Drafters of tax avoidance schemes face greater scrutiny over the coming months as HM Revenue & Customs moves to close loopholes and bolster its disclosure regime, according to the head of the Revenue’s anti-tax avoidance group.

Chris Tailby, a barrister who has directed the Revenue’s anti-avoidance group for five years, described the existing disclosure regime for tax avoidance schemes as a ‘toe in the water’.

He told the Gazette that, although legal avoidance schemes cannot be challenged, the Revenue’s shift towards principles-based legislation will ‘catch more of the mischief’ and ‘close loopholes’.

He said the Revenue is not planning to encroach on privileged client information, which is currently exempt from disclosure. Instead, the Revenue will work with law firms and other professionals to identify further ‘hallmarks’ of damaging avoidance schemes, he said. Schemes bearing these hallmarks risk being shut down, with tax repayments backdated to the scheme’s start date.

The Revenue will move away from prescriptive rules when principles-based legislation is published in the upcoming Finance Act. ‘It will catch more of the mischief and I hope it will close loopholes,’ Tailby said.

‘We don’t want to keep having amendment after amendment because people keep finding holes in the latest amendment and then we have to make another one.

‘If we can get away from this, it will help business and make it harder to promote harmful schemes.

‘When we get information about an avoidance regime, we work out the risk to the Revenue. If there is a risk, we will close that scheme down. Our judgement calls have always been strict.’

In his Budget report for 2009, chancellor Alistair Darling said the government will ‘robustly challenge’ tax avoidance.