DOTAS ― notifiable IHT schemes

Produced by Tolley
DOTAS ― notifiable IHT schemes

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

  • DOTAS ― notifiable IHT schemes
  • What is DOTAS?
  • Application of DOTAS to IHT
  • IHT specific hallmark
  • Established practice exception
  • Application of general hallmarks to IHT schemes
  • Notifying HMRC of the scheme
  • Reporting SRN to HMRC
  • Providing information to promoter
  • Accelerated payments

What is DOTAS?

The disclosure of tax avoidance schemes (DOTAS) is a set of rules that require those implementing tax avoidance schemes to give advance notice to HMRC. This enables HMRC to scrutinise the arrangements and to take countervailing action if it is deemed necessary. 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 is described as such but the rules apply equally to any arrangements. This guidance note uses the terms ‘scheme’ and ‘arrangement’ interchangeably. A scheme is notifiable if it is expected, or can reasonably be expected, to deliver an advantage in relation to tax and that advantage is the main benefit, or one of the main benefits, of the scheme and it also contains specified features. Those features vary according to the type of tax concerned.

The taxes covered by the DOTAS regime are:

  1. income tax

  2. corporation tax

  3. capital gains tax (CGT)

  4. national insurance contributions (NIC)

  5. inheritance tax (IHT)

  6. stamp duty land tax (SDLT)

  7. annual tax on enveloped dwellings (ATED)

A summary of DOTAS procedures is given in the Disclosure of tax avoidance schemes (DOTAS) ― overview guidance note. Full HMRC guidance on DOTAS is available on the GOV.UK website.

Application of DOTAS to IHT

Certain types of inheritance tax scheme became notifiable with effect from 6 April 2011. Initially, only a very narrow range of IHT schemes were brought within the ambit of DOTAS. They were confined to arrangements whereby property becomes relevant property and they gain an advantage in relation to the entry charge. The scope was extended with effect from February 2016 to apply two of the general hallmarks, which apply to other taxes, to IHT arrangements. Then, with effect from 1 April 2018, the original 2011 regulations were revoked and replaced by a set of regulations with broader application. This guidance note describes the identifying features of IHT schemes which are currently notifiable

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