The Finance Bill, which has now received Royal Assent, has given HMRC a new power called ‘accelerated payment’ in relation to individuals and companies that have used what HMRC view as tax avoidance schemes.
Receipt of such a Notice may give rise to serious financial issues for a number of companies and individuals.
HMRC recently published a list of tax avoidance schemes under review and anybody using a listed scheme may receive a notice, at any time over the next year or so, requiring them to pay tax in advance in respect of a disputed scheme rather than waiting for the outcome of a tribunal or court hearing. The tax will be required to be paid within 90 days to avoid further penalties and interest. Due to the nature of the schemes the amount of tax that is going to be required to be paid will be very significant in a lot of cases.
HMRC have suggested that they will discuss time to pay arrangements in certain cases but the level of debt imposed may inevitably lead many taxpayers to have to consider their financial position and whether insolvency options should be considered.
There will be no direct appeal process in relation to accelerated payments and taxpayers will have to rely on their particular scheme eventually succeeding in the Courts. If they are successful the tax will be repaid with interest but it may be too late for some businesses and individuals.
It is estimated that in excess of 30,000 notices will be sent to individuals and 10,000 to companies raising £7bn and it is inevitable that the financial consequences are going to be far reaching. Some tax payers may face demands for several million pounds potentially relating to a number of tax years.
It will therefore be essential that companies, individuals and their professional advisers seek expert assistance and advice in relation to the accelerated payment regime should they receive a notice to pay. This may consist of:
Insolvency advice regarding the financial position of the company or individual;
Independent tax advice or assistance in relation to dealing with any matter that is being taken to the tax tribunal or through the court process.
Ensors can support you and your clients with information and advice. We are happy to act as a ‘sounding board’ if you simply want to discuss a particular case or, of course, meet with your clients on a more formal basis to provide advice on the options available. Any initial meetings held with your clients are offered free of charge.
For more detailed information please visit the HMRC website.