Disclosure of Tax Avoidance Schemes facility is a success

Accountants might be interested in the latest data on HMRCs battle to rid the UK of tax avoidance schemes.

Figures released last month by David Gauke, the Exchequer secretary to the Treasury, show that the tax avoidance landscape has changed since the inception of the Disclosure of Tax Avoidance Schemes facility came into being.

Under the terms of DOTAS, tax arrangement schemes must be disclosed to HMRC. Failure to abide by this could result in prosecution.

Since DOTAS was introduced, the number of submitted schemes has decreased, as has the number of legislative changes made to each scheme. From 1st June 2005 to 31st May 2006, 607 schemes were submitted, resulting in 223 legislative changes. In the 12 months to 31st May this year, just 118 schemes were submitted attracting a mere 17 legislative changes.

Daniel Feingold, a tax barrister specialising in tax avoidance schemes, believes people are slowly getting the message that tax avoidance does not work. Big firms seem to be shifting away from tax avoidance schemes as they become increasingly frowned-upon. Large organisations no longer set up offshore subsidiaries because they damage their reputation.

We are now seeing a worldwide crackdown on tax avoiders and large corporations are reluctant to practice aggressive tax planning. Furthermore, recent tax avoidance court cases have found in favour of the Revenue.

DOTAS has definitely been successful; there are fewer schemes, large organisations are avoiding the ones that do exist and HMRC can tackle them without the need to produce new legislation.

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