AAT RESPONSE TO HMRC CONSULTATION DOCUMENT ON STRENGTHENING THE TAX AVOIDANCE DISCLOSURE REGIMES

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1 AAT RESPONSE TO HMRC CONSULTATION DOCUMENT ON STRENGTHENING THE TAX AVOIDANCE DISCLOSURE REGIMES 1 EXECUTIVE SUMMARY 1.1 The Association of Accounting Technicians (AAT) is pleased to respond to the HMRC consultation document (condoc) Strengthening the Tax Avoidance Disclosure Regimes, which was released in July AAT prepared and submitted responses to each of the earlier consultations on: i) Lifting the Lid on Tax Avoidance ii) Raising the Stakes on Tax Avoidance iii) Tackling Marketed Tax Avoidance iv) Raising the Stakes on Tax Avoidance, the Summary of responses and the associated draft legislation on the High Risk Promoters rules and the Accelerated Payments and Follower Notices regimes. 1.3 AAT now recognises that improvements are due on the operation of Disclosure of Tax Avoidance Schemes (DOTAS) as announced by Government at Budget 2014, and updates required to VAT Disclosure Regime (VADR) (1.7 condoc). 1.4 The condoc covers a number of different aspects which are summarised below: i) Questions 1-8 cover the proposals relating what has to be disclosed under DOTAS ii) Questions 9-16 cover the proposals relating to who has to disclose and/or provide information relating to avoidance schemes under DOTAS iii) Questions cover proposals to protect those wishing to provide information about potential avoidance to HMRC and to deliver greater consistency in the operation of the regime iv) Questions seeks views on draft regulations to introduce a new hallmark to identify schemes involving certain financial products v) Questions seeks views on how VADR may be improved and updated, including potentially changing the way it works to be more in line with DOTAS vi) Question 26 sets out thinking and seeks views on further changes that may need to be considered in the future. 1.5 AAT generally agrees and supports the proposals in this consultation document. However, the response below expresses concerns in some areas and in particular to the new draft Financial Products hallmark (4.15, 4.16, 4.19 below) because it is widely drafted.

2 1.6 AAT considers that our response to the questions posed in the condoc, if adopted, will assist HM Government in its intentions to align the Disclosure of Tax Avoidance Schemes (DOTAS) and VAT Disclosure Regime (VADR) and support HMRC s wider counter-avoidance work. 2 GENERAL OVERVIEW 2.1 As stated in AAT s earlier response 1, AAT endorses HM Government s commitment to robustly tackling and closing down marketed artificial tax avoidance schemes as well as improving the way that tax avoidance is detected and prevented. 3 VESTED INTERESTS 3.1 Given the comment in 2.1 (above), AAT is responding to this consultation document from the wider public benefit perspective of achieving sound and effective administration of taxes. 4 STRENGTHENING THE TAX AVOIDANCE DISCLOSURE REGIMES: AAT RESPONSES TO THE QUESTIONS Question 1 Will removing grandfathering in this way deliver greater consistency in the application of this hallmark? 4.1 AAT considers that all marketed tax avoidance schemes should require a DOTAS report. Therefore the regime needs to be updated to revise exclusions in the earlier legislation which exempted schemes from disclosure where promoters could claim the scheme was the same or substantially similar to a previous scheme designed before a certain date ( grandfathering ). 1 Paragraph 3.1 of Raising the Stakes on Tax Avoidance

