Who is an introducer for the purposes of the Disclosure of Tax Avoidance Schemes (DOTAS) regime and why does it matter? 

FA 2010 included a new category of person, an ‘introducer’ for information power purposes. 

This change was in response to HMRC encountering a number of persons advertising schemes that appeared to be disclosable, but who were not a promoter of the scheme, merely an intermediary who advertised the scheme on behalf of a promoter. 

  • A person who acts solely as an intermediary between a scheme provider and potential scheme user (i.e. they seek clients for the provider, not themselves) is not a promoter.
  • For stamp duty land tax schemes, a person providing the typical services of a conveyancer, and nothing more, will not be a scheme promoter. 

‘Introducer’ is defined in section 307 FA 2004 and is a person who ‘makes a marketing contact’ concerning a notifiable scheme. 

A person who falls within the legal definition of ‘introducer’ is not necessarily a promoter of the scheme. 

An introducer will not have been involved in the design of the scheme and may not know how the scheme is intended to work. Their role is simply to market the scheme to potential users and put them in touch with the promoter.

Introducers will often be IFAs, or other professional firms.

DOTAS does not require an introducer to provide HMRC with any information automatically. The only way in which an introducer can be required to provide HMRC with information is in response to an information notice from HMRC as part of a pre-disclosure enquiry. 

Information powers contained in FA2007 and FA2010 enable HMRC to:

  • require an introducer (a person who introduces clients to a promoter) to identify the person who provided them with information relating to the scheme;
  • enquire into the reasons why a promoter has not disclosed a scheme;
  • resolve disputes and enforce disclosure in appropriate cases; and
  • call for more information where a disclosure is incomplete.

These provisions are mostly exercisable through the Tribunal and provide a mechanism for resolving disagreements as to whether a scheme is required to be disclosed. 

Invoking the powers

In order to use most of the powers described above, HMRC must have reasonable grounds to suspect that a person has been non-compliant in relation to a particular scheme. In the majority of cases, HMRC expect to be able to resolve the issue in an informal way, with use of the powers limited to those occasions where a person does not provide sufficient information to resolve the issue or where there is a genuine dispute as to notifiability which can only be resolved before the Tribunal. The first case has now been heard by the first tier tax tribunal who found in HMRC's favour - see DOTAS: Disclosure of tax avoidance schemes in respect of the Root2 case.         

The powers will be exercised only by officers within HMRC’s Anti-Avoidance Group.

Small print and links

DOTAS: Disclosure of tax avoidance schemes

HMRC guidance: Dealing with HMRC Tax avoidance

 

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