What are the penalties for failure to disclose under the Disclosure of Tax Avoidance Schemes (DOTAS) regulations?

This is a freeview 'At a glance' guide to the Disclosure of Tax Avoidance Schemes (DOTAS) regulations.

Disclosure of Tax Avoidance Schemes (DOTAS)

Penalties for failure to comply with a DOTAS obligation without a reasonable excuse are provided for in section 98C Taxes Management Act 1970, as amended by FA 2010.

DOTAS penalties fall into three categories:

  • Disclosure penalties apply to failure to disclose a scheme. There are variations in cases where a Tribunal has issued a disclosure order.
  • Information penalties apply to other failures to comply with DOTAS.
  • User penalties apply to failure by a scheme user to report a Scheme Reference Number (SRN) to HMRC.

In all cases, apart from user penalties, the initial penalty is determined by a Tribunal.

If a person does not have a Reasonable excuse, the factors that are considered in deciding whether or not to institute penalty proceedings will include:

  • The level of knowledge/experience the person could reasonably be expected to have of DOTAS.
  • The person’s previous behaviour in relation to DOTAS.
  • The adequacy of the systems the person has put in place to ensure compliance with DOTAS.
  • The nature of the behaviour that led to the failure e.g. was it an isolated error, carelessness or a deliberate act.
  • Whether the person alerted HMRC to the failure before being prompted.
  • What the person did after the failure was discovered, or brought to their attention, to prevent any recurrence.

Although there have been cases such as HMRC v Hyrax Resourcing Limited & Bosley Park Limited & Peak Performance Head Office Services Limited [2019] TC07025 and HMRC v Redbox Tax Associates LLP [2021] TC8235 where the First Tier Tribunal (FTT) has found that tax avoidance schemes should have been notified under DOTAS, no penalties have yet been charged in any reported tribunal cases to date. In the Hyrax case the judge went so far as to note that whilst the potential penalties were “enormous”, the respondents (scheme promoters) had not yet been penalised, and “may never be penalised” and in the Redbox case the judge suggested that the penalties would be "very significant".


There is a right of appeal against any penalty imposed by HMRC or determined by a Tribunal.

Penalty rates



Disclosure penalties

Cases where no disclosure order is involved


An amount not exceeding £600 a day during the “initial period”.
If this is an insufficient deterrent, a higher penalty, not exceeding £1 million.
A secondary daily penalty, not exceeding £600, after the initial period.

Cases where no disclosure made within 10 days of a section 314A order

Both the maximum initial daily penalty and the secondary daily penalty increase to £5,000 for each day


Information penalties

An initial penalty of an amount not exceeding £5,000. HMRC may impose a daily penalty, not exceeding £600, for each day that the failure to provide information continues after an initial penalty has been determined. The maximum daily penalty increases to £5,000 per day after an order under sections 306A or 314A.


The user penalty

A scheme user who fails to comply with a section 313 obligation to report a SRN and related information is liable to a penalty of:


£100 per scheme i.e. each scheme to which the failure relates for a first occasion;


£500 per scheme on the second occasion within 3 years, whether or not it relates to the same scheme involved in the previous occasion; and


£1,000 per scheme on the third and subsequent occasions, whether or not the failure relates to schemes involved in a previous occasion.



Failures involving both NICs and Income Tax

No disclosure penalty will be charged for a failure to disclose a NI contribution arrangement if the arrangement, or substantially the same arrangement, is also a disclosable Income Tax arrangement and a penalty has been imposed for failing to disclose that arrangement.

The same principle applies in relation to information and user penalties.


From 1 June 2019 all DOTAS penalties carry late payment interest and repayment supplement at the standard HMRC interest rates.

Joint and several liability

Where certain conditions are met, penalties charged to companies under the DOTAS regime can be made the joint and several liability of individuals who are connected to that company.  See Joint and Several Liability Notices.

Useful guides on this topic

Disclosure of Tax Avoidance Schemes: DOTAS
What are the on Disclosure of tax avoidance schemes (DOTAS) rules? When should you disclose your use of a tax avoidance scheme? What are the consequences of non-disclosure? How are penalties calculated?

Grounds for appeal: Reasonable excuse
What is considered to be a 'reasonable excuse' when a taxpayer makes an appeal against a tax compliance failure?

Joint and Several Liability Notices
An HMRC officer can issue a joint and several liability notice to an individual involved with companies who are in receipt of tax avoidance penalties. HMRC guidance has been updated to explain the provisions.

External link

HMRC’s guidance on Anti-avoidance

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