AHP3400 - Finding avoidance: Disclosure of Tax Avoidance Schemes (DOTAS)

The DOTAS regime allows HMRC to obtain information early on about the types of tax avoidance schemes that are in circulation and how they operate, enabling appropriate counteraction to be taken. Not all avoidance is disclosable under DOTAS because arrangements are only disclosable if they fall within one or more of the hallmarks which mean that you may identify avoidance which has, quite correctly, not been disclosed. 

Full details and guidance on the DOTAS regime are on GOV.UK. 

Very briefly, under the DOTAS regime a scheme promoter, or in certain circumstances the user of a scheme, is required to disclose the main elements of the scheme to HMRC. Having considered the disclosure, HMRC may allocate a DOTAS Scheme Reference Number (SRN) to the scheme. If HMRC become aware of an undisclosed scheme (that is new, or which continues to be sold on or after 10 June 2021) then HMRC may allocate an SRN to the scheme if it reasonably suspects that the scheme should have been disclosed and the promoters/suppliers of that scheme have not been able to satisfy HMRC that the scheme is not notifiable.

Indirect tax avoidance is covered by the VAT disclosure regime (VADR) and Disclosure of Tax Avoidance Schemes: VAT and other indirect taxes (DASVOIT). Full details on the VADR and DASVOIT regimes are on GOV.UK. 

The legislation imposes a number of tests to determine if disclosure is required. Briefly these are:

  1. are there arrangements which are expected to provide a tax advantage?
  2. is getting a tax advantage expected to be one of the main benefits?
  3. does the scheme fall within one of a number of descriptions, called ‘hallmarks’?