The UK HM Revenue & Customs (HMRC) has revised its guidance outlining the statutory requirements for the Disclosure of Tax Avoidance Schemes (DOTAS) regime on 29 May 2026.
The Disclosure of Tax Avoidance Schemes (DOTAS) regime is designed to provide HM Revenue and Customs (HMRC) with early information regarding tax arrangements, how they function, and who is using them. This guidance applies to arrangements—including schemes, transactions, or series of transactions—that are intended to provide a tax or National Insurance contribution advantage compared to other courses of action.
Scope and covered taxes
The disclosure rules currently cover arrangements relating to several heads of duty, including Income Tax, Corporation Tax, and Capital Gains Tax. The scope also extends to National Insurance contributions, Stamp Duty Land Tax (SDLT), Annual Tax on Enveloped Dwellings (ATED), Inheritance Tax (IHT), and the Apprenticeship Levy.
The tests for notifiability
For a scheme to be considered “notifiable” and thus require disclosure, it must generally meet four primary tests:
- Arrangements: There must be a scheme, transaction, or series of transactions.
- Tax Advantage: The arrangements must enable, or be expected to enable, a person to obtain a tax advantage, such as a reduction, avoidance, or deferral of tax.
- Main benefit: Obtaining that tax advantage must be the main benefit, or one of the main benefits, of the arrangements.
- Hallmarks: The scheme must fall within one of the “hallmarks” prescribed in regulations, which are descriptions of typical avoidance features.
Key Hallmarks
Hallmarks are identifying characteristics that signal potential tax avoidance. Key examples include:
- Confidentiality: Where a promoter wishes to keep the scheme’s structure secret from HMRC or competitors to maintain a competitive advantage or facilitate repeated use.
- Premium fees: Where a promoter can charge a fee that is significantly attributable to the tax advantage or is contingent upon that advantage being obtained.
- Standardized tax products: Often called “mass-marketed schemes,” these are prepared products requiring little to no tailoring for different users.
- Loss schemes: Designed to generate trading losses for individuals to offset against other income or gains.
- Specific hallmarks: Dedicated rules exist for leasing arrangements, employment income (specifically avoiding Part 7A ITEPA), and financial products.
Who must disclose and when
- Promoters: The duty to disclose usually falls on the promoter, defined as someone responsible for the design, marketing, or management of a scheme in the course of a relevant business. Promoters must generally disclose a proposal within 5 days of the earliest trigger event, such as making the scheme available for implementation.
- Users: A scheme user may be required to disclose if the promoter is based outside the UK, if the promoter is a lawyer protected by legal professional privilege, or if the scheme is an “in-house” arrangement with no external promoter. Users of in-house schemes must typically disclose within 30 days of the first transaction.
The scheme reference number (SRN) system
Once a scheme is disclosed, HMRC usually allocates an 8-digit Scheme Reference Number (SRN). The promoter must provide this SRN to their clients, who may then need to pass it to other parties involved. Scheme users are legally required to report the SRN to HMRC, typically by including it on their tax return in the specific boxes provided or by using a dedicated form like the AAG4. Employers using schemes involving their employees must also provide the SRN to those employees and submit annual reports (Form AAG8) to HMRC.
Penalties and enforcement
Failure to comply with DOTAS obligations can result in significant financial penalties.
- Promoters: Can face initial penalties of up to GBP 600 a day, which a tribunal may increase to GBP 1 million or more in certain cases of non-compliance.
- Users: Failing to report an SRN on a tax return can lead to penalties of GBP 5,000 for a first occasion, rising to GBP 10,000 for subsequent failures.
- Information powers: HMRC has the authority to issue notices requiring introducers to identify promoters and can seek tribunal orders to deem a scheme disclosable if there are reasonable grounds to suspect it should have been notified.
