HMRC collects £4bn through pay now, dispute later rules

HMRC collects £4bn through pay now, dispute later rules

HM Revenue & Customs (HMRC) has collected more than £4bn through the ‘pay now, dispute later’ rules for people who have used a tax avoidance scheme.

More than 75,000 accelerated payment notices (APNs) have been issued to people under enquiry for tax avoidance since rules were introduced in 2014. 

HMRC has now issued APNs on all the schemes that were already under investigation when the new rules came in.

The tax office collected an average of £38,400 each day by requiring people in avoidance schemes to pay their disputed tax upfront. 

The average bill for large companies trying to avoid tax is £6m, while for individuals and small corporates it is £74,000. 

In comparison, the worker on an average salary who doesn’t try to avoid tax pays less than £6,000 in National Insurance and Income Tax in a year.

David Richardson, director general for customer compliance group in HMRC, said:

“The vast majority of people play by the rules and pay their taxes on time – people who try to do otherwise place an undue burden on everyone else.

“APNs have helped level the playing field by changing the economics of avoidance."

People who receive an APN have 90 days to pay up or make representation to HMRC if they think it is incorrect – with the tax office upholding 90 per cent of decisions.

HMRC challenges every tax avoidance scheme they become aware of and currently have more than 600 schemes and 80,000 users under investigation. 

The tax authority wins around eight out of 10 cases taken to court, with many more settling before litigation.