HMRC have recently issued letters to targeted individuals in an attempt to dissuade them from resorting to using tax avoidance schemes.
The people who received the Revenue correspondence were those whose name appeared on client lists of those scheme promoters who were required to disclose information for the period October 2013 – December 2013 under the Disclosure of Tax Avoidance Schemes (DOTAS). Under DOTAS certain people must provide information to HMRC about avoidance schemes within 5 days of the schemes being made available or implemented. Usually the person providing the information will be the promoter of the scheme, i.e. the person or company who designs or markets the scheme.
The DOTAS legislation imposes a number of tests to determine if disclosure is required. In short these are:
HMRC say the purpose of distributing these letters is to provoke taxpayers into thinking seriously about their involvement in tax avoidance schemes and also enlighten people about the consequences of using such schemes.
The Revenue intend to send out these letters each quarter to those people whose names crop up on subsequent promoter lists. Copies of the letters are sent to the tax advisers of the individuals involved as HMRC recognise the important role that agents have in assisting their clients to decide whether or not to participate in a tax avoidance scheme.