HM Revenue & Customs (HMRC) has launched a new crackdown on tax avoidance with 10 tips on how to stay on the right side of the law.
The warning follows recent revelations of 1,500 investors, including celebrities and sports stars, who are being pursued for £200 million for staking cash in an alleged illegal scheme called Elysian Fuels.
Real Madrid soccer team manager Rafael Benitez, snooker champion Stephen Hendry and golfer Rory McIlroy are all named as investors in the scheme.
“We want to warn everyone involved in aggressive tax planning about their responsibilities to report their actions and pay the right amount of tax due,” said an HMRC spokesman.
DOTAS tax checklist
To avoid an investigation, HMRC suggests:
- Make sure the scheme has a DOTAS number (Disclosure of Tax Avoidance Schemes) which means the promoters have told HMRC the details of how the scheme works
- Carry out due diligence to ensure the scheme does not break the law
- Disclose you are taking part in the scheme on your tax return
- Be aware HMRC has set up a DOTAS task force to sniff out undisclosed tax avoidance
- Understand HMRC is collecting intelligence about suspected tax avoidance schemes with sophisticated software and disclosure from financial institutions and advice firms
- Expect big fines if you are caught out – promoters face penalties of up to £1 million, while taxpayer fines start at £5,000
- Ask the scheme promoter for a form AAG6 – the paperwork shows whether the scheme has been disclosed to HMRC
- If you promote an undisclosed tax avoidance scheme, you risk going on an HMRC agent blacklist, public naming and shaming and a big fine
- Realise that HMRC wins eight out of 10 court cases against tax avoidance schemes
- Check the scheme out by calling the HMRC tax avoidance hotline on 03000 588 993 or contact online
What you should report under DOTAS
DOTAS disclosures cover reporting tax avoidance schemes involving income tax, corporation tax, capital gains tax, stamp duty land tax, inheritance tax, annual tax on enveloped dwellings and national insurance contributions.
For more information about disclosing under DOTAS, go to the HMRC web site
