My Lords, I thank the noble Baroness, Lady Kramer, once again, for her contribution. I hope to persuade her, with the information that I am about to provide, that her amendment is unnecessary. On this occasion, my remarks will be relatively short.
I am pleased that the noble Baroness has raised this point, because communication is extremely important. HMRC will be publishing detailed guidance which will cover the changes to the DOTAS regime, explaining when HMRC can issue a notice requiring promoters or suppliers in the avoidance chain to provide information on suspected avoidance schemes. It will also explain what will happen if they do not provide information, or where they do and HMRC considers the scheme is notifiable, the issue of the scheme reference number—the so-called SRN—their right of appeal against the issue of the SRN, and their right to make representations before HMRC publishes details. Finally, the guidance will explain the obligations of the promoter or supplier if the SRN is not withdrawn.
I can say to the noble Lord, Lord Tunnicliffe, that the new guidance is anticipated for the end of February this year, but it will not adversely impact small businesses that do not participate in avoidance schemes.
I turn to a question from the noble Lord, Lord Sikka —and I appreciate his late intervention and contribution in Committee. First, he asked why NICs are not due on unearned income. He may know this, but national insurance contributions are part of the UK’s social security system, which is based around the long-standing contributory principle and centred around paid employment and self-employment, with employers, employees and the self-employed paying towards the protection of those who have been in the labour market. Payment of NICs builds an individual’s entitlement to claim contributory benefits, which then replace earnings in certain circumstances—for example, if someone is unable to work or, indeed, has retired. Unearned income is generally excluded from liability to NICs, as it is not derived from paid employment.
The noble Lord also asked about tackling the promoters of tax avoidance and what success had been had in that regard. I took note of his points about DOTAS and appreciate his raising this issue. HMRC has undertaken more than 500 compliance interventions on promoters and their supply chains—that takes account of the year 2020-21. However, there is no single approach that will force all promoters to leave the market, and it requires a multipronged approach. This includes HMRC prioritising the most active promoters and their supply chains, and vigorously challenging schemes and promoters under the disclosure of tax avoidance schemes, or DOTAS, as we are discussing today, the promoters of tax avoidance schemes, or POTAS, and the enablers regime. The Government have taken strong action to tackle tax avoidance and those who promote it, introducing a number of anti-avoidance regimes that have helped reduce the avoidance tax gap from £4.7 billion in 2005-06 to £1.5 billion in 2019-20.
I hope that, with those answers, the noble Baroness will withdraw her amendment.