This is where HMRC will demand upfront payment of any disputed tax associated with avoidance schemes. Until now HMRC have had to win a tribunal case before they can demand disputed tax in these schemes. The tax avoidance schemes on which users may be charged an upfront payment are available via their reference numbers on the Government's website.
HMRC gives an avoidance scheme a scheme reference number (SRN) when a promoter notifies HMRC of the scheme under the rules for disclosing a tax avoidance scheme (DOTAS). Users will need to make an accelerated payment of tax to HMRC on some DOTAS schemes while the scheme is under dispute with HMRC.
Users of those schemes with a reference number on the list are those who may receive a notice to make an accelerated payment. Starting in August 2014, HMRC will phase the issuing of notices to current users over approximately 20 months.
This could lead to thousands of taxpayers facing sudden demands for cash payments from HMRC that they may not be able to afford.
International law firm, Pinsent Masons, has warned that contractors are going to be in the firing line with some of these schemes.
Jason Collins, Head of Tax, at law firm Pinsent Masons said: “This is inevitably going to lead to immense financial stress and even insolvency amongst the individuals targeted by these accelerated payment demands.”
"It is not just High Net Worths and celebrities that have invested in these tax planning schemes. There are a lot of modestly well off self-employed contractors who have been sold tax planning schemes that will face these demands for money.
"HMRC need to take into account the fact that many of these individuals will not have fully realised what they were buying into. Whilst HMRC will say it warned users back in 2007 that it would use all its litigation firepower in order to discourage people from entering into schemes in the first place, this strategy was buried away in the detail of a document on their website. I very much doubt promoters brought it to their customers' attention when encouraging them to sign on the dotted line.
"What has really concerned the legal and accountancy community is that HMRC is changing the law retrospectively. That has completely upended the rules that govern these tax disputes - and was not set out in that strategy."
HMRC has until April 2016, starting in August this year, to issue an ‘Accelerated Payment Notice’, warning that they will require the disputed tax upfront.
Pinsent Masons says that it is helpful that HMRC has listed the schemes where it plans to issue Accelerated Payment Notices, but it now needs to publish its timetable for issuing notices in relation to the individual schemes.
Once the Accelerated Payment Notice is issued, taxpayers will have 90 days to pay HMRC - unless they make representations that the notice should not have been issued to them, in which case, if timed right, they will get a further 30 days. It is understood that HMRC is also considering whether to issue 'warning letters' a few weeks before they issue the notice itself.
Jason Collins said: “Those individuals affected will want to know whether they have a few months or a couple of years to come up with the cash.”
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Susie Hughes © Shout99 2014