With effect from today, the tax avoidance disclosure regime is extended to national insurance contributions.
Where a scheme covers both tax and NICs, the promoter must disclose as before, but only a single disclosure need be made. However, included in the disclosure must be clear explanation as to how the scheme works for NIC purposes.
HMRC have provided guidance for payroll managers who may not be certain whether or not they need to disclose certain schemes. Basically, says HMRC, most payroll schemes would not be caught by the disclosure rules. They would not be likely to pass the test for disclosure, ie is it a scheme expected to provide someone with a NICs advantage, that advantage being one of the main benefits of using the scheme?
The answer, in HMRC's view, is in most cases, likely to be no.
In the few instances that the answer is yes, there are further 'hallmarks' that the scheme must exhibit before the rules on disclosure apply. These are hypothethical tests:
Confidentiality from other promoters. (This test applies to promoters only. Simply put, would you like to keep the NIC-advantage element of the scheme secret from other promoters?)
Confidentiality from HMRC. Ask yourself: would you want to keep the NIC -advantage element secret from HMRC? If yes, then it looks like a scheme that could be caught by the disclosure rules.
Premium fee. Would a promoter be likely to receive a premium fee for the NIC-advantage element?
Standardised NIC products. That is, certain schemes using standardised documentation and transactions, and whose main purpose is to obtain a NICs advantage (so-called “plug and play” schemes).
These hallmarks are the hypothetical tests that must be applied in order to decide whether or not a scheme falls within the disclosure rules.