Disclosure of tax avoidance schemes—income tax, corporation tax, CGT and NICs
Disclosure of tax avoidance schemes—income tax, corporation tax, CGT and NICs

The following Tax guidance note provides comprehensive and up to date legal information covering:

  • Disclosure of tax avoidance schemes—income tax, corporation tax, CGT and NICs
  • Function of the DOTAS rules
  • Where can I find the rules?
  • Which taxes are affected?
  • What creates a requirement to disclose?
  • Who is a promoter?
  • Hallmarks where there is a promoter
  • Hallmarks for in-house arrangements
  • Who must make a disclosure?
  • Using existing toolkit
  • more

This Practice Note describes the rules on the disclosure of tax avoidance schemes (DOTAS) applying to income tax, corporation tax, capital gains tax (CGT) and National Insurance contributions (NICs).

The procedural aspects of the DOTAS rules, including time limits, how to make a disclosure, scheme reference numbers, client lists, penalties and HMRC information powers, are covered in Practice Note: Disclosure of tax avoidance schemes—procedure.

For the rules on disclosing:

  1. stamp duty land tax (SDLT) avoidance, see Practice Note: Disclosure of tax avoidance schemes—SDLT

  2. avoidance of VAT and other indirect taxes, see Practice Note: Disclosure of tax avoidance schemes—VAT and other indirect taxes (DASVOIT), and

  3. inheritance tax (IHT) avoidance, see Practice Note: Disclosure of tax avoidance schemes—IHT

For the separate (but related) rules imposing sanctions on promoters of tax avoidance schemes (POTAS), see Practice Note: Promoters of tax avoidance schemes.

Function of the DOTAS rules

The DOTAS rules make it obligatory to inform Her Majesty's Revenue & Customs (HMRC) about certain tax avoidance arrangements. Making a disclosure has no bearing on whether the arrangements have their intended tax outcome. This means, for instance, that if a scheme is legally effective (from the taxpayer's point of view), HMRC will have to legislate to stop it.

The DOTAS rules act as an early warning system for HMRC, who would otherwise not find out about tax avoidance schemes