Disclosure of tax avoidance schemes (DOTAS)
The DOTAS operation provides a way to pre-inform HMRC of your intentions before taking part in a tax avoidance scheme. It enables HMRC to keep track of and assess any schemes that might be considered aggressive or unfair from a legal perspective.
The information gathered through DOTAS includes details of how the scheme will be used and the people using it.
Promoters of tax avoidance schemes are required to disclose details about the scheme to HMRC, upon which, if approved, they are issued with a DOTAS number. Any user of this scheme will need to insert the applicable DOTAS number into their tax return.
A DOTAS-approved scheme won’t necessarily stay that way. HMRC will monitor the scheme and, if it is found too aggressive or unfair, will file to have it legally terminated. There are severe financial penalties for those who fail to comply with the DOTAS regime.
The main taxes all require disclosure under the DOTAS rules, which are complex, and are regularly updated, which can be confusing, so it’s always best to consult HMRC’s most recent guidance and/or a tax advisor when doing your tax returns.
You will need to declare your tax arrangements in the following circumstances:
- If the arrangement will enable a tax advantage to any person
- If the tax advantage is considered the main benefit of the tax arrangement in question
- If the tax arrangement falls under the hallmarks put forward in the relevant regulations