Following complaint from HMRC, the Advertising Standards Authority (ASA) have ruled that the way in which a tax avoidance scheme was marketed was misleading and have ordered the advert be changed.

HMRC complained to the ASA about the way in which a tax scheme was being advertised on the scheme providers website and in leaflets. Advertising included HMRC’s logo and made claims about the scheme:

  • It was “known and accepted by HMRC since 1994”
  • It was “approved by the House of Lords in 2005”
  • It resulted in “up to 80% less tax”, “without breaking the law!”
  • It was “fully disclosed to HMRC”.
  • The scheme trusts “don’t involve tax avoidance – they use statutory reliefs”.

The scheme relied on a House of Lords ruling, MacDonald v Dextra Accessories [2005] HL , but as this case did not refer to the scheme that was being sold, and did not, at the House of Lords, discuss the tax avoidance position, the ASA said it was misleading to state that it was approved by the House of Lords since 2005.

The advert implied that the House of Lords and HMRC had each considered the particular scheme and approved or accepted it. This would mislead those who saw the advertisement.

Similarly, the use of the HMRC logo and that it was fully disclosed to HMRC also implied that HMRC have fully scrutinised and accepted the scheme.

The advertising stated it did not involve tax avoidance but made no reference to the General Anti-Abuse Rule (GAAR), Disguised Remuneration (DR), or the proposed new loan charge applicable from April 2019.

It is not uncommon to see such claims in tax scheme advertising: approval from HMRC or the courts due to a previous case; claims that there is no tax avoidance because the scheme provider has concluded that no Disclosure of Tax Avoidance Scheme (DOTAS) is required, etc.

The ASA ruling is another string to HMRC’s bow, and will change the way that schemes are advertised, which should result in a reduction in the number of users.

HMRC have stated they believe the scheme clearly fails and that a tax charge arises at the outset. See HMRC Spotlight 40.


Close company EBTs and HMRC

General Anti-Abuse Rule – GAAR

DOTAS: Disclosure of tax avoidance schemes

DOTAS: are you an introducer?

DOTAS: what to do if you are given a scheme reference number

Disguised remuneration

Spotlight 40: Income trust schemes: misleading advertising

Spotlight 39: Disguised remuneration: re-describing loans


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