AHP3400 - Finding avoidance: Disclosure of Tax Avoidance Schemes (DOTAS)
The DOTAS regime allows HMRC to obtain information early on about the types of tax avoidance schemes that are in circulation and how they operate, enabling appropriate counteraction to be taken. Not all avoidance is disclosable under DOTAS because arrangements are only disclosable if they fall within one or more of the hallmarks which mean that you may identify avoidance which has, quite correctly, not been disclosed.
Full details and guidance on the DOTAS regime are on GOV.UK.
Very briefly, under the DOTAS regime a scheme promoter, or in certain circumstances the user of a scheme, is required to disclose the main elements of the scheme to HMRC. Having considered the disclosure HMRC issues the scheme with a DOTAS Scheme Reference Number (SRN), and users are required to notify HMRC of use of the scheme by inserting the number on their tax return.
Indirect tax avoidance is covered by the VAT disclosure regime (VADR) and Disclosure of Tax Avoidance Schemes: VAT and other indirect taxes (DASVOIT). Full details on the VADR and DASVOIT regimes are on GOV.UK.
The legislation imposes a number of tests to determine if disclosure is required. Briefly these are:
- are there arrangements which are expected to provide a tax advantage?
- is getting a tax advantage expected to be one of the main benefits?
- does the scheme fall within one of a number of descriptions, called ‘hallmarks’?