5 Nov 2012 : Column 447W

(3) how many closure notices HM Revenue and Customs issued making (a) an adjustment and (b) no adjustment to a tax return, in each tax year between 1989-90 and 2008-09, in circumstances where relief had been claimed using schemes later closed down by (i) section 62 of the Finance Act 1987 (No. 2), (ii) sections 112 and 115 of the Income and Corporation Tax Act 1988, (iii) section 59 of the Taxation of Chargeable Gains Act 1992, (iv) section 858 of the Income Tax (Trading and Other Income) Act 2005 and (v) section 58 of the Finance Act 2008. [126252]

Mr Gauke: Section 62 Finance (No 2) Act 1987 and the later equivalent provisions referred to in the question retrospectively restored the important and well established principle that Double Taxation Treaties do not affect a UK resident's liability to UK tax on their income or gains.

Section 58 Finance Act 2008 was introduced when evidence emerged that a large number of people were using the schemes and in light of a number of factors (including the widespread use, aggressive nature and artificiality of the scheme, the deliberate attempt to avoid the aim of the 1987 legislation, and the need to ensure fairness and certainty for all taxpayers). The legislation put beyond doubt, again with retrospective effect, that the schemes did not work—and never had done.

I am unable to provide the information requested because HM Revenue & Customs does not hold the information in the manner stipulated and a search of their systems and records would be at a disproportionate cost, is unlikely to provide the requested information, and any information found may still not be in the form you require. It may also be useful to explain that the original legislation introduced in 1987 preceded self-assessment procedures, including the introduction of closure notices.

HMRC can provide the following information which may be relevant to the questions being asked.

With regard to the number of trusts, a number of people using the wholly artificial tax avoidance schemes set up more than one trust in attempting to avoid tax, and in other cases more than one person used the same trust. HMRC identified roughly 3,000 people who had set up one or more Interest in Possession trusts that were likely to have been used for the wholly artificial scheme targeted by section 58 of the Finance Act 2008. Enquiries were opened into the returns made by many of these individuals. In a substantial number of cases it was established that the trust either was not in fact set up for the scheme, was set up for the scheme but not used, or was set up for the scheme but used for a later year.

HMRC is enquiring into the returns of approximately 2,000 people who used the scheme under enquiry and many of them used the scheme for more than one year, therefore users may have received multiple closure notices. In some cases enquiries were not opened but the position of the Exchequer has been safeguarded by the issuing of assessments. Where an assessment has been made for a year in respect of the wholly artificial scheme targeted by section 58, no closure notice would have been issued for the same year.