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AIA

New DOTAS guidelines published

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2nd Oct 2013
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Promoters of tax avoidance schemes will have slightly longer to disclose information about their clients to HMRC in some situations.

The extension to the usual 30-day deadline for giving HMRC a client's NI number and unique taxpayer reference is the main change in draft guidance of the Disclosure of Tax Avoidance Schemes (DOTAS) in the Finance Act 2013.

The change will come into force in early November 2013 and apply if "the time limit for the client to provide the information to the promoter has not expired at the date that the promoter has to provide that information to HMRC."

HMRC uses DOTAS to help it close avoidance schemes it believes to be abusive.

Last year, a report by the National Audit Office said that DOTAS has helped the Revenue change tax law and prevent some avoidance activity, although challenging a scheme can take years and often requires litigation.

In each of the last four years, more than 100 avoidance schemes have been disclosed under DOTAS, but it found there was no evidence that their usage has reduced.

The disclosure regime began in 2004 and was initially limited to tax arrangements concerning employment or certain financial products. in 2006, it was extended to all income tax, corporation tax and capital gains tax.

A tax arrangement must be disclosed when:

  • It will, or might be expected to, enable any person to obtain a tax advantage

  • That tax advantage is, or might be expected to be, the main benefit or one of the main benefits of the arrangement

  • It is a tax arrangement that falls within any description ('hallmarks') prescribed in the relevant regulations

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