HMRC seeking £250m in tax avoidance crackdown

Thursday 23 October 2014

HM Revenue and Customs (HMRC) is seeking more than £250 million in disputed tax as part of a crackdown on tax avoidance.

Under the accelerated payments regime, which was introduced in this year's Finance Act, HMRC has already sent out many notices to people who have been using tax avoidance schemes.

Even though recipients have 90 days to pay the tax laid out in the notices, a number of these people have already started to contact HMRC and arrange to make payments that cover about £25 million of disputed tax.

It is recognised that only a small portion of taxpayers would be considered guilty of tax avoidance. In the case of self employed professionals, many understand the worth of working with a contractor accountant to ensure they are fully compliant with tax.

As well as the people who are responding quickly to the accelerated payments notices, the government has also said that a number of people are taking a more proactive approach and getting in contact to settle their taxes early before receiving an accelerated payments notice.

On October 21st, financial secretary to the Treasury David Gauke told members of Parliament that over 600 accelerated payment notices had been sent since late August. In total, the amount of tax discussed in these notices totals at over £250 million.

Accelerated payment notices are sent to taxpayers when they have entered into a tax avoidance scheme that HMRC has become aware of through the disclosure of tax avoidance scheme rules or when a counteraction has taken place under the general anti-avoidance rules.

Should people who have been contacted fail to pay within 90 days then they will be taken to court by HMRC.

The tax collector can issue a follower notice in cases where it believes there has been a final court or tribunal decision in a case similar to the way that the taxpayer has been treating their tax.

Those who receive follower notices will have to change their tax return or claim or withdraw their appeal against an HMRC assessment.

Mr Gauke said: "Accelerated Payments are changing the economics of avoidance by removing the cash-flow advantage that avoidance scheme users have had until now. It is only fair that those who use avoidance schemes should have to pay their tax upfront, like the vast majority of other taxpayers who don’t try to shirk their responsibilities."

In terms of the response that HMRC has received regarding the accelerated payments, director general of enforcement and compliance at HMRC Jennie Granger said: "HMRC is making good progress in tackling marketed avoidance as today’s figures illustrate. If anyone is concerned about being able to pay the notice they should contact us as soon as possible to discuss their options."

It is predicted that by January 2015, HMRC will be sending out around 2,500 accelerated payment notices each month. At present, it is due to send notices to 43,000 people who are using tax avoidance schemes by March 2016. In turn, this will cover £7.1 billion of disputed tax.

By Victoria McDonnell

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