3 4.2 Disclosure is now required in respect of any arrangement that might previously have been claimed to be exempt and AAT considers that the proposed legislation to remove grandfathering will prevent promoters from seeking exemption on the basis that a new scheme is somehow a slightly modified version of a scheme that existed before 1 August 2006, thus providing greater consistency in the application of this hallmark. Question 2 Do you foresee any issues with removing grandfathering prospectively for schemes made available or implemented from a certain date? 4.3 It is fair that all tax avoidance schemes should require a DOTAS report. However, AAT is against retrospective legislation. Provided the new regulations operate from the date when these measures were publicised by Government then AAT can foresee no issues. Question 3 Will recasting the hallmark to consider the overall product being offered rather than the underlying documentation and scheme structure ensure greater consistency in the application of this hallmark? 4.4 Clearly the identified weakness in the existing hallmark is inadequate wording. AAT therefore agrees with H M Government s proposals to change the current description in order to make it clearer that a wide range of tax products are caught by this hallmark, so that disclosure is required for schemes if they are made available or newly implemented after the change takes effect. 4.5 AAT agrees with HMRC s proposal at paragraph 2.21 and 2.23 (condoc) where it is proposed that the emphasis of the tests be changed from whether it could be reasonably concluded that the main purpose of the arrangements was to enable the client to obtain a tax advantage to whether it could reasonably be concluded that the arrangements are a tax avoidance scheme or product aimed at more than one person (that is, marketed) even though the individual circumstances of the client will inevitably need to be taken into account in formalising the detail of implementation.

4 4.6 We consider whether marketed on the internet, at conferences, or where material is produced for distribution to intermediaries and clients which provides sufficient information to entice prospective clients to make contact with a view to implementing the underlying arrangements all such arrangements should be within the scope of this hallmark. 4.7 In paragraphs 4.1 to 4.6 of AAT s Response 2 to the Consultative Draft Legislation contained in January 2014 Raising the Stakes on Tax Avoidance: Response document, AAT highlighted the definition of promoter as being so wide that the ordinary accountant giving one-to-one guidance to his client to make use of general tax reliefs could be caught within the definition. 4.8 AAT supports proposals to make schemes disclosable, which are marketed as bespoke advice but which in reality are aimed at more than one person. However, advice given to a particular client on a genuinely bespoke basis should remain exempt. Question 4 Do you agree that widening the main purpose test to the, or one of the, main purposes will help ensure the policy objective is met? 4.9 Widening the wording in this way as described in question 4 would provide a more specific test. AAT agrees with 2.17 (condoc) that the proposed widening should not impact on ordinary business transactions General tax avoidance schemes such as ISAs are to be exempt but the danger in catch-all legislation such as DOTAS is that advertising for capital in investment funds to take advantage of schemes promoted by the government to encourage a particular type of spending or investment may be inadvertently caught. Question 5 Would including additional characteristics such as the existence of a fighting fund in this hallmark ensure disclosure of all schemes which include such elements or would a separate hallmark be a better way to achieve this? 2 Raising the Stakes on Tax Avoidance

5 4.11 Many firms of accountants encourage clients to take out insurance to cover the eventuality of a return being selected at random for enquiry and AAT considers it important that this right is not compromised AAT notices that the above question existence of a fighting fund differs from the consideration at 2.4 (condoc) of a requirement for users to contribute at the outset to a fund AAT agrees that a DOTAS report should apply to all schemes which include the requirement to contribute to a fighting fund. A separate hallmark would better highlight this characteristic. Question 6 Do you think that a combination of the new draft Financial Products hallmark and the revisions proposed to the loss hallmark will result in more tax avoidance schemes being disclosable without adversely impacting on normal business activity? 4.14 AAT supports HMRC s efforts to counter artificial schemes where, as mentioned in 2.29 (condoc), situations where it would be reasonable to expect that the tax relief for those using a scheme is greater than the amount the individual has, in economic substance, contributed AAT has also considered the comments in 2.32 and 2.33 (condoc) that is, concerns that some genuine financial investments or commercial arrangements might still be caught 4.16 We are concerned that there is a risk that poorly drafted legislation could adversely affect ordinary traders as evidenced by the following example. The Telegraph reported 3 on 10 April 2012 the following comments attributed to the Chancellor referring to traders writing off business losses and it was this kind of aggressive avoidance which the tax relief cap is designed to address. Other newspapers carried similar reports on the same day After the 2012 consultation document Delivering a cap on income tax relief: the tax relief cap was legislated in Finance Act 2013 (Schedule 3 Limit on Income tax Reliefs ) restricting, among other things, early trade loss reliefs against general income, including past employment income. 3 The Telegraph, 10 April 2012, Wealthiest people 'abusing tax system with donations to charities that don't do charitable work'

