HM Revenue & Customs (HMRC) the UK tax authority published draft guidance on 21 August 2013 to accompany the present consultation on the confidentiality hallmark about the disclosure of tax avoidance schemes (DOTAS) regime. The guidance will be modified once the hallmark is final.

Under the UK legislation on the disclosure of tax avoidance schemes the promoters of schemes must disclose a scheme to HMRC if the scheme will give a person a tax advantage, the tax advantage is one of the main benefits of the arrangement and the arrangement fits certain hallmarks, one of which is the confidentiality hallmark.

The hallmarks of schemes that fall under the legislation are that they are standardized tax products; products for which a premium fee could reasonably be obtained; loss schemes; certain leasing arrangements; the promoter wishes to keep the arrangements confidential from a competitor or the promoter wishes to keep the arrangements confidential from HMRC.

A scheme falling under any of these hallmarks must be disclosed by the promoter within a short time, normally five days, of certain triggering events. Any taxable person designing their own tax avoidance scheme must disclose it within 30 days of implementation. HMRC issues the scheme with a reference number and this number must then be disclosed by users of the scheme when submitting returns to HMRC.

The draft guidance issued by HMRC relates to the confidentiality hallmark where there is a promoter involved and where there is no promoter (i.e. the taxpayer has devised its own avoidance arrangement). The guidance under each of these headings looks at the hallmarks relating to the wish to keep the scheme confidential from competitors and the wish to keep elements of the scheme confidential from HMRC.