Accelerated payment begins as first demands sent by HMRC

Monday 15 September 2014

Tax compliance is now more important than ever for contractors, limited companies and sole traders.

Accelerated payments have begun and HM Revenue and Customs (HMRC) has sent its first wave of demands to those who owe levies to the tax body.

In what is a controversial move, HMRC now has the ability to demand payment from those suspected of using tax avoidance schemes, taking the money out of the individual's bank account.

The taxpayer is required to pay up in full within 90 days of receipt of a notice sent by HMRC or face late payment penalties.

According to the Financial Times, the first wave of notices have now been sent, although no details have emerged about which scheme's users have received such a document.

Criticism of the initiative has continued, with Tessa Lorimer, special counsel at law firm Withers, telling the newspaper that many people use 'tax avoidance schemes' simply as a means to assist their cash flow but could now find themselves in financial ruin. "Some people will pay up, some will drag their feet, and some people will go bankrupt," she said.

HMRC expects that accelerated payment notices will be sent to around 33,000 individuals and 10,000 businesses in the UK over the course of the next 18 months. This is in a bid to retrieve £7.1 billion of unpaid tax.

By the end of the year the tax body is hoping to be sending out around 2,500 notices per month.

David Gauke, exchequer secretary to the Treasury, said: "Most people pay the tax that is due, when it is due, so it [is] unacceptable that a minority seek to hold on to the tax they should pay by using avoidance schemes.

"Accelerated payments will tackle the small minority of taxpayers who are currently able to put off paying tax, sometimes for several years. This will put them on the same footing as the majority of taxpayers who pay their tax up front."

One scheme to be targeted by HMRC is the Liberty scheme, which has been used by several high profile investors.

Around 1,600 people have been named as being part of the £1.2 billion avoidance programme, including Gary Barlow and the Arctic Monkeys.

The Liberty Scheme has been out of operation since 2009 when the government closed the loophole it had exploited. However, those linked to the scheme are now expected to be forced to pay back millions of pounds to HMRC.

By Victoria McDonnell

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