HM Revenue & Customs’ accelerated payments programme has now collected £1 billion from users of tax avoidance schemes
Last year HMRC gained the power to demand upfront tax payment from users of tax avoidance schemes subject to the Disclosure of Tax Avoidance Schemes (DOTAS) rules or the General Anti-Abuse Rule, or where a similar scheme had already been defeated in the courts. The power was extended to schemes involving National Insurance Contributions earlier this year.
In August 2014 HMRC started sending out ‘Accelerated Payment Notices’ and to date it has issued over 25,000. By the end of next year, HMRC anticipates it will have issued around 64,000. Anyone receiving such a notice has 90 days to pay up or make representations to HMRC if they consider the notice to be incorrect. So far those choosing to pay up have put £1 billion into the HMRC coffers. By March 2020 HMRC is projecting that it will have collected £5.5 billion of upfront payments.
HMRC will have to repay some of that money if the courts decide in favour of any litigating scheme users. However, as HMRC regularly reminds taxpayers, the taxman wins 80% of avoidance cases and many people choose to settle before embarking on the expensive path of litigation.
As if to prove the point, HMRC recently won a High Court Judicial Review case in which two users of a film-based avoidance scheme argued that the accelerated payments process was unlawful.
The lesson from HMRC’s £1 billion revenue raising is that users of aggressive tax avoidance schemes are no longer able to delay tax payment until it is proven in court that their scheme fails the rules – often a protracted process. Of course, there remain many tried and tested ways to reduce your tax bills which have received HMRC approval. If you would like to talk about ways to manage your tax bill, please give us a call.
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