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DoTAS - an observation

Of the 16 DoTAS schemes disclosed last year

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"only five were proactively disclosed. “We forced the disclosure of the others, and we’re intent on making the UK an uncomfortable place to be an avoidance promoter,” Ciniewicz said" See:

https://www.civilserviceworld.com/articles/news/hmrc-cracks-down-tax-avo...

Penny Ciniewicz seems to have not realised that by trying to make HMRC look good with that statement it equally calls the whole DoTAS regime into disrepute and not fit for purpose if HMRC admit that they only receive 5 DoTAS disclosures a year! 

 

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Psycho
By Wilson Philips
27th Nov 2019 15:46

I agree. The principle behind DOTAS is sound but if promoters are refusing to comply then other means will need to be found to bring them into line. And I have no problem with that.

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Replying to Wilson Philips:
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By Justin Bryant
27th Nov 2019 16:47

But DoTAS does not just apply to tax avoidance schemes does it? It's already widely drafted - just look at the SDLT & IHT DoTAS rules.

It's completely crazy to have all that DoTAS legislation and guidance (not to mention all the text books and seminars etc. on the topic) for just 5 disclosures a year!

HMRC should do away with voluntary DoTAS disclosures and just have forced DoTAS disclosures (a bit like how the GAAR works).

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Replying to Justin Bryant:
Psycho
By Wilson Philips
27th Nov 2019 16:44

What part of “I agree” do you not understand? I think the principles behind DOTAS are sound, but agree that it isn’t working as intended.

If promoters are not voluntarily Disclosing their Tax Avoidance Schemes then something else needs to be put in place.

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Replying to Wilson Philips:
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By Justin Bryant
27th Nov 2019 16:52

You used the word "promoter" presumably in the tax avoidance context. Most high street tax advisors would not consider themselves promoters of tax avoidance schemes, yet they (including you) are all caught by DoTAS on their day-to-day tax advice work without realising it is my point. That's why it's a farce my friend.

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Replying to Justin Bryant:
Psycho
By Wilson Philips
27th Nov 2019 20:09

Since I said “If promoters are not voluntarily Disclosing their Tax Avoidance Schemes” it should be fairly obvious to all but the terminally stupid that I was using the word “promoter” in the context of tax avoidance.

You clearly do not understand DOTAS. We have very strict procedures in place to identify which of our advice (all of it) is outside of DOTAS and which (none of it) is disclosable.

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Replying to Justin Bryant:
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By unearned luck
28th Nov 2019 00:00

Please Justin, can you give some examples of day-to-day advice work undertaken by high St tax advisers that are subject to DOTAS, saying which hallmarks are triggered. If aweb members were aware that they were giving DOTAS advice it might up the number of reports made to HMRC.

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Replying to unearned luck:
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By Justin Bryant
28th Nov 2019 10:34

I suggest the [deleted by mod] above reads the actual DoTAS legislation and the recent Hyrax DoTAS case, where he will see that DoTAS applies to a tax advantage (a la Brebner) and not to tax avoidance (a la Willoughby), so it applies to lots and lots of things most tax advisors advise on and in particular there are basically no DoTAS filters re SDLT and very few filters re IHT.

The real reason for the dearth of DoTAS disclosures is the general ignorance on that point we have seen so clearly displayed here.

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Replying to Justin Bryant:
Psycho
By Wilson Philips
28th Nov 2019 11:31

You can be as rude and dismissive as you want. It doesn't change the fact that you don't know what you're talking about. Your failure to comply with the request to provide examples speaks volumes.

I'd be interested on your view as to how many ordinary tax advisors are promoting stuff like Hyrax in their day-to-day work, in particular falling within any of the hallmarks.

But well-known is your propensity to reference cases that have only a tenuous, if any, link to the point in hand. My point, in case you missed it, is that DOTAS is failing in that it is not catching the promoters of tax avoidance schemes, and so alternative means may need to be employed. Whether or not the DOTAS net is cast beyond contrived tax avoidance schemes is another discussion point. For the record, I'm confident that none of our advice is hallmarked. I suspect that you've merely got a large chip on your shoulder because much of yours would be.

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Replying to Wilson Philips:
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By Tax Dragon
28th Nov 2019 12:45

All that said (and linking this thread to another recent query), while it has been confirmed that mere incorporation of a business is not reportable, even if the main benefit – or one of the main benefits – of incorporation is a tax saving, is the same true of the use alphabet shares?

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Replying to Tax Dragon:
Psycho
By Wilson Philips
28th Nov 2019 13:19

Perhaps you could identify which of the hallmarks might apply, because it’s not immediately apparent to me.

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Replying to Wilson Philips:
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By Tax Dragon
28th Nov 2019 13:22

Shares are financial products, as defined.

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Replying to Tax Dragon:
Psycho
By Wilson Philips
28th Nov 2019 16:01

The use of alphabet shares does not in itself fall foul. But, yes, in certain circumstances I agree that the financial product hallmark could apply to schemes or arrangements involving their use.

In all cases where we have advised on their use it has been for one simple purpose only - to facilitate the payment of dividends at different rates on the different share classes. They invariably rank pari passu in all respects (of course there are exceptions) but none of the shares contain terms such that the shareholder would not have acquired them but for any perceived tax advantage.

