Tax avoiders required to pay disputed taxes up front

With the 2014 Finance Bill having now received Royal Assent, users of certain tax avoidance schemes may be required to pay disputed taxes upfront.

Where a taxpayer receives either a follower notice*, or has a scheme notified under the Disclosure of Tax Avoidance Schemes (DOTAS) rules or is a member of a scheme which has been subject to counteraction under the General Anti-Abuse Rule (GAAR), HMRC will be able to issue them with an Accelerated Payment Notice (APN).

An APN forces the taxpayer to make payment to HMRC of the disputed tax within 90 days of being issued with a Notice to Pay. APNs are being introduced to counteract the perceived cashflow advantage for the taxpayer of holding onto the disputed tax during an avoidance dispute.

HMRC estimate that around 65,000 taxpayers have unresolved disputes relating to tax avoidance schemes and, they anticipate issuing 43,000 APNs in relation to these.

Latest developments
HMRC has now released a list of tax avoidance schemes notified under the DOTAS rules on which users may be charged an upfront tax payment.

HMRC has stated that the list has been released in order to help avoidance scheme users and their advisers prepare for accelerated payments. Whilst HMRC may seek upfront payment of the disputed tax, taxpayers will be free to continue to make their case to the tribunal or court and, if successful, HMRC will return the money to the taxpayer with interest.

From August 2014, HMRC will phase the issuing of notices to current users over approximately 20 months. The list contains SRNs rather than scheme names, as taxpayers will have used this to notify their use of an avoidance scheme when completing their self-assessment returns. The list is under continual review to ensure that only current and newly disclosed schemes where users may receive an accelerated payment notice are included. The next update is expected to be published in October 2014.

How can Moore Stephens help?
Moore Stephens Tax Investigations specialists can help you understand the new measures and how they may impact you or your business. We can also explore the possibility of resolving open disputes, including under existing HMRC settlement opportunities.

* Where a tax scheme has been defeated in the courts HMRC will have the power to issue a ‘follower notice’ to others (so-called followers) that it believes to be impacted by the decision.


Dominic Arnold

Related links

Tax investigations