Last updated: 16 October 2026
What powers does HMRC have to tackle tax avoidance and deliberate defaulters?
HMRC has wide powers against tax avoidance and evasion, and they keep growing. It can require promoters of avoidance schemes to disclose them (DOTAS), issue stop notices, name and fine promoters, publish the details of deliberate tax defaulters who owe more than £25,000, and charge penalties of up to 100% of the tax (200% for some offshore matters). Recent changes add tougher penalties for promoters, criminal offences for failing to comply with stop notices, and more data-gathering powers. For most taxpayers, the practical message is to avoid schemes that look too good to be true and to correct mistakes promptly.
Main powers
| Power | What it does |
| DOTAS | Promoters must register schemes; users get a reference number |
| Accelerated payment notices | Tax in dispute paid up front |
| Follower notices | Requires settlement after a similar case is lost |
| Promoter stop notices | Bans promoting a scheme, with criminal penalties |
| Publishing deliberate defaulters | Names people with deliberate errors over £25,000 |
| Managing serious defaulters | Closer monitoring for up to 5 years |
| Data-gathering powers | Information from banks, platforms and third parties |
Who gets named?
HMRC publishes names, addresses and amounts for people and businesses who deliberately underpay more than £25,000 of tax and don’t make a full unprompted disclosure. The list stays online for a year. A full, prompt disclosure avoids publication.
Penalties for inaccuracies
- Careless: up to 30%
- Deliberate: up to 70%
- Deliberate and concealed: up to 100%
- Offshore matters: up to 200%
Penalties are lower for unprompted disclosures.
How to spot an avoidance scheme
- Promises to pay little or no tax
- Loans that don’t need repaying
- Pay through umbrella companies taking a large cut, or offshore trusts
- Advice that it’s “HMRC approved”
Example
A contractor joins a scheme paying most of his income as “loans” from an offshore trust. HMRC issues an accelerated payment notice, and he must pay £45,000 up front while the dispute continues. He later settles, paying the tax, interest and a penalty.
What to do if you’re in a scheme
Get independent advice, contact HMRC to discuss settlement, and don’t ignore notices. HMRC offers support to help people leave avoidance schemes.
Common mistakes
- Believing a scheme is legal because it has a DOTAS number
- Ignoring accelerated payment notices
- Hiding income rather than disclosing it
- Not checking an umbrella company
Records to keep
Keep scheme documents, correspondence and any DOTAS numbers.
Umbrella company rules from April 2026
From 6 April 2026, recruitment agencies that supply workers through umbrella companies are jointly and severally liable for the PAYE and NIC the umbrella should deduct. This targets non-compliant umbrellas, which have been a common route for disguised remuneration schemes. Workers should still check payslips to make sure tax and NIC are being deducted properly.
Frequently asked questions
Is tax planning the same as avoidance?
No, using reliefs as intended is legitimate.
Can HMRC investigate past years?
Up to 20 years for deliberate behaviour.
Can I appeal a penalty?
Yes, to HMRC and then the tribunal.
What if my umbrella company used a scheme?
You may still owe the tax.
Reporting avoidance
You can report suspected schemes to HMRC online, anonymously if you prefer.
Related: disclosure of avoidance schemes, umbrella deemed payments and house swaps as evasion.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with HMRC investigation support. See our small business accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 16 October 2026. It is not personal advice, so speak to an accountant about your own situation.
