Use this guidance to find out about the Serial Tax Avoidance Regime, what happens if you’ve used a defeated tax avoidance scheme and what you need to do next.
If you use a tax avoidance scheme you could be affected by the Serial Tax Avoidance Regime (STAR).
Certain schemes defeated after 5 April 2017 are taken into account when HMRC considers if you’re affected.
The types of schemes taken into account are those:
- that have been counteracted under the general anti-abuse rule (GAAR)
- where HMRC has sent you a follower notice
- that fall under the disclosure of tax avoidance schemes (DOTAS) rules
- that are notified or notifiable under the VAT avoidance disclosure regime rules (VADR)
- that fall under the disclosure of tax avoidance schemes for VAT and other indirect taxes’ (DASVOIT) rules
If you’ve been given a warning notice under the STAR, but continue using tax avoidance schemes, you may have sanctions imposed on you, which could include:
- being publicly named as a serial tax avoider
- restrictions to direct tax relief
More information is available about the STAR.
Find out if you’re affected
If HMRC isn’t already looking into your tax affairs
You can make sure you’re not at risk of being affected by the STAR by contacting HMRC to correct your tax affairs for those schemes you’ve used.
You should only do this if:
- you’ve used a tax avoidance scheme that falls under the DOTAS, DASVOIT or VADR rules
- you don’t think we’ve started, or are about to start, a check of your tax affairs
- the scheme isn’t counteracted under the GAAR
- we haven’t sent you a follower notice for the scheme
If you want to talk to us about correcting your tax affairs you can contact us by telephone:
For a single scheme
Telephone: 03000 510 350
For more than one scheme
Telephone: 03000 530 435
8:30am to 4pm
Monday to Friday
Closed weekends and bank holidays
If HMRC is already looking into your tax affairs
If you enter into a tax avoidance scheme on or after 15 September 2016, and it’s defeated, we’ll consider whether you’re affected by STAR.
If you entered into a scheme before 15 September 2016, you won’t be affected for that scheme if you:
- settled your tax affairs for the scheme with us before 6 April 2017
- fully disclosed your use of the scheme to us before 6 April 2017
- wrote to HMRC before 6 April 2017 to say you will have fully disclosed your use of the scheme within the time limit given to you
If you entered into more than one scheme before 15 September 2016, you’ll need to have done this for each scheme to make sure you’re not affected.
If you contacted HMRC about fully disclosing a scheme before 6 April 2017
You’ll need to fully disclose your use of the scheme to us. This means providing all the information we need by the time limit.
You must include:
- full details of the scheme (tax arrangements) you used
- a description of how you used the scheme
- a description of how the scheme is designed to produce a tax advantage
- a breakdown of the income, reliefs and deductions you received or claimed through the scheme - for each tax year or period (include any future income, reliefs or deductions)
- details of the total amount of tax advantage you received from the scheme - for each tax year or period (include any future tax advantage)
- the dates any tax would have been due - if you hadn’t used the scheme
- your tax reference number, for example your:
- Unique Taxpayer Reference (UTR)
- National Insurance number
- employer Pay As You Earn (PAYE) reference
- VAT registration number if the avoidance scheme was for VAT
Make sure you also include any supporting documents or information you have about the scheme, for example:
- copies of accounting entries
- copies of related letters or emails
Send the information to us in writing.
If you’re already dealing with someone in HMRC Counter-Avoidance, send the information to them. If not, send it to:
HM Revenue and Customs
A tax avoidance scheme is classed as defeated if:
- you reach an agreement with HMRC, so the expected tax advantage of using the scheme isn’t available
- we send you a tax assessment, or adjust your tax position, to counter the tax advantage - and you don’t appeal
- you appeal to a tribunal or court against our assessment in relation to your use of a scheme and they rule in our favour
- you take corrective action after receiving a follower notice
If you use a tax avoidance scheme which is defeated and you’re affected by that defeat, we’ll send you a warning notice and factsheet within 90 days of the defeat.
The warning notice gives you:
- information about the defeated scheme
- start and end dates for your warning period under the STAR
We’ll also send you a warning notice if you’re linked to someone who’s in a scheme which is defeated.
The warning notice will tell you that you’ve entered into a warning period.
The warning period runs for 5 years. During this period, you must send extra information to HMRC about your tax affairs.
Special rules apply to partnerships. Instead of a warning period, the partnership will enter into an information period. We’ll tell you more about the special rules for partnerships at the time.
HMRC can extend the warning or information period
A warning or information period can be extended if you:
- don’t send us the information required
- use another tax avoidance scheme which is also defeated
Information you need to send
During the warning period, you must send information to HMRC for each reporting period that is specified in the warning notice. Your warning notice will also tell you the exact information you need to send.
This could be information about:
- your use of any tax avoidance schemes
- late or missed tax returns
- any tax returns that included avoidance arrangements you were using
You must send this information to us within 30 days of the end of the reporting period it covers.
You may be charged a penalty if you use another defeated tax avoidance scheme during your warning period.
If you use further defeated schemes in the same warning period, HMRC may send you a notice of penalty assessment charging:
- 20% for 1 defeated scheme
- 40% for 2 defeated schemes
- 60% for 3 or more defeated schemes
When to pay or appeal against a penalty
Public list of serial tax avoiders
HMRC may publish your details to identify you as a serial tax avoider if both of the following apply:
- you’ve used an avoidance scheme during a warning period and we have defeated it
- we’ve given you warning notices for 2 other schemes that were used by you or a person linked to you, during the warning period
We’ll tell you when we are considering publishing your details, and give you the opportunity to object.
Tax relief restrictions
As well as being charged a penalty and having your details published, you could be stopped from claiming direct tax reliefs for up to 3 years. HMRC may put this restriction in place where all the following apply:
- you’ve used an avoidance scheme during a warning period and we’ve defeated it
- we’ve given you warning notices for 2 other schemes that were used by you or a person linked to you during that warning period
- all of those schemes involved the misuse of direct tax reliefs
If we restrict your direct tax reliefs, we’ll send you a relief restriction notice. If you disagree, you have 30 days from the date shown on the notice to appeal.
Direct tax relief restrictions can cover:
- Annual Tax on Enveloped Dwellings
- Apprenticeship Levy
- Capital Gains Tax
- Corporation Tax
- Diverted Profits Tax
- Income Tax
- Inheritance Tax
- National Insurance contributions
- Petroleum Revenue Tax
- Stamp Duty Land Tax