Provisions) Order 2005 (SI 2005/2010); The VAT (Disclosure of Avoidance Schemes) (Designations) Order 2004 (SI 2004/1933) (as amended by The VAT (Disclosure of Avoidance Schemes) (Designations) (Amendment) Order 2005 (SI 2005/1724); The VAT (Disclosure of Avoidance Schemes) Regulations 2004 (SI 2004/1929) (as amended by The VAT (Disclosure of Avoidance Schemes) (Amendment) Regulations 2005 (SI 2005/2009); De Voil Indirect Tax Service V5.213; V2.210; V3.407; VAT Notice 700/8 
What is a hallmark scheme?

A scheme is a plan of action that has been entered into and includes transaction, series of transactions and arrangements. Businesses will not be automatically caught by these provisions if they claim all of the VAT that they are entitled to using any ESC, option to tax, etc unless these actions form part of an overall VAT planning arrangement.

HMRC would view the presence of the following as potential hallmarks that the business has entered into a VAT planning arrangement:

Connected parties

The parties involved in the scheme are connected parties. Please see the Anti avoidance - introduction guidance note for a definition.

Parties enter into confidentiality condition agreements

If the parties enter into an agreement that limits or prevents a party from disclosing details regarding how the scheme creates a tax advantage, this would be seen as a hallmark. These agreements are intended to protect the competitive advantage of the creator or promoter of the scheme, and a potential beneficiary of the scheme, would be required to sign such an agreement before any details are provided regarding how the tax advantage would be achieved if they participate in the scheme.

It should be noted that an adviser would normally insert a general

More on Anti-avoidance: