Disclosure of Tax Avoidance Schemes

The Disclosure of Tax Avoidance Scheme (DOTAS) rules were created as a way for the HMRC to keep up-to-date with the various tax avoidance schemes in circulation.  Promoters are requested to disclose avoidance schemes, which allow HMRC to review and amend legislation to block the schemes they deem to be unfair. HMRC also has the power to issue penalties to those who fail to comply with the regime.  Scheme promoters are required to disclose the main elements of the scheme to HMRC; the scheme is then issued with a DOTAS number to identify it, which is then be entered into the tax return form.

HMRC should be informed of any tax arrangement where the description falls within any of hallmarks prescribed in the relevant regulations, and where it is expected to enable an individual to have a tax advantage, which is, or is expected to be, one of the main benefits of the arrangement.

The regime covers the direct taxes: Income Tax, Corporation Tax, or Capital Gains Tax, National Insurance schemes, and Stamp Duty Land Tax and Annual Tax on Enveloped Dwelling and Inheritance Tax, where chargeable lifetime Inheritance Tax is avoided. There are the separate regimes which apply to VAT which can be found in the VAT Disclosure Regime (VADR).  The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) (Amendment) Regulations 2016 (SI 2016/99) came into force on 23 February 2016, introducing new hallmarks.  Notably, a financial products hallmark was added, which includes any tax advantage obtained where a share, loan, or other prescribed financial product.

Bright Line Law is a leading law firm that has previously been involved in advising on the use of, and regulatory investigation of film industry, and offshore tax schemes. We have also been instructed to represent clients in criminal and civil litigation initiated by HMRC. Bright Line Law provides specialist advisory, advocacy, litigation, policy and strategic services. If you require specialist advice on tax, contact our team or telephone us on + 44 (0)203 709 9470.

Jonathan Fisher QC
Lead Counsel

Email jf@brightlinelaw.co.uk
Telephone + 020 3872 2852

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