New DOTAS regulations on ATED, confidentiality and employment hallmarks

New regulations have been published to take forward initiatives announced in the 2012 “Lifting the Lid on Tax Avoidance Schemes” consultation, reports accountancy services Harris & Co. They extend the Disclosure of Tax Avoidance Schemes (DOTAS) regime to include the Annual tax on Enveloped Dwellings (ATED) hallmark and employment hallmarks, and also enhance the confidentiality hallmark.

Finance Bill 2013 added ATED, an annual charge payable by companies that own high value residential properties, to the list of taxes to be covered by DOTAS. The Annual Tax on Enveloped Dwellings Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2013 (SI 2013/ 2571) and the Tax Avoidance Schemes (Information) (Amendment, etc) Regulations 2013 (SI 2013/2592), both published on 9 October 2013, add the ATED to the DOTAS regime, where currently schemes designed to reduce a user’s tax bill for income tax, corporation tax, capital gains tax, inheritance tax, national insurance contributions, stamp duty land tax and VAT must be disclosed.

Schemes designed and marketed to avoid paying the ATED will now have to be notified to HMRC. Penalties for non-disclosure of a scheme are up to £1 million and penalties for users failing to report the use of a scheme on a tax return are £100 for the first failure, £500 for the second and £1,000 for subsequent failures.

In another move to further tackle tax avoidance, promoters of avoidance schemes will now be forced to provide HMRC with details of their client’s national insurance number and unique taxpayer reference. This will make it easier for HMRC to track and investigate avoiders. It will also make it harder to avoid tax by using “disguised remuneration” schemes designed to avoid tax and national insurance on employment income.

Exchequer Secretary David Gauke said:

‘This Government has been clear – aggressive tax avoidance is unacceptable and will not be tolerated. The regulations we are laying mark a significant strengthening of the rules and build on the considerable work we have done to tackle not only tax avoidance schemes but also the promoters of these schemes.’