Forthcoming changes intended to strengthen and improve the DOTAS Regime, including the introduction of client lists, have been announced by HMRC.

The recently published update details the work being done by HMRC to strengthen and improve DOTAS, how client lists will operate and the preparations that will be required before this measure comes into force.

Briefly, the package of five measures to strengthen and improve the DOTAS regime includes:

• a new ‘trigger point ‘ for the disclosure of actively marketed schemes – the point at which a promoter first communicates information about a substantially designed scheme to a third party with a view to obtaining clients for that scheme;
• an information power which gives HMRC the power to require a scheme ‘introducer’ to identify the promoter;
• increased penalties for failure to comply with a disclosure obligation;
• a new requirement for promoters to provide HMRC with periodic information about clients who implement a notifiable scheme; and
• revised and extended hallmarks.

The first four of these measures were included in section 56 and sch 17 of FA 2010. HMRC expect regulations implementing these changes, including some changes to hallmarks, to come into force on 1 January 2011.

The work on revising and extending the hallmarks will now be taken forward in two tranches. HMRC will continue to hold discussions with business and representative bodies on the implementation of these measures as the detail is worked up.

The current update also provides more detail on the requirements for providing client lists. HMRC aim to publish guidance before these all these measures come into force.

For more information visit http://www.hmrc.gov.uk/avoidance/dotas-update-oct10.htm