The expected announcement about strengthening the VAT disclosure of tax avoidance schemes rules is likely to result in a significant increase in the number of transactions being reported to HMRC.
The current VAT disclosure regime (VADR) is likely to be completely redrafted to more closely align with the disclosure of tax avoidance schemes rules for direct tax. The primary change we expect to see is a shift in responsibility from the ‘users’ to the ‘promoters’ to disclose ‘schemes’, and provide further and ongoing information.
In addition, the inclusion of gambling duties, insurance premium tax (IPT), landfill tax, climate change levy (CCL), aggregates levy and all excise duties and customs duties within VADR, and more significant penalties, is likely to lead to advisors disclosing more transactions to HMRC even where the main benefit of VAT savings sit within the HMRC guidance. The result will be additional burden for advisors and businesses, and a spike in cases being reported skewing the figures to show an uplift in activity.
For more information on this issue, please get in touch with Ian Carpenter or your usual RSM contact.