APN and non DOTAS schemes

[webberg]

The question has come up recently about the above.

The conditions required for the issue of an APN include the presence of a DOTAS SRN (scheme reference number) in respect of a notifiable scheme.

Clearly a non disclosed scheme has no SRN.

In the absence of such, HMRC need to either issue a Follower Notice based on a final decision is a case with similar facts, principles, etc, or have advised of counteraction under a GAAR process.

To be best of my knowledge, no FN's or GAAR counteraction notices exist in relation to contractor schemes.

HMRC therefore has options about how to deal with non disclosed schemes. I see these as:

Wait for a decided case and issue a FN - I'm guessing that might be 2 years away.

Take action under GAAR - I'm guessing that contractor schemes will be down the list and perhaps more than 2 years away.

Claim that a scheme is notifiable and issue an SRN followed by an APN - I'm guessing that this move, whilst potentially liable to challenge, is perhaps able to be done more quickly than the above. It would however be an escalation in their anti avoidance policy and as such may be less likely.

More likely I think is a new law that allows HMRC to designate any "scheme" as one designed for tax avoidance and therefore liable to an APN. In other words remove the requirement for SRN, FN or GAAR.

Until there is a change of law or policy however, I think users of non DOTAS schemes have a breathing space.

I'm aware that many such schemes also claim to have various levels of insurance that will either be called upon to fight any HMRC challenge and/or return fees if a challenge is made. My view is that such insurance needs to be studied carefully. Questions such as the below might be a good start.

1. Who is the insurer?
2. Are the connected with the provider?
3. Is there a limit on the insured value, individually or collectively?
4. Is the insurance for the tax value or the cost of defence?
5. Are there any minimum standards or stages to which a scheme has to be defended?

Make no mistake here. Non DOTAS schemes will come under the microscope and whilst I've seen a few that are very clever and have a good chance of resisting challenge (absent a change of law), some I've seen are little different from those disclosed already and will not only have a lower chance of ultimate success but may run users into penalties for non disclosure.

[holymoly23m]

The question has come up recently about the above.

The conditions required for the issue of an APN include the presence of a DOTAS SRN (scheme reference number) in respect of a notifiable scheme.

Clearly a non disclosed scheme has no SRN.

In the absence of such, HMRC need to either issue a Follower Notice based on a final decision is a case with similar facts, principles, etc, or have advised of counteraction under a GAAR process.

To be best of my knowledge, no FN's or GAAR counteraction notices exist in relation to contractor schemes.

HMRC therefore has options about how to deal with non disclosed schemes. I see these as:

Wait for a decided case and issue a FN - I'm guessing that might be 2 years away.

Take action under GAAR - I'm guessing that contractor schemes will be down the list and perhaps more than 2 years away.

Claim that a scheme is notifiable and issue an SRN followed by an APN - I'm guessing that this move, whilst potentially liable to challenge, is perhaps able to be done more quickly than the above. It would however be an escalation in their anti avoidance policy and as such may be less likely.

More likely I think is a new law that allows HMRC to designate any "scheme" as one designed for tax avoidance and therefore liable to an APN. In other words remove the requirement for SRN, FN or GAAR.

Until there is a change of law or policy however, I think users of non DOTAS schemes have a breathing space.

I'm aware that many such schemes also claim to have various levels of insurance that will either be called upon to fight any HMRC challenge and/or return fees if a challenge is made. My view is that such insurance needs to be studied carefully. Questions such as the below might be a good start.

1. Who is the insurer?
2. Are the connected with the provider?
3. Is there a limit on the insured value, individually or collectively?
4. Is the insurance for the tax value or the cost of defence?
5. Are there any minimum standards or stages to which a scheme has to be defended?

Make no mistake here. Non DOTAS schemes will come under the microscope and whilst I've seen a few that are very clever and have a good chance of resisting challenge (absent a change of law), some I've seen are little different from those disclosed already and will not only have a lower chance of ultimate success but may run users into penalties for non disclosure.

Thanks for this. I do have a couple of thoughts/questions?

I used a scheme that was not DOTAS, and while its great to not have an APN it also seems to leave us in a greater degree of uncertainty. Where a scheme is DOTAS and has an APN there seems to be at least greater clarity in respect of the following.
1. Paying an APN at least stops interest accruing (a big assumption you can afford it I know)
2. DOTAS registered means that there cant be a non-disclosure penalty
3. DOTAS registered seems to be more on the "radar" and more likely to be heard at Tribunal earlier.

Essentially we are left in a position where the financial figure is unknown and the resolution date seems a long long way away.

I guess, I do wonder sometimes whether I would have preferred DOTAS and an APN. For those with an APN please dont take that the wrong way, its horrendous to have to pay out good money, I am thinking purely from a clarity perspective.

Interestingly and maybe related Herefordshire Property Company Ltd v HMRC. While the content of the scheme is unrelated it does seem as if it was found that the user should be able to rely upon professional advice without the risk of penalty.

