The new DOTAS hallmark for inheritance tax

The new rules for the disclosure of tax avoidance schemes (DOTAS) in relation to inheritance tax (IHT) planning introduced from 1 April 2018 are much wider in scope than the previous rules. The new rules introduce two conditions and three tests to help determine whether a proposal or arrangement should be notifiable, with a practitioner having to decide on whether something needs to be disclosed based on what an informed observer would conclude if they had full information. If an informed observer thinks tax planning is contrived or abnormal, the planning is disclosable to HMRC. There is a narrow exception for an ‘established practice’; however, any planning that involves the use of anything other than basic IHT exemptions will need to be reviewed and possibly disclosed.