Have you received a  Pre-Disclosure enquiry under Section 313A of Finance Act 2004?

DOTAS

The Disclosure of Tax Avoidance Schemes (DOTAS) regime was introduced in 2004 to provide early information to HMRC about tax avoidance schemes and their users. It has been amended a number of times to ensure it remains up- to-date and can identify tax avoidance schemes as the tax avoidance market changes. 

DOTAS regime covers Income Tax, Corporation Tax, Capital Gains Tax, Stamp Duty Land Tax (SDLT), Inheritance Tax (IHT), Annual Tax on Enveloped Dwellings (ATED), National Insurance contributions, Apprenticeship Levy.

Under DOTAS, promoters must provide information to HMRC about their avoidance scheme within 5 days of the scheme being made available or implemented. 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’?

There are 8 hallmarks aimed at new and innovative schemes, marketed schemes and targeting specific schemes, for example, loss schemes.

Where HMRC suspect that a person is the promoter of arrangements which may be notifiable, they may open a Pre-Disclosure enquiry under Section 313A of Finance Act 2004. This will be in the form of a written notice requiring you to state whether, in your opinion, the proposal of arrangements are notifiable by you and, if not, to provide reasons why they are not. This is a formal notice which should not be ignored.

POTAS

HMRC are committed to further tackle promoters and enablers of tax avoidance including strengthened sanctions and additional HMRC powers taken at an earlier stage to disrupt the business model on which promoters rely.

The measures proposed aim to:

1.     Clamp down on promoters who dissipate or hide their assets to avoid paying penalties by ensuring HMRC can protect its position to secure promoters’ assets to pay any relevant penalties.

2.     Tackle offshore promoters through the UK entities that support them by imposing a new penalty on the onshore entities who are associated with, and who facilitate, the activities of an offshore promoter.

3.     Give HMRC the power to ask a court to close down a company involved in promoting or enabling tax avoidance where it can be shown that they are not operating in the public interest, and disqualifying the directors at the earliest point possible.

4.     Support taxpayers to identify and exit avoidance earlier by providing more information on the products offered or sold to them by promoters, so they can make informed decisions.

If you have received a letter from HMRC’s Counter Avoidance Promoters department, you should obtain professional advice as soon as possible. Contact us for a confidential non obligation consultation today.

We can help you deal with any tax investigation through expert advice and specialist representation. Our team deals with matters ranging from individual tax disputes to large and complex multiple client cases. 

• Formal and Informal Notices
• Compliance Checks
• Penalty Notices
• Discovery Assessments
• Voluntary Disclosures to HMRC
• Accelerated Payment Notices (APNs)
• Code of Practice 8 – CoP 8 Investigations
• Code of Practice 9 – CoP 9 Investigations
• Contractor Loan Schemes and the Loan Charge
• DOTAS/POTAS Inquiries
• PAYE Tax Investigations 

• Corporation Tax Investigations
• IR35 Disputes
• VAT Investigations and Inspections
• HMRC Unannounced Inspections and Visits
• Settlements with HMRC
• Time to Pay Arrangements
• Statutory Reviews
• Forensic Tax Advice
• Tax Litigation Advice
• Corporate Advisory
• Private Client Advisory