AHP3500 - Finding avoidance: Disclosure of Tax Avoidance Schemes (DOTAS) - client lists

Disclosure of Tax Avoidance Schemes (DOTAS) - client lists obligations

HMRC may give the scheme an SRN after a promoter has supplied information about the scheme or when HMRC identifies a new avoidance scheme or a scheme that continues to be sold on or after 10 June 2021 without having been disclosed.

Issuing an SRN does not mean that HMRC approves the scheme. HMRC does not approve avoidance schemes.

When the scheme is disclosed by a promoter, HMRC will notify the SRN to that promoter. The promoter must provide that SRN to any clients using the scheme.

When HMRC has allocated an SRN to an undisclosed scheme, HMRC will notify that SRN to both promoters and suppliers of the scheme. Any promoter or supplier notified of a SRN must provide that SRN to any of their clients using the scheme.

Promoters and suppliers, who have been notified of the SRN, must tell HMRC which scheme they’ve provided scheme related services to by providing ‘client lists’ each quarter.

Persons using a scheme who have been given a SRN must tell HMRC that they have used the scheme when submitting a tax return, or by using specific forms.

Scheme users are also required to pass on the SRN received from the promoter or supplier to any other parties to the scheme.

Employers must let HMRC have information about the scheme and the employees who may be advantaged by avoidance schemes where they have received an SRN from a promoter. If there’s a tax advantage for employers, this should also be reported to HMRC. This information identifying employees must be sent to HMRC by including it on form AAG8.

Client list information

Client list data can be used by HMRC operational teams to track scheme usage and to inform the scale, potential tax at risk and probable resource impact of a risk.

Some points to consider when using the data:

  • if you have any doubts about the identity of the customer you should proceed cautiously and aim to verify the information before discussing it with your customer
  • the law requires the promoter (and or supplier) to make the relevant client list entry in relation to the client who has bought the scheme; it may however be the case that the client is an intermediary and not the end user, that is the person who is expected to get the tax advantage
  • the trigger for a promoter making a client list entry is the same as that which is required to issue the SRN, that is, becoming aware of the client entering into a transaction forming part of the scheme. Be aware that at the point you receive client list information, the client may not have filed a return affected by the scheme
  • you also need to be aware that some promoters issue SRNs to clients as soon as they make the scheme available to them, and before they are strictly required to); it is therefore possible that some of these promoters may make a client list entry for a ‘client’ who has not yet (and in some cases never does) implement the scheme

Further information about the DOTAS rules and when they apply can be found in the DOTAS Guidance Manual on GOV.UK.

https://www.gov.uk/guidance/disclosure-of-tax-avoidance-schemes-overview