6 4.18 AAT is anxious that reliefs available to assist traders venturing out on their own in an uncertain financial climate are not further restricted and have examined the draft regulations in this spirit The new draft Financial Products Hallmark is widely drafted which is understandable for anti-avoidance legislation. Also, the legislation is directed at promoters. However, the following areas ( ) give AAT cause for concern: 4.20 AAT commented in response to the consultation on the draft legislation contained in the HMRC January 2014 document Responses on Raising the Stakes on Tax Avoidance and specifically in paragraphs 4.3 and 4.6 AAT s stated in its opinion that the definition in Paragraph 2 of Consultation draft, PART 1 Promoters of Tax Avoidance Schemes is so widely drawn as to include any accountant who advises his client as to obtain tax relief or reduce tax which are defined as arrangements for tax advantage and expressed the opinion that the legislation needs to provide more protection for the ordinary accountant In considering the opinion expresses in 4.20 (above) AAT notes the draft legislation for the Financial Product Hallmark at page 43 ( condoc), reproduced below: 19. (1) Subject to paragraph (6), arrangements are prescribed if (a) conditions 1 and 2 are met, and (b) either condition 3 or condition 4 is met. (2) Condition 1 is that the arrangements include at least one financial product specified in regulation 20(1) (a specified financial product ). (3) Condition 2 is that the main benefit, or one of the main benefits, of including a specified financial product in the arrangements is to give rise to a tax advantage. (4) Condition 3 is that a specified financial product within paragraph (2) contains at least one term which is unlikely to have been entered into by the persons concerned were it not for the tax advantage. The first financial product specified in regulation 20(1) is a loan. Condition 2 is one of the main benefits (of the arrangements) is to give rise to a tax advantage. Condition 3 includes that one term is unlikely to have been entered into by the persons concerned were it not for the tax advantage.

7 4.22 AAT is concerned that the wide definitions of the Financial Product Hallmark at page 43 (condoc) might also catch advice to genuine traders as well as catching tax avoidance schemes traded by promoters. For example: it might well be part of the business plan and forward cash flow planning that losses incurred in the first 4 years of a newly formed business may be funded by a claim for tax relief against tax paid on employment income in respect of the 3 years prior to business commencement, under s.72 of Income Tax Act We are concerned that the above example and similar scenarios could be termed a tax advantage and one of the main benefits of the arrangements Furthermore, in order to attract a loan from a bank or similar third party a business is legitimately entitled to take into account in its cashflow forecasting funds received back from HMRC in respect of early years loss relief. In fact, it is entirely possible that a bank might not sanction the loan without the prospect of a repayment of tax under s.72 ITA AAT considers that this part of the financial arrangement (4.22 and 4.23, above) might be caught by the draft Financial Product Hallmark, paragraph 19 (4) Condition 3 where the business loan gives rise to tax deductions which contribute to losses to be set off against s72 relief as described above Paragraph 5.7 of condoc states that the primary element of the hallmark should be that the tax advantage could not arise but for the inclusion of the financial product. The loan is not the proximate cause of the gaining of the tax advantage but the tax advantage could not be obtained but for the inclusion of the loan (because the loan is the means of providing a tax loss in form greater than economic substance) The above statement would appear to give the protection sought, but the proposed legislation does not actually say this. Question 7 To what extent do the proposals strike the right balance between ensuring that IHT avoidance is brought within DOTAS but that legitimate estate planning is not disclosable? If not, how might this balance be best achieved? 4.26 AAT is pleased to note that Government recognises that reliefs and exemptions are used legitimately in many arrangements by the vast majority

