DOTAS ― notifiable IHT schemes

Produced by Tolley

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

  • DOTAS ― notifiable IHT schemes
  • Notifiable schemes
  • Application of DOTAS to IHT schemes
  • IHT-specific hallmark
  • Hallmark conditions
  • Established practice exemption
  • Grandfathering
  • Application of general hallmarks to IHT schemes
  • Confidentiality where promoter involved
  • Premium fee

DOTAS ― notifiable IHT schemes

Under the disclosure of tax avoidance scheme (DOTAS) regime, persons have to self assess tax planning proposals or arrangements, and if these meet one or more ‘hallmarks’ they must be disclosed to HMRC.

The DOTAS regime is deliberately cast quite widely so that it is capable of applying both to something that everyone would recognise as a tax avoidance scheme and to any set of arrangements that may be expected to deliver a tax or national insurance advantage as a main benefit.

This guidance note considers whether a scheme is notifiable where the tax advantage relates to inheritance tax (IHT). For an summary of the DOTAS regime, including the taxes to which it applies and who must make the disclosure, see the Disclosure of tax avoidance schemes (DOTAS) ― overview guidance note.

For details of the action which end users of the scheme must take, see the DOTAS ― what end users must do guidance note.

Notifiable schemes

The DOTAS rules do not include a definition of an avoidance scheme, instead they focus on whether a scheme is ‘notifiable’. A scheme can be something that it is described as such, but the rules apply equally to any arrangements. This guidance note uses the term ‘scheme’ to cover both.

A ‘scheme’ is notifiable if it is expected, or can reasonably be expected:

  1. to deliver an advantage in relation to any of the taxes listed in the Disclosure of tax avoidance schemes (DOTAS) ― overview guidance note

  2. that advantage is the main benefit or one of the main benefits of the scheme, and

  3. that it carries certain ‘hallmarks’ or contains specified features. Those hallmarks or features vary according to the type of tax concerned

Tax: FA 2004, s 306; SI 2006/1543

The hallmarks that apply to schemes where the tax advantage relate to IHT are discussed below. The hallmarks that apply for national insurance and the other taxes are discussed in the DOTAS ― what is a notifiable scheme?

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