Promoters of tax avoidance schemes

13 February 2015

Guidance on the new rules that apply to promoters of tax avoidance has been published and describes the legislation in Part 5 and Schedules 34 to 36 Finance Act 2014.

Part 5 contains new rules that apply to promoters of tax avoidance schemes and which aim to deter the development and use of avoidance schemes by influencing the behaviour of promoters, their intermediaries and clients.

The objectives of the regime are to change the behaviour of a small and persistent minority of promoters of avoidance schemes who are not transparent with HMRC and display other behaviours detrimental to the fairness of the tax system. The regime aims to achieve its objectives by:

  • requiring monitored promoters to disclose details of their products and clients to HMRC
  • ensuring monitored promoters tell clients, potential clients and intermediaries that they are a monitored promoter
  • minimising the risk of tax loss via avoidance schemes developed by promoters of tax avoidance schemes
  • making sure that clients and intermediaries are fully aware of the risks of engaging in avoidance schemes.

The regime builds on the existing regime for the disclosure of tax avoidance schemes (DOTAS), drawing on and reinforcing existing disclosure obligations and sharing many similar definitions. So this guidance frequently refers to the existing DOTAS guidance that may be found on the HMRC website.

The regime involves a graduated series of sanctions, which carefully balances the rights of a person against the need to prevent and defeat tax avoidance.