So to those points, if a scheme is not DOTAS and should have been can the user be penalised for non-disclosure. Surely its not up to the users to register a scheme as DOTAS?
How would you go about stopping interest accruing (without settling) and/or getting away from non-disclosure penalties (without prejudicing the outcome).
Essentially is there anything we can do, as users, to gain some clarity in this situation?

[MercladUK]

Thanks for this. I do have a couple of thoughts/questions?

I used a scheme that was not DOTAS, and while its great to not have an APN it also seems to leave us in a greater degree of uncertainty. Where a scheme is DOTAS and has an APN there seems to be at least greater clarity in respect of the following.
1. Paying an APN at least stops interest accruing (a big assumption you can afford it I know)
2. DOTAS registered means that there cant be a non-disclosure penalty
3. DOTAS registered seems to be more on the "radar" and more likely to be heard at Tribunal earlier.

Essentially we are left in a position where the financial figure is unknown and the resolution date seems a long long way away.

I guess, I do wonder sometimes whether I would have preferred DOTAS and an APN. For those with an APN please dont take that the wrong way, its horrendous to have to pay out good money, I am thinking purely from a clarity perspective.

Interestingly and maybe related Herefordshire Property Company Ltd v HMRC. While the content of the scheme is unrelated it does seem as if it was found that the user should be able to rely upon professional advice without the risk of penalty.

So to those points, if a scheme is not DOTAS and should have been can the user be penalised for non-disclosure. Surely its not up to the users to register a scheme as DOTAS?
How would you go about stopping interest accruing (without settling) and/or getting away from non-disclosure penalties (without prejudicing the outcome).
Essentially is there anything we can do, as users, to gain some clarity in this situation?

if you are worried that your scheme is not valid, then purchase a CTD now with a ball park figure of your tax potentially owed.

Rule of thumb 40% of total loans received

[bluemonkey71]

Dotas penalties mentioned in here.

The providers get penalised harder but I'd wager that if a provider got sniff of this heading their way they'd be closed and gone before you could say goodbye Danny Alexander.


https://www.gov.uk/government/public...hemes-guidance

[webberg]

Herefordshire Property Company Ltd v HMRC[/URL]. While the content of the scheme is unrelated it does seem as if it was found that the user should be able to rely upon professional advice without the risk of penalty.

So to those points, if a scheme is not DOTAS and should have been can the user be penalised for non-disclosure. Surely its not up to the users to register a scheme as DOTAS?
How would you go about stopping interest accruing (without settling) and/or getting away from non-disclosure penalties (without prejudicing the outcome).
Essentially is there anything we can do, as users, to gain some clarity in this situation?

Hertfordshire (and a couple of others) are useful BUT... is the scheme provider a "professional adviser". In the case, this is not a defined term but the inference is that the adviser was an accountant or tax professional of perhaps a finance professional. From what I can see, most providers would not fall into this category and perhaps therefore the protection is not available?

Can a user be required to disclose - yes. It depends on when the scheme was done as the rules changed (and my text books are not next to me so I can't remember when!)

Interest can be halted by acquiring a CTD - see posts ad nauseum

Penalty cannot be hedged.

In terms of disclosure I suggest:

1. Contact the provider and ask them why disclosure was not made.
2. If they say "because we were advised by Mr xx QC", ask to see a copy of the opinion.
3. If they say yes, it's likely you will need to go to their office to read it or you can appoint a representative to do it for you
4. If you read the opinion and are happy, you probably have as much certainty as is possible until a case comes along.
5. If the provider has not had an opinion or will not share it with you, speak to a professional about approaching HMRC to either make a personal disclosure or achieve written confirmation that you don't have to.

Whatever you do - DON@T get fobbed off by vague assertions or similar.

Take control.

[Hoodlum]

Has there been any change in the position on non-DOTAS schemes?

I ask because I was on such a scheme for a couple of years. I presume it was non-DOTAS because we were never told that it was, and I've had no APN.

I've still got unsubmitted self-assessments from those years (due to massive disorganisation), so I at least I still have the chance to "come clean" instead of running the risk of being found, and incurring a penalty.

Apparently some other users of the same scheme have received inquiry letters, so it's on HMRC's radar.

What I'm concerned about at this point is if they can somehow issue an APN against me. I am utterly insolvent at present, having been out of work for years, and only just returned.

[DotasScandal]

Has there been any change in the position on non-DOTAS schemes?
(...)
What I'm concerned about at this point is if they can somehow issue an APN against me

No change in position, and no, they cannot issue an APN to you.

[regron]

I know everyone's situation is different, but due to the fact I will end up bankrupt due to the DOTAS schemes I was on. The last thing I want is the non-dotas ones to drag on beyond that point. If I do end up in a position to declare bankruptcy, can I just hold my hands up and agree that the non-dotas ones didn't work and wrap them up as one ?

[Hoodlum]

Thanks, that's some cause for relief. At least it gives me a chance to scrape part of the tax together before they come knocking.

I presume if my scheme is taken to court in the meantime, and they rule it was notifiable, that opens me up to an APN.

Has this happened to many non-DOTAS schemes yet?

[DotasScandal]

Has this happened to many non-DOTAS schemes yet?

In theory it's possible, but as far as we know, hasn't happened to any scheme ever.