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AS 2014: Govt in further crackdown on Dotas tax avoidance schemes

The Government has announced a further crackdown on tax avoidance schemes which fall under its Disclosure of Tax Avoidance Schemes regime.

In the Autumn Statement today, the Government said it will increase penalties for non-declaration of Dotas schemes and publish more information on schemes and their promoters.

It says this will increase transparency and further educate potential scheme users of the risks of entering into marketed tax avoidance.

It will also increase HM Revenue & Customs resources in administering and enforcing the Dotas regime by creating a new taskforce in April to police promoter and user behaviour.

In addition, scheme promoters will have to declare more information about Dotas schemes to HMRC.

The Treasury estimates the measures will create an additional £150m in tax revenues over the next five years.

BDO partner and tax investigations specialist Dawn Register says: “Publishing more details about Dotas schemes is designed to deter people from using these schemes in the first place. The Government is trying to change the taxpayer mindset.

“Requiring promoters to provide more information will also mean that HMRC can intervene earlier where it has concerns.

“This is not a new agenda but it shows the Government is putting significantly more resources into this.

“It will consult on the new penalties but I would expect them to be quite severe because the Government is clearly taking this seriously.”

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  1. This is good news as these schemes are often been promoted as legal schemes when in fact they often break the law as in Eclipse 35.

    I would go even further and make tax advice a regulated activity as often there are too many cowboys inventing schemes that are clearly illegal and often putting the liability on the consumer. Accountants should not be allowed to put small print in their terms and conditions stating that the client has checked their own tax return to see if it complies with the law.

    Maybe it’s about time that accountants and solicitors faced the same level of fines that financial advisers suffer if we are found to be in the wrong.

    Nobody likes paying tax but its a necessary part of our system, I’m okay with financial planning which includes ISA, Pension, VCT etc. just not okay with artificially created schemes that blatantly are tax evasion. There has to be some degree of social justice and part of the problem is our tax system is far too complicated.

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