Anti-avoidance ― introduction ― pre-1 January 2018

Produced by Tolley

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

  • Anti-avoidance ― introduction ― pre-1 January 2018
  • What is VAT avoidance?
  • Notifying HMRC
  • Party to a scheme
  • Conditions
  • Who needs to disclose a VAT avoidance scheme
  • Time limits to notify HMRC
  • HMRC address
  • Connected persons
  • Features of a scheme
  • More...

Anti-avoidance ― introduction ― pre-1 January 2018

This guidance note provides an overview of how a business, or its adviser, is required to notify HMRC if it enters into a VAT avoidance scheme. Anti avoidance ― listed schemes, Anti-avoidance ― hallmark schemes and Anti-avoidance ― analysis of relevant case law guidance notes.

Please note that HMRC has replaced the legislation contained in VATA 1994, s 58A and Sch 11A with a new Schedule that extends the disclosure regime to the majority of indirect taxes with effect from 1 January 2018. Further details on the changes can be found in the Disclosure of tax avoidance schemes for VAT and other indirect taxes (DASVOIT) - introduction guidance note.

What is VAT avoidance?

HMRC views VAT avoidance as any arrangement or transaction that a party enters into that is intended to give it, or another party, a VAT advantage when compared to another course of action.

It should be noted that businesses are entitled to structure their tax affairs so they can obtain a VAT advantage providing their actions cannot be viewed as being dishonest. However, HMRC does need to be notified if the businesses decides to structure theirs tax affairs in order to obtain a tax advantage as HMRC may decide to challenge the use of the scheme and take steps to prevent the business from continuing to use the scheme.

Businesses should also be aware that HMRC can impose a penalty if the business does not notify it of any schemes that are implemented where the provisions outlined below apply.

If a business obtains a VAT advantage dishonestly, then HMRC can undertake either a civil or criminal investigation. Further information on the civil investigation procedure can be found in the Managing serious defaulters guidance note.

Notifying HMRC

Businesses who meet the criteria outlined above are required to notify HMRC that they have entered into a VAT avoidance arrangement. If the business is in a VAT group then the representative member is responsible

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