Disclosure of tax avoidance schemes

The rules on the disclosure of tax avoidance schemes (DOTAS) (and their indirect tax equivalent, disclosure of tax avoidance schemes for VAT and other indirect taxes (DASVOIT)) oblige tax advisers, or sometimes the taxpayer, to inform HMRC about certain arrangements avoiding UK taxes. Further rules require the disclosure of certain cross-border arrangements to avoid obligations to report information on financial accounts and beneficial ownership. Initially these rules were contained in legislation implementing the EU directive known as DAC 6, but these were replaced by legislation to implement the OECD Mandatory Disclosure Rules (MDR) applicable to arrangements entered into on or after 28 March 2023.

For more information on the MDR, see Practice Note: Disclosable cross-border tax arrangements—Mandatory Disclosure Rules (MDR) and below.

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. There is no obligation on HMRC to comment on the effectiveness of a disclosed scheme.

The intention of the disclosure rules