HMRC Agrees that new DoTAS IHT Hallmark is ‘wide of the mark’

//HMRC Agrees that new DoTAS IHT Hallmark is ‘wide of the mark’

HMRC Agrees that new DoTAS IHT Hallmark is ‘wide of the mark’


Who said that HMRC never listens to feedback garnered through the consultation process? Definitely not me.

HMRC seemingly agrees with the Professions that it’s proposed new hallmark for IHT under the Disclosure of Tax Avoidance Schemes (DoTAS) is cast for too wide and would necessarily result in plain vanilla tax planning being subject to the regime.

What is DoTAS?

The DOTAS regime imposes certain requirements on promoters and users of schemes where one of the main purposes of the planning is to provide a tax advantage AND the planning also meets certain defined conditions (the hallmarks).

On such requirement is that the scheme needs to be notified HMRC. Of course, this helps HMRC identify avoidance schemes and will invariably result in the scheme being investigated and potentially challenged. In recent years, the use of a DoTAS scheme means that HMRC issue Accelerated Payment Notices under controversial new HMRC powers. As such, one is probably better off these days not touching such a scheme with someone else’s bargepole.

The IHT hallmark

In the March 2015 Budget, HMRC proposed changes to the IHT hallmark in a consultation document.

IHT was a relative newcomer to the DoTAS party. Originally the tax was totally outside of the regime and, only in recent years, were very narrow types of IHT planning were required to be disclosed.

However, the new IHT hallmark was intended to expand this net considerably and to ensure that all types of IHT avoidance should be disclosed.

However, it was clear that the proposed hallmark was the proverbial sledgehammer to crack the nut and respondents were consistent in their view that the draft legislation went too far.

HMRC agreed and, in response, said “The Government recognizes [the] concerns. It remains committed to updating the IHT hallmark, but in a way that is tightly targeted and does not catch ordinary, non-abusive, tax planning. To achieve this the Government intends to develop a revised draft IHT hallmark for further consultation in 2016.”

It will therefore be interesting to see what version two of the new hallmark brings!