8 of people. The Government wants to ensure that the hallmark is appropriately targeted without inadvertently putting an information requirement under DOTAS on situations where a relief is being used in the way that the legislation intended it to work, or for normal family arrangements that take place after death (2.44, condoc) 4.27 AAT accepts that it is now reasonable to require disclosure of schemes listed in paragraph 2.41 (condoc) and sold to clients but implemented after the changes in the condoc take effect AAT agrees with the amendment to the existing hallmark to catch arrangements designed to avoid or reduce an immediate charge to IHT rather than the existing hallmark in SI 2011/170 4 relating to the avoidance of the entry charge on transfers into relevant property trusts AAT also agrees as reasonable the Government proposals, to require under DOTAS, the disclosure of arrangements intended to circumvent the reservation of benefit rules (2.43 condoc) AAT agrees with the proposal to extend the application of certain general DOTAS hallmarks to IHT, such as the confidentiality and premium fee hallmarks. Question 8 Does the proposed approach ensure so far as possible that legitimate claiming of reliefs and exemptions does not have to be disclosed? If not, what alternative proposals would achieve that aim? 4.31 As stated in 4.26 (above) AAT acknowledges as important that advice by advisers on legitimate reliefs and exemptions remain unencumbered by DOTAS A general clause that the IHT DOTAS hallmarks relate specifically to catch arrangements designed to avoid or reduce an immediate charge to IHT and that the safeguard expressed in 2.44 (condoc) that only arrangements which an informed observer could reasonably conclude are an IHT avoidance scheme or arrangement would be disclosable might achieve the aim of Q8. Question 9 4

9 To what extent will these changes help ensure that HMRC is able to identify those responsible for making a disclosure where people are seeking to sidestep their obligations? 4.33 AAT notes that in Part 3 (condoc) the operation of DOTAS by promoters or introducers of tax avoidance schemes (a person who advertises schemes on behalf of a promoter) and the HMRC proposals to widen the definition of introducer and also to widen HMRC powers to require information about persons to whom the introducer has given scheme details AAT agrees that these changes will enable HMRC to look down the chain of intermediaries to identify those who use a scheme and might be responsible for disclosure in the event a promoter fails to disclose. (3.15, condoc) Part 5 of Finance Act 2014 introduced new rules relating to promoters of tax avoidance schemes who fail to comply with their disclosure responsibilities, enabling HMRC to take appropriate action, such as a conduct notice and monitored promoter status. This legislation only received Royal Assent in July 2014 and AAT is surprised that HMRC has not given the legislation time to have effect Promoters who change their behaviour in this way and who subsequently fail to disclose a scheme when required to do so, or otherwise fail to comply with their DOTAS obligations, will bring themselves within this new legislation Question 10 Do you think this will help ensure there is consistent treatment of users of avoidance schemes and their promoters irrespective of where the scheme was designed? 4.37 As stated in paragraph 3.1 (condoc), the obligation to disclose is placed on to each user of the scheme where overseas promoters fail in their reporting responsibilities. The purpose of the legislation is to enable HMRC to obtain DOTAS reports both from UK and overseas promoters. However, the treatment of promoter and user is hardly consistent Paragraph 3.5 (condoc) highlights that HMRC can pursue those clients for disclosure and for penalties of up to 1m in respect of each person who fails to disclose the scheme. This must be a huge deterrent for clients but the vast majority of clients may be unaware of the promoter s failure, especially where

