The new Mandatory Disclosure rules for certain types of tax avoidance arrangements, introduced in Finance Act 2010, are heavily reliant on Revenue regulations for their operation. A draft of these Regulations and associated documents was released by Revenue last month for consultation.

Chartered Accountants will already be well aware of the gist of the new rules, now set out in section 817D TCA 1997 and following sections. Promoters and Marketers of tax avoidance schemes, all as defined, must notify Revenue of the arrangements. The draft Regulations focus on the type of scheme which must be disclosed, the precise information to be provided, and the timescale in which this must be done. Revenue is canvassing the views of interested parties which should be offered by 15 September next.

Without prejudice to any submissions which CCAB-I might make as part of the consultation process, the main features of the draft Regulations are:

Types of Scheme

Some particular arrangements are included. Schemes based on the use of losses, both for individuals and corporates, employment arrangements involving a reduction or deferral of the employee's liability and devices which convert income into capital or income into gifts are all namechecked. Listed recognised arrangements involving ESOTs, Share Options, Salary Sacrifice (Bus and Bike etc), Pension Contributions, Film Relief, Windfarms, Woodlands, BES, High Tech Venture Capital and Remittance Basis are, on the face of it, excluded.

However, there are three more nebulous categories. The first of these involves secrecy. If a promoter wants to keep a scheme quiet, either from Revenue or from other promoters, the scheme becomes a disclosable scheme. A parallel provision exists where no promoter is involved. And when a scheme might, even hypothetically, attract premium fees, it becomes disclosable. The third, and admittedly narrower, category posits that a scheme will be a candidate for disclosure if it involves the use of reusable, standardised, documents. It's narrower because there is recognition that some standard arrangements (for example BES) involve a raft of standardised documentation which would not of itself make a scheme disclosable.

Precise Information – For practical purposes in understanding the draft Regulations, the most straightforward approach is to examine the draft standard forms. Completion of these will not be a trivial task. Having the scheme documented in a client friendly manner (as most accountancy firms would do in any event) will be a help.

Timescale – Five days

This Revenue scheme for mandatory disclosure of tax avoidance arrangements is largely imported from the UK approach, warts and all. Unfortunately some of the bad bits crossed the Irish Sea, while not all the good bits made it. The Legal Professional Privilege provisions exempt law firms from making disclosures where accountancy firms must. But these, for example, had a chequered history in the UK. They were absent in the original UK legislation, then introduced following protestations from lawyers representatives, and finally had to be modified following representations from our sister organisation the Institute of Chartered Accountants in England and Wales. Of itself, that doesn't make the proposed approach wrong but it does raise legitimate questions as to whether or not it is appropriate in Ireland.

On the other hand, the very broad secrecy and premium fee conditions for disclosure can, and will, over-ride the specific areas which are mentioned both as included and excluded.

CCAB-I will offer a written submission on the matter and among our priorities will be to try to ensure equality of approach between accountancy practices and other professional firms in complying with these new requirements.

The Revenue consultation material is available at http://www.revenue.ie