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Disclosing Tax Avoidance Schemes

By Qdos Contractor

Qdos Contractor

10 things you need to know

Whether someone is a promoter, an intermediary such as a tax agent, an independent financial advisor, or a user of a tax avoidance scheme, HMRC would like to make you aware of your responsibilities to disclose the scheme. To this end they have published  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 the Revenue 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 HMRC has been extended and the department is consulting on extending even further, so you need to check the rules.

3. You must disclose a tax avoidance scheme
Be you a promoter, a tax advisor, an independent financial adviser or a user of a tax avoidance scheme, you must be aware of your responsibilities to disclose tax avoidance schemes.

4.HMRC is hunting down hidden tax avoidance schemes
The Revenue's new specialist tax avoidance taskforce is a dedicated team of investigators who are seeking out undisclosed avoidance schemes which should have been reported through the DOTAS rules.

5. HMRC is getting smarter at uncovering tax avoidance schemes
HMRC's 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 don't disclose
Those that use a DOTAS scheme but don't report it correctly to HMRC could be looking at a starting penalty of £5,000 per offence.

7. You need to check if the scheme should be disclosed
HMRC is uncovering schemes which should have been disclosed and they will challenge such 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 themselves in the new Promoters of Tax Avoidance Scheme regime. This involves HMRC sending them a conduct notice and if they don't mend their ways they risk being publicly shamed by the department, as well as having to inform their clients that they are being monitored by the Revenue. Failure to comply with these conditions could result in them being fined by up to £1 million.

9. HMRC's litigation success means that you should get out of avoidance
Most avoidance schemes, so say HMRC, don't work. The Revenue wins about 80% of avoidance cases that go to court and many more users settle with HMRC before it gets that far.

10. HMRC have set up a hotlline so you can report tax avoidance
For those that want to report a scheme or a promoter, they can ring HMRC's Avoidance hotline on 03000 588 993 or e-mail via the Tax Avoidance Schemes section of the Revenue's website.

Published November 2015