SolvedCH54000 | Assessing Time Limits: Extended time limits: Failure to disclose a notifiable avoidance scheme
From HM Revenue & Customs · Compliance Handbook
There is a 20-year assessing time limit to recover a loss of tax which is attributable to an avoidance scheme. This extended time limit may apply if the scheme user hasn’t notified HMRC at the proper time about using a scheme under one of the following disclosure regimes
the disclosure of tax avoidance schemes regime (DOTAS) for direct taxes
the disclosure of avoidance schemes regime for VAT (VADR)
the disclosure of tax avoidance schemes; VAT and other indirect taxes regime (DASVOIT), or
the promoters of tax avoidance schemes regime (POTAS). This only applies if the promoter of the scheme is a monitored promoter, see AHP6732.
Direct Taxes
A scheme user is required
to disclose to HMRC that they have used a scheme. If that scheme has been disclosed to HMRC and the user has been sent the reference number HMRC has allocated to the scheme, the user is normally required to notify HMRC by including the scheme reference number on their return
where there is no promoter or all promoters are non-resident, the scheme user has to disclose details of the arrangements they have used to HMRC on a form AAG2 or AAG3
notify HMRC of any promoter reference number provided to them by a monitored promoter on their return, see AHP6732.
If a person doesn’t notify HMRC about their use of the scheme, we may, subject to the points below, assess relevant tax periods ending not more than 20 years earlier, to recover any loss of tax attributable to the use of the scheme. See CH53600 for details.
However, under transitional provisions, the 20 year time limit to make an assessment does not apply
For these earlier tax years and accounting periods, the 20 year extended time limit only applies where the assessment is to make good a loss of tax attributable to negligent conduct of the taxpayer or a person acting on the taxpayer’s behalf.
Indirect Taxes
VAT disclosure regime ‘VADR’ introduced in 2004
A scheme user is required to disclose the scheme to HMRC at the time when they first achieve a tax advantage from their use of the scheme.
Before 1 January 2018 another person, for example a tax adviser, could make a voluntary disclosure under the Voluntary Registration Scheme ‘VRS’ which would remove the obligation from the scheme users to disclose. But the VRS does not apply to schemes that are listed in the legislation which must be disclosed by scheme users.
VADR does not apply to arrangements first entered into after 1 January 2018.
Disclosure of tax avoidance schemes: VAT and other indirect taxes regime ‘DASVOIT’ introduced from 1 January 2018
A scheme user is required to disclose details of the arrangements they have used to HMRC where there is no promoter or all promoters are non-resident, and do not disclose, on a form DASVOIT2 or DASVOIT3.
If a person doesn’t disclose the scheme to HMRC, we may, subject to the points below, assess relevant tax periods ending not more than 20 years earlier to recover any loss of tax attributable to the use of the scheme.
There are transitional provisions that apply where you use the 20-year time limit to make a VAT assessment for a relevant tax period ending on or before 31 March 2010. See CH51530 for details.
All VAT assessments made more than 2 years after the end of the prescribed accounting period are subject to the 12 months evidence of facts rule, see CH51820.