Revenue-Customs integration discussed at Downing Street

Treasury Permanent Secretary Gus O'Donnell has held a meeting in 11 Downing Street with business representatives, and the accountancy and legal professions involved in work on tax.

According to the Government, the meeting was used as an opportunity to "explain and discuss" the outcome of the review of the revenue departments and to add detail to the Chancellor's proposals for greater transparency in the market for tax avoidance schemes.

The meeting, described as "constructive", focused on the importance of on-going dialogue between the Treasury, Inland Revenue, and HM Customs and Excise, and representatives of business and the professions.

The review of the revenue departments, "Financing Britain's Future", was published alongside Wednesday's Budget.

At the meeting, officials set out details for the implementation of the proposed rules covering direct taxes, which will be targeted to catch avoidance schemes and arrangements based on financial or employment-based products. Also targeted will be taxpayers that devise and use their own schemes.

The rules will be backed by an initial penalty of up to £5000 for non-disclosure by promoters of notifiable schemes, subject to appeal with continued failure to disclose attracting penalties of £600 a day.

Users of notifiable schemes or arrangements who will have to make a disclosure in place of a promoter (for example, if the scheme was purchased from offshore), would be required to do so for schemes of arrangements dated from 23 April in relation to schemes they have implemented.

The legislation would allow Customs to introduce parallel arrangements for the disclosure of avoidance schemes involving VAT, reflecting the different legal context for VAT law.

Under the new rules businesses with an annual turnover of £600,000 or more will be required to notify Customs where it uses specific VAT avoidance schemes, which will be published in a statutory list.

(SP)