Tax Faculty comments on proposed changes to the DOTAS regime
At the time of the Pre-Budget Report on 9 December 2009 HMRC published a consultation document setting out potential changes to the DOTAS regime. We have now submitted our response, TAXREP 12/10.
Five measures were set out in the consultation document covering:
- the timing for disclosure of schemes;
- introducers to promoters will have to provide details of the latter;
- increased penalties for failing to disclose a scheme;
- periodic reports about clients to whom a scheme reference number has been issued; and
- revisions and extensions to the hallmarks.
Our overall comments about these new proposals were:
‘The consultation document proposes a package of five measures to enhance the existing DOTAS regime that was introduced in 2004 and has been amended periodically since then.
The introduction to the consultation document recognises that DOTAS has been a success but cautions that this very success
‘has encouraged some of the small number of businesses who promote tax avoidance schemes to seek not to comply with the rules, or to find loopholes in them. Moreover, tax avoidance is a highly changeable market and a number of the schemes operating in the current global economic downturn are beyond what DOTAS currently targets.’
We support the aim of DOTAS to provide intelligence about avoidance schemes so that the Government can take informed decisions as to whether it is appropriate to prevent the use of those schemes that undermine the tax system and which the Government decides need to be closed down.
However we feel that some of the proposed measures are too draconian and go further than is necessary to achieve the objectives outlined in the consultation document.’
We then set out our detailed views on each of the five measures that have been proposed.