The City of London Law Society has warned that government proposals to identify tax avoidance schemes will create a ‘significant burden on business’.

The society’s revenue law committee was responding to HM Revenue & Customs’ consultation, ‘Strengthening the Tax Avoidance Disclosure Regimes’. 

Committee chair Simon Yates, a tax partner at Travers Smith, said: ‘There has always been a potential degree of inbuilt conflict arising from the obligations on advisers imposed by DoTAS (Disclosure of Tax Avoidance Schemes), in that the responsible adviser will generally want to take a very cautious view and so disclose if there is any element of doubt at all (since no reputable professional would ever want to be identified as non-compliant with anti-avoidance rules), when this may not always be the client’s preferred course or even in the client’s best interests.

‘None of this is particularly changed by the new proposals, although, if adopted, the changes would greatly widen the scope of DoTAS, and so it would be much harder a lot of the time to be absolutely confident that one had no obligation to disclose, even where the tax planning being undertaken was uncontroversial.’

The Society also called for a ‘wholesale sea change’ in the language used for tax avoidance disclosure regimes. 

The regime, it said, ‘is about “disclosure and tax transparency”, and its name should reflect that.

‘For a business to say that it has on occasion complied with its obligations for disclosure and tax transparency is an entirely different proposition to saying that it has disclosed or used a tax avoidance scheme,’ it noted.

CLLS said it was ‘important that responsible businesses are not tarnished as tax avoiders’.