Update On New HMRC Powers To Tackle Promoters Of Tax Avoidance

Tax avoidance remains a pressing issue for HMRC and the Treasury. This is not because it directly defrauds the system like evasion, but because it undermines fairness and shifts the burden onto compliant taxpayers. In response, HMRC is enhancing its suite of powers to target those who design, promote, and facilitate marketed tax-avoidance schemes.

A Step Change in Tackling Promoters

Tax avoidance, particularly through marketed schemes sold to individuals, continues to generate a material tax gap, estimated at around £0.7 billion, in 2023-24. Despite this reduction, HMRC identifies between 20 and 30 active promoter organisations, sometimes operating offshore and protected by complex structures, intent on skirting compliance and profiting from misleading schemes.

Existing Tools: From Stop Notices to Naming Names

HMRC has already wielded significant instruments:

• Naming and shaming: By the close of 2024, HMRC had named 135 schemes, 129 promoters, and 50 connected individuals.
• Stop Notices: Legal orders compelling promoters to cease marketing a scheme, backed up by criminal offences for non-compliance, resulting in over £41 million in penalties against promoters.

While effective in many cases, HMRC acknowledges that a more decisive toolkit is needed to dismantle remaining promoters’ business models.

Proposals for Enhanced Powers

On 21 July 2025, the government published updated proposals following consultation responses, which have their focus on these four main areas:

a) Expanding the DOTAS (Disclosure Of Tax Avoidance Schemes) Regime

• Criminal offence for failure to notify

Promoters who fail to disclose schemes under DOTAS (Disclosure of Tax Avoidance Schemes) could face criminal sanctions under a strict-liability offence.

• Targeting disguised remuneration

A new “hallmark” is proposed to capture these schemes more clearly.

• Direct DOTAS penalties

HMRC would gain the power to impose civil penalties under DOTAS without tribunal referral, aligning with recent reforms.

b) Stronger Information Powers and Targeting “Controlling Minds”

Promoters and those influencing them would face tighter obligations to share information with HMRC. The proposals aim to pierce complex structures and hold those behind the scenes accountable.

c) Universal Stop Notices (USNs) and Promoter Action Notices (PANs)

USNs would allow HMRC to issue a blanket stop order to promoters, streamlining intervention. PANs impose obligations on third parties (such as financial institutions): if they are assisting the promotion of avoidance schemes, they would be required to cease providing services.

d) Strengthening Information Powers: CPINs and PFINs

To better penetrate the often complex and opaque structures around promoter organizations, HMRC proposes two new information-gathering powers:

• Connected Parties Information Notice (CPIN)
• This would allow HMRC to issue notices compelling any person reasonably suspected of being connected to a marketed avoidance scheme to provide relevant information and documents.
• Promoter Financial Information Notice (PFIN)

With tribunal approval, HMRC could obtain access to financial and banking data held by financial institutions relating to promoters or connected parties. This measure aims to improve visibility over promoters’ financial operations, disrupting their business models more effectively.

HMRC Support: Helping Taxpayers Avoid and Exit Schemes

While targeting promoters aggressively, HMRC continues to champion taxpayer advice:

• HMRC uses real-time data to identify individuals who may have entered avoidance schemes and writes to them, within two months, to warn and assist them in exiting before liabilities spiral.
• Don’t Get Caught Out” campaign and Spotlight publications raise public awareness about avoidance schemes and their risks.
• Practical help is also offered. Anyone uncertain or anxious about their participation in a scheme is encouraged to contact HMRC so that sustainable payment solutions can be arranged.

HMRC plans to review submissions and publish a formal response later in 2025. Once finalised, these proposals would likely feed into legislation.

HMRC’s new strategy represents a meaningful escalation in the fight against promoters of tax avoidance. By broadening DOTAS, deploying USNs and PANs, enhancing investigative powers, and targeting professional enablers, HMRC aims to disrupt promoter operations comprehensively.