DOTAS - what end users must do

By Tolley

The following Employment Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • DOTAS - what end users must do
  • End users of a scheme with no UK promoter - obligation to disclose
  • End users in receipt of Scheme Reference Numbers (SRNs)
  • Accelerated Payments

Although it is generally the responsibility of promoters of avoidance schemes to provide HMRC with details of a notifiable scheme, end users of notifiable schemes also have responsibilities under the DOTAS regime.

End users of a scheme with no UK promoter - obligation to disclose

If a notifiable scheme has no promoter resident in the UK to which HMRC can apply the disclosure requirements, the responsibility to disclose details of the scheme shifts to the end user, ie any person entering into a transaction that forms part of the scheme in question. Alternatively, any non-UK promoter may voluntarily disclose details of the scheme to HMRC, removing that obligation from end users.

FA 2004, ss 309, 310

In the case of income tax, corporation tax, capital gains tax and NIC, if the scheme has been developed in-house, it may still have to be disclosed. However, this obligation usually only arises if the end user receiving the tax or NIC advantage arising from the scheme is not an individual or a small or medium-sized business. The exception is where the scheme comes within the employment income hallmark (see the DOTAS – what is notifiable? guidance note for more details of this exception and the definition of SME), where an in-house scheme would always have to be disclosed. Where the tax advantage sought is inheritance tax, stamp duty land tax, or the annual tax on enveloped dwellings, there is no exception for notifiable schemes developed in-house.

If the end user does disclose a notifiable scheme to HMRC, he has to supply HMRC with the same level of detail as a promoter would, ie enough detail to enable HMRC to understand the scheme and the way in which it aims to deliver the intended tax advantage (or NIC advantage). HMRC has the same powers to require further information regarding schemes disclosed by end users

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