HMRC have published an open consultation 'Draft regulations: DOTAS, DASVOIT and POTAS regimes', requesting industry views on the proposed rule changes. The Finance Bill 2021 will, when passed, enable HMRC to act decisively where promoters fail to disclose avoidance schemes at an early stage.
The changes were initially announced as part of the Finance Bill 2020-21 and the relevant 'Tax Information and Impact Note' was published at the time. These proposed changes are now incorporated in Finance Bill 2021 and apply to the following regimes:
- Disclosure of Tax Avoidance Schemes (DOTAS).
- Disclosure of Avoidance Schemes for VAT and Other Indirect Taxes (DASVOIT).
- Promoters of Tax Avoidance Schemes (POTAS).
The new measures will be incorporated into Statutory Instruments (SIs) that will come into force on 9 September 2021.
- DOTAS: The Tax Avoidance Schemes (Amendment) Regulations 2021.
- DASVOIT: The Indirect Taxes (Disclosure of Avoidance Schemes) (Amendment) Regulations 2021.
- POTAS: The Promoters of Tax Avoidance Schemes (Prescribed Circumstances under Section 235) (Amendment) Regulations 2021.
The measures are intended to strengthen the existing regulatory regimes. HMRC are aware that promoters and other enablers are failing to comply with the requirements to disclose the existence of Tax Avoidance Schemes while continuing to sell and promote them.
The proposals include:
- DOTAS: allowing HMRC to allocate a Reference number to an arrangement or a proposal that has not been disclosed but where HMRC reasonably suspects them to be notifiable. In such circumstances, the amendments also extend the obligations in Part 7 to all persons that HMRC reasonably suspects to be supplying the (proposed) arrangements and their clients.
- DASVOIT: in addition to the DOTAS proposals which are mirrored here. Where a reference number has been allocated on this basis, there is no requirement for the arrangements or proposals to be 'notifiable'. Certain references are changed to allow the amendments to work.
- POTAS: new regulation 3(4) provides that the existing exception to someone being categorised as a promoter does not apply if the person is a member of a promotion structure.
HMRC invites views on these changes. It is recommended that the draft SIs are read before doing so. The consultation runs until 13 June 2021.
Responses should be sent to:
Useful guides on this topic
Tax Avoidance Schemes
Tax avoidance is heavily targeted by HMRC, but how do you spot tax avoidance schemes? What are the types of schemes available that should be avoided? What disclosure requirements are there? When are tax clearances needed?
DOTAS: Disclosure of Tax Avoidance Schemes
What are the rules on Disclosure of tax avoidance schemes (DOTAS)? When should you disclose your use of a tax avoidance scheme? What are the consequences of non-disclosure? How are penalties calculated?
Promoters of Tax Avoidance Schemes (POTAS)
Who is a Promoter? What are the Promoters of Tax Avoidance Scheme rules? What does this mean for promoters, intermediaries and clients?
Government consults on how to tackle tax avoidance schemes
The government has launched two new consultations dealing with tax avoidance, ‘Tackling promoters of tax avoidance’ and ‘Call for evidence: Tackling Disguised Remuneration tax avoidance.’
External links
Consultation: Draft Regulations: DOTAS, DASVOIT and POTAS regimes
Policy paper: New proposals for tackling promoters and enablers of tax avoidance schemes
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