10 the product is sold through an intermediary. This would be time consuming and may afford a financial timing advantage to those who choose to behave in this way, depending on the sums involved. Question 11 To what extent would requiring persons working with the offshore promoter ensure the proposed special rule applies appropriately? 4.39 AAT notes HM Government s intention, explained in paragraph 3.6 (condoc), to introduce a special rule to ensure that if an offshore promoter does not disclose a scheme, the requirement to disclose attaches to any person or persons resident in the United Kingdom who are working with the offshore promoter, for example a business partner or all partners A danger here is that the business partner may not be aware of the promoter s failure or possibly even his requirement to disclose. An international firm of accountants would obviously require internal procedures for a partner to disclose promotional activities to business partners. Question 12 Are there any other steps which could be taken to strengthen DOTAS in this area to ensure that those required to disclose comply with their obligations? 4.41 In addition to the 1m maximum penalty for failure, which surely must be a deterrent, interest for late accelerated tax could be charged following a failure to notify Products sold by overseas promoters are most probably marketed through a UK intermediary. Presumably the special rule explained at 3.6 (condoc) would apply to intermediaries. However, we acknowledge that this may depend on their relationship with the promoter. We consider that UK intermediaries should be pursued and penalised for failure by overseas promoters. Question 13 Do you agree that aligning penalties in this way is proportionate given the significant financial gains users can obtain through failing to correctly report their use of a

11 disclosed tax avoidance scheme? 4.43 AAT does not consider it appropriate that scheme users should be treated exactly the same as promoters. Promoters devise and market schemes and should know better, whereas the scheme user client may be distant from accountancy and taxation and rely on the representations made to them by their agent / promoter who might advise them that certain claims are lawful Paragraph 3.17 (condoc) outlines concerns that current penalties bear little resemblance to the amounts of tax typically involved in tax avoidance schemes. AAT agrees with the proposal to modernise the DOTAS penalty regime and considers that penalties under Finance Act 2007, Schedule 24 would be fairer if penalties were aligned against other penalties incurred in respect to omissions in returns. Such penalties would then directly relate to the tax lost by the Exchequer as they would be calculated as a proportion of potentially lost tax It may also be reasonable to charge interest from the time tax ought to have been paid until actual payment, to remedy the mischief referred to in paragraph 3.19 (condoc). Question 14 To what extent will this help ensure employees are fully aware of the fact that they are becoming involved in tax avoidance? 4.46 Employees should be fully aware of their participation in a tax avoidance scheme when they receive the Scheme Reference Number (SRN) from their employer and where the prescribed format fully explains the issues. To ensure that every effort is made to bring their involvement in a scheme to the attention of an employee we recommend that consideration be given to ensuring an explanation is given, to them, in a form of words prescribed by statutory regulation. Question 15 Do you think that the Government s preferred option is the more effective and least burdensome way to achieve this objective?

12 4.47 HM Government s proposals outlined in paragraph 3.28 (condoc) are to ensure HMRC receives information about all beneficiaries of employment schemes AAT agrees that it would increase administration to require all employees to complete tax returns and that, where possible, this should be avoided. Therefore, AAT agrees the preferred option outlined in 3.33 (condoc) to introduce rules similar to the Client List rules for promoters so that employers would have to report details of employees participating in a scheme for which the employer is the DOTAS user, as if the employer were a promoter and the employees their clients. Question 16 Are there other ways in which this information could be cost effectively obtained from employers or employees? 4.49 AAT considers the method outlined in 4.48 (above) to be the most efficient option and sees similarities with the current benefits scheme whereby employers are required to provide details of certain benefits provided to employees, such as company cars. These are taxed on employees often without the employee being required to complete a tax return, although the tax in this case would be the Accelerated Payment. Question 17 To what extent would a provision of this nature provide a suitable safeguard to those wishing to provide information about avoidance to HMRC? 4.50 Part 4 of the condoc relates to the protection for whistleblowers. AAT agrees with HM Government s proposals in 4.5 (condoc) to introduce a provision into DOTAS, broadly modelled on section 273 Finance Act 2014, to provide safeguards to any person wishing to volunteer information or documents to HMRC about suspected non-compliance with the regime without fear of breaching any statutory or contractual obligation.

