HMRC has outlined plans to amend the Disclosure of Tax Avoidance Schemes (DOTAS) confidentiality hallmark and introduce a new employment hallmark. It is calling for comment by 28 August 2013.

The DOTAS regime is a key component of the detection element of HMRC's anti avoidance strategy. The regime requires a promoter (and in some cases users) to provide information to HMRC about schemes falling within certain descriptions (known as hallmarks), which might provide a tax advantage as a main benefit.

The draft regulations are published as a follow-up to the Lifting the Lid on Tax Avoidance Schemes consultation in 2012, where amendments to the confidentiality hallmark and a new employment income hallmark were proposed.

The draft regulations amend the confidentially hallmark in two parts. Where a promoter is involved, the test proposed in the new hallmark is whether 'it might reasonably be expected that a promoter wouldwish to keep the way in which any element of these arrangements (including the way in which arrangements are structured) that secures, or might secure, the tax advantage confidential from HMRC'.

This prompts the promoter to also consider if other promoters would want to keep elements of the scheme confidential from HMRC. The regulations also clarify that the hallmark applies whether or not there are specific conditions of confidentiality on the client.

Where no promoter is involved, ie, in-house schemes, the revised wording of the confidentiality hallmark would require the user to take a wider more commercial perspective on whether or not they would want to keep the arrangement confidential from HMRC.

The draft regulations also introduce a new employment income hallmark to put beyond doubt that schemes which were intended to circumvent the 'disguised remuneration' rules in Part 7A of the Income Tax (Employment and Pensions) Act 2003 (ITEPA) need to be disclosed. This hallmark will apply for the purposes of both income tax and NIC.

More details on the consultation are available from HMRC