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HMRC internal manual

National Insurance Manual

NICs avoidance: Disclosure of Tax Avoidance Schemes: NICs legislation - general


For general information about the Disclosure of Tax Avoidance Schemes (DOTAS) regime, see NIM58001.

Part 7 Finance Act 2004

This requires disclosure of arrangements or proposals where

  • use of the arrangements might be expected to confer a tax advantage
  • that tax advantage might be expected to be the main benefit, (or a main benefit) of using the arrangements
  • the arrangements fall within a description prescribed in Treasury regulations.

The FA 2004 disclosure provisions

  • apply to taxes and not NICs
  • include powers to make regulations which include those setting out arrangements which must be notified to HMRC and the details that must be disclosed.

Section 7 of the National Insurance Contributions Act 2006

Many employment schemes relate to both tax and NICs. However, NICs were not included in the disclosure rules because that would have required NICs primary legislation and so securing Parliamentary time for a NICs Bill.

In practice, the tax disclosure rules provide the information necessary to counter both tax and NICs avoidance in the usual situation where a scheme seeks to avoid both. But they do not support the provision of information in relation to schemes seeking to avoid only NICs.

NICA 2006 took forward the Paymaster General’s Pre-Budget Report 2004 announcement that the Government would be prepared to act against tax and NICs avoidance involving employee remuneration.

NICA 2006 inserted section 132A into the SSAA 1992. Section 132A provides for tax disclosure rules brought in by Part 7 of the FA 2004 to apply to NICs proposals and arrangements in the same way as they apply to income tax schemes.

For more detail about what powers section 132A of the Act provides, see NIM58100.

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Section 8 National Insurance Contributions Act 2006

Section 132A extends to Northern Ireland as well as Great Britain. No amendment was made to the Social Security Administration (Northern Ireland) Act 1992.