13 4.51 AAT did support such legislation in paragraph 4.34 of the AAT s Response to HMRC s Consultation Document Raising the Stakes on Tax Avoidance 5 Question 18 To what extent would a threshold condition in the High Risk Promoters rules ensure promoters do not seek to use DOTAS as a test-bed or clearance regime when devising new schemes and what other steps might the Government take to prevent abuse of this sort? 4.52 AAT considers that where possible the law should provide certainty to taxpayers concerning their future liabilities and this also extends to DOTAS disclosures and to schemes where a Payment Notice will be issued. A clearance regime works well in other areas of taxation and would give certainty in respect of borderline DOTAS requirements The amendments of s.310a of Finance Act 2004 (4.16 condoc) introduced by Finance Act 2014 should be given time to settle in. As stated in paragraph 4.35 (above), it is only months since Finance Act 2014 received Royal Assent AAT considers that it does seem reasonable to provide for a cap in the numbers of clearance requests but we see difficulties arising in respect of enforcing a cap on attempts to clarify, where several companies (perhaps with same shareholders) collude to share feedback from HMRC AAT agrees with the 90 day period for clarification as mentioned in 4.56 (below) followed by the policy suggested at 4.58 (below). Question 19 To what extent would the preferred option deliver a balance between providing greater certainty for the taxpayer while ensuring HMRC can give due consideration to the need to issue a SRN? 4.56 AAT agrees with the Government s preferred option outlined in paragraph 4.25 (condoc) to extend the 30-day period to 90 days which would provide 5 Para 4.34 Raising the Stakes on Tax Avoidance

14 sufficient time to resolve uncertainties after obtaining additional information required in deciding whether to issue an SRN. Question 20 Are there other ways in which this could be achieved? 4.57 Another option would be to improve clarity to disclosure requirements where any uncertainty is perceived to exist If this is compared to disclosure of income in the tax return, ignorance of the law, which can sometimes be obtuse, is no excuse for error or omission and the taxpayer is exposed to interest and penalties for failure. Question 21 To what extent does the draft hallmark deliver the policy objective of bringing arrangements involving financial products into the view of DOTAS? 4.59 AAT considers that the draft hallmark achieves the objective of bringing the arrangements involving financial products into the scope of DOTAS. However, we are concerned that draft Financial Product Hallmark (page 43, condoc) is too widely drafted and could impact disproportionately on AAT members in practice, giving general advice to clients, which is not of an egregious nature as in the example in (above). Question 22 Does the approach deliver the safeguards requested by respondents to the previous consultation? 4.60 AAT does not consider that the approach delivers the adequate safeguards because, as stated in paragraphs (above), the safeguard expressed in paragraph 5.7 (condoc) the tax advantage could not be obtained but for the inclusion of the loan because the loan is the means of

15 providing a tax loss in form greater than economic substance is not actually provided for in the draft legislation at Annex A to this condoc in Pages 42 to 44 - Draft Financial Product Hallmark. Question 23 Which form of VADR (user-based/promoter-based/include in DOTAS) is likely to be most effective in achieving the policy objectives? 4.61 Since 2004 Government anti-avoidance policy has been to move from reacting to avoidance by use of targeted anti-abuse rules (TAARs) to proaction by way of upfront reporting by the promoter in Disclosure of Tax Avoidance Schemes (DOTAS). In the first instance this was for avoidance relating to Income Tax, Capital Gains Tax and Corporation Tax and has been more recently extended to arrangements involving National Insurance Tax, Stamp Duty Land Tax, Inheritance Tax and the Annual Tax on Enveloped Dwellings. AAT considers the VADR retains a certain feature of this reaction. VAT has been left with the more reactive and user centric VAT Disclosure Regime (VADR). AAT agrees with Government policy for closer alignment of DOTAS and VADR AAT, therefore, considers that re-designing the regime to operate on a promoter basis would be preferable because, like DOTAS, this would place the disclosure responsibility on a small number of scheme promoters who design and promote avoidance arrangements, rather than a much larger population of users, each disclosing potentially similar information Users of disclosed schemes would report their actual use of a scheme, in a manner similar to DOTAS, by notifying HMRC of the SRN and the period in which they expect the tax advantage to arise, thereby reducing the administration burden for wider business users. Question 24 Which form of VADR would best contribute to achieving consistency and fairness for users and promoters of avoidance schemes across all regimes? 4.64 AAT considers that a promoter based reporting regime based on DOTAS lines would best contribute to achieving consistency and fairness for users and promoters.

