HMRC powers to demand payments to be extended
As already outlined in our Budget 2014 publications, a number of further anti-avoidance measures look set to form part of the Finance Act 2014 when it receives Royal Assent over the coming weeks. Although it is possible that the measures will affect all taxpayers, they are designed to target those who have entered into marketed tax avoidance schemes.
1 ‘Follower Notices’
HMRC will be able to issue ‘follower notices’ to taxpayers whose affairs are:
• either under enquiry or appeal; and who
• HMRC believes, have used tax planning arrangements that are the same as (or substantially the same as) those which a Tribunal or Court has held to have failed.
Participants of tax schemes will be given the opportunity to amend the relevant tax returns or settle any appeals in line with the decision. HMRC will also be able to issue a ‘Notice to Pay’ requiring payment of the disputed tax within 90 days.
If a taxpayer refuses to engage with the process and pursues the appeal, they could face a financial penalty of up to 50% of the disputed tax.
2 Accelerated Payment Notices
There are additional provisions within the Finance Bill 2014 to cover any taxpayer whose affairs are either under enquiry or appeal, where they have claimed a tax advantage from using a tax scheme.
This means that, irrespective of there being a judicial decision on the same or similar facts, HMRC will be able to issue a ‘Notice to Pay’ requiring the accelerated payment of the disputed tax within 90 days. Penalties will apply for late payment and HMRC will only release these payments back to the taxpayer if they are unable to successfully challenge the basis of the scheme.
This applies to all tax avoidance schemes, even those which pre-date the Finance Act 2014.
Affected taxpayers can expect to start to receive their Notices by the end of August 2014.
3 Direct access to bank accounts
Finally, Budget 2014 also included a proposal to introduce new legislation to allow HMRC to take money directly from the bank accounts of taxpayers who owe more than £1,000. However, this measure is not due to come into effect until 6 April 2015.
It is hoped that the Government will take the arguments being put forward to amend this proposed legislation into consideration. However, taxpayers who have used tax schemes which are currently being challenged must be made aware of the risk of these measures coming to fruition.
If you would like more information or would like to discuss your tax affairs in more detail, please contact our Tax Partner, Chris Barrington on the details below:
telephone: 01942 292505