HMRC Spotlights and tax avoidance warnings

HMRC warns the public about avoidance in two main ways: Spotlights, which describe specific schemes HMRC is investigating and why it thinks they fail, and a published list naming schemes, promoters, enablers and suppliers. Behind the warnings sit sanctions on promoters, including disclosure penalties, stop notices, enabler penalties and, since Finance Act 2026, a ban on promoting schemes with no realistic prospect of success backed by a criminal offence.

What is an HMRC Spotlight?

A Spotlight is a numbered warning published on GOV.UK. HMRC’s collection page says Spotlights cover schemes it has identified as having the features of tax avoidance and has started investigating. It also states what happens to users: HMRC will open an enquiry, seek full payment of any tax due plus interest, and charge penalties where appropriate. The current collection runs from Spotlight 20 onwards, with earlier articles held by the National Archives.

A Spotlight is not a court ruling. It is HMRC’s stated view, published early so that people can avoid a scheme before they join it. The scheme may still be litigated later, and the general anti abuse rule or specific legislation may be used against it.

What does a typical Spotlight say?

Spotlight 68, on prepaid debit cards, follows the standard structure. It describes a scheme where a company buys “advertising” from a promoter and claims corporation tax and VAT deductions, while at least 80% of the spend comes back to the directors as loyalty points loaded on prepaid cards. HMRC’s view is that the scheme does not work: the amounts are taxable income of the directors, the company’s deduction may fail the wholly and exclusively test, and input VAT may not be recoverable.

Each Spotlight then covers how the scheme claims to work, why you should not use it, what to do if you are already in it, what it means for promoters and how to report it. For users the message is consistent: withdraw, contact HMRC to settle, and consider independent advice or a tax charity such as TaxAid.

Which schemes have recent Spotlights covered?

• Property: Spotlight 63a (updated April 2026) on hybrid LLP structures with a corporate member, sold to landlords as a way round the mortgage interest restriction.
• Umbrella companies: Spotlight 71 (June 2025) warns contractors who are moved between umbrella companies, a pattern HMRC says is used to hide avoidance.
• Managed service companies: Spotlight 67 (January 2025) on mass marketed, off the shelf service company structures.
• Profit extraction: Spotlight 68 (March 2025) on prepaid cards.

Disguised remuneration is a recurring theme; see our page on the loan charge.

What is the list of named schemes and promoters?

Separately, HMRC publishes a list of named tax avoidance schemes, promoters, enablers and suppliers, last updated on 15 October 2026, alongside a list of schemes subject to a stop notice. HMRC says it publishes to help people make informed choices and to encourage those already involved to leave. It warns that the list is not complete and that a scheme’s absence does not mean it works or is approved; HMRC does not approve avoidance schemes.

The publishing powers come from four sources, each with its own trigger:

Regime	When HMRC can publish	How long it stays
Finance Act 2022 publishing rules	On suspicion that a scheme involves avoidance	No fixed limit; reviewed periodically
DOTAS	From allocation of a scheme reference number	No limit if the promoter disclosed; 12 months if HMRC allocated the number itself
POTAS	From the stop notice, once the appeal period has ended	No limit
Enablers	50 or more final penalties within 12 months of one another, or penalties over £25,000	12 months

Under DOTAS, the enablers rules and the 2022 rules, HMRC must give a reasonable opportunity to make representations before publishing. Under POTAS there is no right to make representations. HMRC must amend or withdraw information published under the 2022 rules if an officer later considers it incorrect or misleading in a significant respect.

What action does HMRC take against promoters?

The sanctions build on each other:

• DOTAS: a promoter must disclose a scheme within 5 working days of making it available. HMRC issues a scheme reference number, which users must put on their returns; see our guide to DOTAS scheme reference numbers. Spotlight 68 notes the initial penalty for non disclosure is up to £600 a day and can be increased up to £1 million. Section 216 of Finance Act 2026 rewrote the DOTAS penalty provisions so that HMRC issues these penalties itself instead of applying to the courts.
• POTAS stop notices: from 10 June 2021 HMRC can require a promoter to stop promoting a scheme or anything similar in form or effect.
• Enablers penalties: anyone who designed, managed, marketed or facilitated abusive arrangements that are defeated can face a penalty equal to the fees they received.
• Prohibited promotion: section 159 of Finance Act 2026 bars promoting arrangements marketed for a tax advantage where there is no realistic prospect of achieving it, or arrangements specified in regulations. It came into force on 18 May 2026. Breach is a criminal offence under section 163, punishable on indictment by up to two years’ imprisonment, a fine or both, and directors can be liable if the offence involved their consent, connivance or neglect.
• Promoter action notices: under section 167 HMRC can require a business supplying goods or services to a certified promoter to stop or restrict that supply.
• Anti avoidance information notices: new powers to investigate promoter organisations and identify the individuals responsible.

How do the publication thresholds work?

Illustration only. An adviser incurs 40 enabler penalties that become final within a year of one another, totalling £30,000. The count is below 50, but the total exceeds £25,000, so HMRC can publish the adviser’s name, address, business and scheme details after giving them a chance to make representations. The entry comes down after 12 months.

What should someone in a named scheme do?

Spotlights advise withdrawing and settling with HMRC, which will say what information it needs. Take independent advice and check whether accelerated payment notices could follow. Anyone can report a scheme or promoter through HMRC’s online form, anonymously if they wish.

For advisers, a Spotlight or a named listing is a red flag to raise with a client, and the professional standards in PCRT are relevant before helping anyone into a marketed arrangement. It also helps to know where avoidance ends and evasion begins.

What mistakes do people make?

• Treating a scheme reference number as approval. It only means the scheme was disclosed.
• Assuming a scheme is safe because it is not on the named list, which HMRC expressly says is incomplete.
• Believing claims that a scheme is “HMRC approved”; HMRC does not approve avoidance schemes.
• Not checking whether an umbrella company has moved you between employers.
• Waiting for a court decision before acting, while interest keeps running.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

Related Accountapedia entries

• The POTAS regime for avoidance scheme promoters
• The serial tax avoidance regime
• Penalties for enablers of defeated tax avoidance
• Joint and several liability notices for directors
• Publishing details of deliberate tax defaulters
• Letters from HMRC Counter Avoidance

Sources

• GOV.UK: Tax avoidance schemes currently in the spotlight number 20 onwards
• GOV.UK: Using prepaid debit cards for profit extraction to reduce profits and
• GOV.UK: Property business arrangements involving hybrid partnerships and indem
• GOV.UK: Warning for agency workers and contractors who are moved between umbre
• GOV.UK: Managed service companies spotlight 67
• GOV.UK: Named tax avoidance schemes promoters enablers and suppliers
• GOV.UK: Information hmrc may publish about tax avoidance schemes promoters ena
• GOV.UK: Tackling promoters of marketed tax avoidance
• legislation.gov.uk: Act 2026 c. 11, section 159
• legislation.gov.uk: Act 2026 c. 11, part 6

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.