16 4.65 HM Government s policy in tackling Marketed Tax Avoidance has been to challenge the small number of designers and promoters rather than the wider number of end users. AAT considers that the fact that VADR requires disclosure by the scheme user after implementation rather than by a promoter prior to implementation does not provide the early notification which HMRC require. Question 25 Which form of VADR would minimise the administrative burden on businesses, other than those who design and promote avoidance and their clients? 4.66 Government policy objectives in 6.3 (condoc) is for closer alignment of VADR and DOTAS to provide early information on new avoidance schemes and data on the users of the schemes, while remaining proportionate in terms of burdens on business. AAT considers that redesigning VADR on DOTAS lines would achieve this objective As stated in paragraph 4.65 (above), Government policy in tackling Marketed Tax Avoidance has been to challenge the small number of designers and promoters rather than the wider number of end users. This form of VADR would minimise the administrative burden on businesses and easily provide early information on new avoidance schemes and data on the users of the schemes, while remaining proportionate in terms of burdens on business. Question 26 What more could be done to ensure that HMRC receives the information it needs to effectively detect and tackle marketed avoidance? 4.68 Users can be influenced by their accountants to adopt a particular avoidance scheme and as acknowledged in paragraph 7.2 (condoc), current and potential users of tax avoidance schemes, and others involved in scheme marketing, facilitation or implementation, may not always have a clear understanding of a scheme s status or the level of risk involved for participants As suggested in 4.46 (above), scheme promoters could be required to issue their clients with a statutory form of words warning of the level of risks

17 potentially involved for participants. Alternatively, HMRC could circulate users on their register of DOTAS notifications To overcome the problem of transparency in a promotion chain, it might be made mandatory for each member of a chain who promotes an avoidance scheme to deliver the words of warning referred to above The proposals referred to in response to Q9 should be given time to operate. The DOTAS regime is now quite voluminous, with responsibility on promoters and further proposed responsibility on introducers with penalties for failure. A danger in extending the requirement on users would frustrate the principles outlined at 4.62 (above) of reducing administration. 5 CONCLUSION 5.1 AAT considers that its responses to this HMRC Consultation Document Strengthening the Tax Avoidance Disclosure Regimes will assist in implementation of the Government s intentions to align the Disclosure of Tax Avoidance Schemes (DOTAS) and VAT Disclosure Regime (VADR) rules and to update these to keep pace and support HMRC s wider counter-avoidance work. 5.2 AAT generally agrees and supports the proposals in this consultation document. However, concerns have been expressed in some areas, and in particular to the new draft Financial Products hallmark (4.15, 4.16, 4.19 above) because it is widely drafted. 5.3 AAT has suggested in the response to Q26 ways in which the DOTAS regime may be enhanced. 6 ABOUT AAT 6.1 AAT has over 49,800 full and fellow members and 80,000 student and affiliate members worldwide. Of the full and fellow members, there are 4,100 Members in Practice (MIPs) who provide accountancy and taxation services to individuals, not-for-profit organisations and the full range of business types AAT is a registered charity whose objects are to advance public education and promote the study of the practice, theory and techniques of accountancy 6 Figures correct as at 30 Sept 2014

18 and the prevention of crime and promotion of the sound administration of the law. 6.3 In pursuance of those objects AAT provides a membership body. We have drafted our response on behalf of our membership. 7 FURTHER ENGAGEMENT 7.1 If you have any questions or would like to consult further on this issue then please contact AAT at: consultation@aat.org.uk and aat@palmerco.co.uk telephone: FAO. Aleem Islan Association of Accounting Technicians 140 Aldersgate Street London EC1A 4HY