HM Revenue and Customs (HMRC) has begun its push to clamp down on certain tax avoidance schemes by publishing a list of arrangements that it would consider as avoiding tax.
Individuals who have invested in these schemes may receive an accelerated payment notice requesting them to pay the tax disputed by HMRC within 90 days.
Appeals are not allowed, and the tax will be due 30 days from notification where requests for review and amendments are rejected. Grounds for a demand being withdrawn are strictly limited by HMRC policy.
Martin Taylor, head of client relations at Rebus Group, which offers support to individuals who have been mis-sold unregulated investment schemes, said, “It is likely HMRC has anticipated many investors will not blindly accept such notices without making an effort to reduce or annul them, and as such, might be ready for a number of pleas. It is unlikely that many of them will be accepted.”
“We believe there will be many calls for a judicial review of HMRC powers and a repeat of the - in many cases - criticism from a wide range of professional, legal, accounting, and tax bodies.”
Individuals and businesses will be expected to raise external finance or sell assets to pay the tax, which could lead to significant cash flow problems and individual bankruptcies could increase.
An option to seek time to pay arrangements will be made available, but this may be limited to those who can prove they have attempted by all other means to raise the money needed. Interest will be charged on late payments.
Dawn Register, partner in the tax investigations team at accountancy and business advisory firm BDO, said, “A successful appeal not only depends on the merit of the scheme but how it was implemented and the quality of the paperwork retained.
“Therefore, we would urge individuals and businesses to carefully review engagement letters with scheme providers to understand the implications of continuing to defend appeals.”
“Clearly the overall objective of this move is to increase tax revenues for the Treasury as well as forcing taxpayers to deal with long-running disputes. This move is a clear message that it is not the ‘bank of HMRC’.”
