In a consultation document published by HMRC on 22 April 2016, proposals have been made to expand the scope of the VAT Disclosure Regime (VADR) to include Insurance Premium Tax and gambling duties.
In the consultation document, HMRC acknowledges that “most businesses and individuals in the UK meet their tax obligations in full.” But it adds that “a small minority try to sidestep their liabilities through the use of tax avoidance schemes.” The VADR scheme currently deals only with VAT, but according to HMRC “avoidance is also a risk in other indirect taxes, in particular gambling duties and Insurance Premium Tax.”
HMRC considers that the VADR has not kept pace with changes in VAT and consequently this scheme needs reviewing to protect the collection of VAT and to discourage the avoidance of VAT. One of the key proposals is to change the primary responsibility for the disclosure of tax avoidance schemes from the user of the scheme to the promoter of the scheme (VADR currently requires disclosure to be made by those companies who use an avoidance scheme rather than the promoter of the avoidance scheme).
The reason cited for the proposed expansion of VADR to include Insurance Premium Tax and gambling duties is that HMRC has evidence of avoidance, often with schemes taking advantage of the boundaries between these taxes and VAT.
Anyone is welcome to make representations to HMRC, but they must be submitted by 13 July 2016. As FiscalReps do not engage in the creation or promotion of tax avoidance schemes, it is currently felt that representations from FiscalReps would not add any further value in this process. However we are happy to discuss concerns with any industry participants and can assist in drafting or making representations for them.
If you think that a promoter has sold you a tax avoidance scheme that may fall within the parameters of this consultation, we can review the arrangements and provide an independent assessment.
A copy of the consultation document can be found at:
If you wish to discuss this matter further or require more information please contact Peter Hewitt, Head of European Tax on +44 (0) 20 7036 8070 or by email