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Replying to Wilson Philips:
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By Tax Dragon
28th Nov 2019 16:21

All of that would, I think, be consistent with a correct analysis. That said, I'd be a bit worried about atlea's £100 per child and condition 4 (which condition you fail to mention). I know it's peanuts, but there isn't a non-peanuts test in the requirement to disclose.

But none of that was my real point. I was just doing what Justin seems incapable of doing and that was to suggest real life situations in which DoTAS would have to be considered (if only to determine that no disclosure was needed) – and to show that DoTAS encroaches much more onto the high street than the high street seems to be aware of. I hate to say it, but Justin is not as wrong as you (and unearned luck etc) suggest.

The mere fact that there has to be guidance to say that incorporation is not disclosable (provided it is vanilla...) shows just how wide-ranging the financial product hallmark is considered to be.

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Replying to Tax Dragon:
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By Tax Dragon
28th Nov 2019 16:26

Tax Dragon wrote:

The mere fact that there has to be guidance to say that incorporation is not disclosable (provided it is vanilla...) shows just how wide-ranging the financial product hallmark is considered to be.

And the fact that even atlea seems capable of thinking of a potentially disclosable scheme is fairly disquieting!

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Replying to Tax Dragon:
Psycho
By Wilson Philips
28th Nov 2019 17:01

Some people (eg Justin) might consider the issue of shares, with subsequent payment of dividends, to minor children to be abnormal or contrived. The thought never entered my mind. Now, if the purpose of the children's shares was to allow the dividend income to find its way back into the parents's pockets the analysis might be different. Even then, though, that to me is a fairly straightforward arrangement and is not particularly contrived nor abnormal. No doubt Justin would disagree.

The fact that DOTAS may apply to certain schemes and arrangements resulting in a tax advantage, without necessarily involving avoidance, is not in dispute. My issue is with the statement that all tax advisers are caught in respect of their day-to-day tax work, suggesting that the DOTAS net is cast much wider than it actually is. Whilst agreeing that it goes beyond pure tax avoidance, at the same time I am in no doubt whatsoever that my 'day-to-day' tax advisory work is outside the regime. I suspect that Justin is simply talking from personal experience.

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Replying to Wilson Philips:
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By Tax Dragon
28th Nov 2019 17:11

The thought never entering your mind is Justin's point, I think. A DoTAS checklist (if you don't already have one) might solve that. Have something on file to justify on non-disclosure, if push ever comes to shove. [I doubt we have yet seen the last chapter in this evolving story.]

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Replying to Tax Dragon:
Psycho
By Wilson Philips
28th Nov 2019 17:35

That is exactly my point. For all tax advisory work we have a hallmark checklist. And that includes work on alphabet shares. That is why I am confident that all of our advisory stuff is outside of DOTAS.

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Replying to Justin Bryant:
Psycho
By Wilson Philips
29th Nov 2019 18:35

What a pathetic cop-out

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Hallerud at Easter
By DJKL
27th Nov 2019 16:25

Justin- as an aside, more stirrings on the front page of today's Times (Scottish edition) vis a vis the quantum of tax sought arising from the Glasgow Rangers EBT schemes- some murmurings of HMRC causing the demise of the club (and losses for its then shareholders) by over egging the tax demands- Mr King, as he steps down as chairman of the current Glasgow Rangers, has been voicing the possibility of future legal action against HMG by such shareholders.(He lost money as a shareholder of the original company)

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Replying to DJKL:
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By Justin Bryant
27th Nov 2019 16:36

That's entirely unsurprising and of little interest as it's well known that HMRC are happy to screw people pretty much all the time you'll see from this & other websites. They get up to much worse than is alleged there I can assure you!

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By Tax Dragon
28th Nov 2019 14:44

Wasn't someone (Sift?) asking for ideas for a live show (Sift Live?) recently?

Perhaps you should suggest DoTAS as a topic.

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By SWAccountant
28th Nov 2019 15:25

I can't believe 5 whole people couldn't manage to sidestep the hallmarks and then actively disclosed.

We need a "Disclosure of un-disclosed DOTAS'able Schemes" regime. DOUDOTASS.

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Replying to SWAccountant:
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By Tax Dragon
28th Nov 2019 15:57

I have to say I'm not quite sure how this story tallies with the ones about thousands of disclosed schemes having been lined up for APNs. Something has gone wrong, somewhere. But before laughing too loud, you might want to familiarise yourself with TMA s98C - and in particular the time limits for the imposition of penalties.

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Replying to Tax Dragon:
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By SWAccountant
28th Nov 2019 16:46

There were a lot. Maybe not thousands, I'm not sure.

HMRC released a list of DOTAS numbers to which APN's had been applied (all of them, basically).

used to be a time that everything was registered for DOTAS as to do so was a good thing - it prevented HMRC from ever claiming a discovery.

APN's turned that on its head.

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Replying to SWAccountant:
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By Tax Dragon
28th Nov 2019 17:14

SWAccountant wrote:

APN's turned that on its head.

I'm voting for the party that will get rid.

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