Changes to the Disclosure Regime
With effect from 1 July 2006, the existing Tax Avoidance Schemes (Prescribed Description of Arrangements) Regulations will be revoked. New Regulations will apply to the whole of income tax, corporation tax and capital gains tax and contain hallmarks (descriptions of arrangements in line with the system already used for VAT). If a scheme falls within any one hallmark then it will be notifiable. The hallmarks will fall into three groups:

• three generic hallmarks that target new and innovative schemes (derived from the existing ‘filters’ of confidentiality, premium fee and off-market terms);
• a hallmark that targets mass marketed tax products; and
• hallmarks that target areas of particular risk.

Two specific hallmarks will concern schemes intended to create tax losses to offset income or capital gains tax and certain leasing schemes.

The time limit for disclosure of schemes devised in-house will be reduced to 30 days from the date that the scheme is implemented. But a de minimis provision will be added so that neither individuals nor businesses that are SMEs will have to disclose in-house schemes.

International Tax Enforcement Arrangements
New powers will allow the UK to enter into bilateral and multilateral arrangements for the exchange of information in relation to both direct and indirect taxes. The existing rules provide for arrangements only in respect of direct taxes. They will also provide for such arrangements to include, for the first time, provisions on mutual assistance in tax collection in respect of both direct and indirect taxes. The provisions will have effect from the date of Royal Assent to the Finance Bill.