The POTAS regime for avoidance scheme promoters

The promoters of tax avoidance schemes (POTAS) regime in Part 5 of Finance Act 2014 lets HMRC act against the small group of promoters it regards as high risk. A stop notice orders a promoter to stop selling a scheme at once, a conduct notice sets rules of behaviour for a promoter who meets a threshold condition, and a monitoring notice follows a breach, bringing publication, promoter reference numbers that clients must report and extended assessment time limits for those clients.

What is the POTAS regime and who does it apply to?

HMRC’s guidance says the regime aims to change the behaviour of “a small and persistent minority” of promoters and to deter the development and use of avoidance arrangements by influencing promoters, intermediaries and clients. It builds on the disclosure of tax avoidance schemes (DOTAS) rules and shares many of their definitions. The main provisions are sections 234 to 283 of Finance Act 2014 and Schedules 33A to 36, as amended several times since.

The rules cover Income Tax, Capital Gains Tax, Corporation Tax and the other direct taxes listed in the Act, and were applied to National Insurance contributions by the National Insurance Contributions Act 2015 from 12 April 2015. VAT and other indirect tax schemes count only in one respect: their defeat can be a “relevant defeat” towards threshold condition 12. Only an authorised officer, a senior HMRC officer, can decide to issue a conduct notice or a stop notice.

When can HMRC issue a stop notice?

Stop notices were reworked by Finance Act 2021 and the current rules apply from 10 June 2021. Under section 236A an authorised officer from outside HMRC’s counter avoidance directorate can give a stop notice to anyone they suspect is promoting, or has promoted, arrangements meeting the required conditions. In broad terms, HMRC must consider either that:

• the scheme is the same as, or similar to, one that has a DOTAS reference number, has been the subject of follower notices, falls within the loan charge, or is specified in regulations (condition A), and in addition it is more likely than not that the scheme does not deliver the tax advantage it is marketed for (condition B), or HMRC has been unable to get information about a DOTAS scheme (condition C); or
• the advantage is unlikely to be achieved (condition B) and the promoter is already under a conduct or monitoring notice (condition D).

A stop notice takes effect immediately and covers the scheme described and anything similar in form or effect. The promoter can ask for withdrawal within 30 days; HMRC must decide within 45 days or the notice falls away for that person, and a refusal can be appealed to the tribunal.

What must a promoter do under a stop notice?

• Stop promoting the scheme straight away.
• Within 5 days, notify every existing client and every known intermediary that the scheme is subject to a stop notice, with a copy of the notice.
• Make quarterly returns to HMRC listing clients approached or served, due within 15 days of each quarter end, for quarters starting within 3 years of the notice.
• Pass copies to connected companies and partnerships within 5 working days and tell HMRC about them within 15 working days.

Promoting in breach can cost up to £100,000 per stop notice plus £5,000 for each person the scheme was promoted to, rising to £250,000 (or £1 million) and £10,000 if the promoter is also under a monitoring notice. Since 22 February 2024 breaching a stop notice without reasonable excuse is also a criminal offence, carrying an unlimited fine, up to 2 years’ imprisonment, or both. HMRC can publish details of the scheme as soon as the notice is given, and the promoter’s identity once the appeal period ends.

When does a promoter get a conduct notice?

Under section 237 an authorised officer must give a conduct notice to a person carrying on business as a promoter who has met a threshold condition, subject to safeguards on significance and tax impact. Threshold conditions 1 to 11 in Schedule 34 include being published as a deliberate tax defaulter, being given a conduct notice as a dishonest tax agent, failing to meet DOTAS obligations, being charged with a relevant offence, a scheme being found unreasonable by the GAAR Advisory Panel, disciplinary action by a professional body, failing to comply with an information notice, imposing confidentiality terms on clients and continuing to promote despite a stop notice.

Threshold condition 12, in Schedule 34A, is met where three relevant defeats of schemes promoted by the person occur within 3 years, or within a longer period of up to 8 years where defeat notices have been given. A defeat can be a final court ruling against the scheme or, without one, settlement by more than 75% of users.

A conduct notice can last up to 5 years and there is no right of appeal against it, although the promoter must first be given an opportunity to comment on its terms. Conditions must be reasonable and proportionate and may require the promoter to give clients adequate information, comply with disclosure rules, avoid restrictive contract terms and not promote schemes relying on contrived or abnormal steps.

How does a monitoring notice work?

If a promoter breaches a conduct notice, an authorised officer may apply to the First tier Tribunal for approval to issue a monitoring notice, and the tribunal’s decision can be appealed. A monitored promoter faces the heaviest sanctions in the regime: HMRC publishes information about it, it must publicise its own status online and in correspondence, and HMRC gains enhanced information powers. Failing to publicise the notice or to provide information can each attract penalties of up to £1 million. Concealing or destroying documents becomes a criminal offence.

What are scheme users told, and what must they do?

Users learn about action against a promoter in four main ways.

1. A copy of a stop notice from the promoter within 5 days, or from HMRC, which can send it to anyone it thinks has been affected where it suspects the promoter has not complied.
2. Publication of the scheme and promoter on HMRC’s list of named schemes, promoters, enablers and suppliers; see our guide to Spotlights and avoidance warnings.
3. A promoter reference number (PRN) from a monitored promoter. A client who receives one must pass it within 30 days to other people they might reasonably be expected to know became clients, and must report it to HMRC in the tax return for each year in which a tax advantage is expected (or separately for Inheritance Tax, Stamp Duty Land Tax and some other taxes).
4. Disclosure rights. No confidentiality term imposed by a monitored promoter can stop a client telling HMRC about the arrangements.

A client who fails to report a PRN can be charged up to £5,000, rising to £7,500 and then £10,000 for repeat failures within 3 years. For Income Tax, Capital Gains Tax and Corporation Tax, HMRC then has up to 20 years to assess tax lost through the arrangements. The defences of reasonable care and reasonable excuse are also restricted for clients of monitored promoters.

What did Finance Act 2026 add?

Finance Act 2026 added new powers alongside POTAS. Since 18 May 2026 section 159 bars anyone from promoting arrangements marketed for a tax advantage where there is no realistic prospect of achieving it, or arrangements specified in regulations. Section 166 lets an authorised officer certify that a person is promoting in breach of a stop notice or of section 159, and section 167 then allows a promoter action notice requiring a business that supplies goods or services to that certified promoter to stop or restrict the supply. The promoter gets 30 days to make representations first.

What does this mean for a scheme user in practice?

Illustration only. A contractor joined a remuneration scheme two years ago. He receives a copy of a stop notice from the promoter, followed later by a PRN after the promoter breached a conduct notice. He has three things to do: report the PRN on each relevant return, take independent advice about settling, and stop making new payments into the scheme. Ignoring the PRN would expose him to a penalty and give HMRC 20 years to assess. If the scheme is later defeated he may also enter the serial tax avoidance regime, and could receive accelerated payment or follower notices in the meantime.

Advisers who helped design or sell the scheme should also consider the separate penalty regime for enablers of defeated avoidance.

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Related Accountapedia entries

• Joint and several liability notices for directors
• Penalties for not complying with an information notice
• Appealing an HMRC information notice
• The loan charge and disguised remuneration
• Financial institution notices
• Getting out of a tax avoidance scheme

Sources

• GOV.UK: Promoters of tax avoidance schemes guidance
• legislation.gov.uk: Act 2026 c. 11, section 159
• legislation.gov.uk: Act 2026 c. 11, section 166
• legislation.gov.uk: Act 2026 c. 11, section 167

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.