Ten things about disclosing a tax avoidance scheme
Published 29 October 2015
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Here are 10 things you need to be aware of about your responsibilities to tell HMRC about tax avoidance schemes.
1. Most tax avoidance schemes have to be disclosed to HMRC
Under the Disclosure of Tax Avoidance Schemes (DOTAS) rules, promoters and users of tax avoidance schemes have to tell us about the scheme.
2. HMRC is tightening the rules on disclosure
Over the past few years, the type of avoidance scheme that has to be reported to us has been extended, and we’re consulting on extending even further – so you need to check the rules.
3. You must disclose a tax avoidance scheme
You need to be aware of your responsibilities to disclose tax avoidance schemes whether you’re a promoter, an intermediary such as a tax agent, an independent financial advisor, or a user of a tax avoidance scheme. You can find more information at Disclosure of tax avoidance schemes: overview.
4. HMRC is hunting down hidden tax avoidance schemes
Our new specialist tax avoidance taskforce is a dedicated team of investigators who are looking for undisclosed avoidance schemes which should have been reported through the DOTAS rules.
5. HMRC is getting smarter at uncovering tax avoidance schemes
Our specialist investigators have access to state of the art tools and intelligence systems to profile and detect tax avoidance schemes, promoters and individual users.
6. You could face a penalty if you do not disclose
For promoters, if you do not disclose a scheme to HMRC which should be disclosed under DOTAS, the penalty is up to £1m. For users, if you use a DOTAS scheme and do not correctly report it to HMRC, the penalties start at £5,000 per offence.
7. You need to check if the scheme should be disclosed
You should be aware that HMRC is uncovering schemes which should have been disclosed. We will challenge these schemes. An easy way to tell if the scheme has been disclosed is whether the promoter sent you a form AAG6.
8. New sanctions and penalties for promoters who fail to disclose
Promoters who fail to disclose a DOTAS scheme, could find HMRC putting them in the new Promoters of Tax Avoidance Scheme regime. HMRC will send them a conduct notice, and if they do not change their behaviour they will risk being publicly named by us, as well as having to inform their clients that they are being monitored by us.
Failure to comply with these conditions could result in receiving fines of up to £1 million. You can find more information at Promoters of tax avoidance schemes: guidance.
9. HMRC’s litigation success means that you should get out of avoidance
Most avoidance schemes simply do not work. HMRC wins around 9 out of 10 avoidance cases that the taxpayer chooses to take to court and many more users settle with us before that stage. Settling your tax affairs with us will avoid the stress and sleepless nights of court action and the cost of litigation.
10. HMRC have set up a hotline so you can report tax avoidance
If you want to report a scheme, or a promoter, you can ring our Avoidance hotline on Telephone: 03000 588 993. You can also email us using our website at Tax avoidance schemes.