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Upfront tax payments now a reality

HMRC has issued a report on its accelerated payments programme; from 17 July 2014, those involved in tax avoidance schemes may have to pay the disputed amount of tax upfront, i.e. before the dispute is resolved.  In HMRC’s opinion this removes the cash flow advantage that those who seek to avoid tax have historically gained.

HMRC has the right to apply accelerated payments to schemes that are:

  • Formally notified through the Disclosure of Tax Avoidance Schemes rules;
  • Counteracted by the General Anti-Abuse Rule; or
  • Similar to ones already defeated in court.

Currently the programme only applies to the use of tax avoidance schemes that HMRC dispute, which generally fall into six broad categories:

  • Sideways loss schemes
  • Stamp duty land tax schemes
  • Self-employed schemes
  • Artificial loss deduction schemes
  • Capital gains schemes
  • Employment schemes.

HMRC must have opened an enquiry, or made an assessment, into a taxpayer’s case before it can issue an accelerated payment notice.

The new system does not affect anyone’s rights to pursue their dispute with HMRC.  Should they win their case HMRC will repay the tax plus interest.

HMRC has also updated its list of schemes where it has the right to seek payment.



Date: 24th November, 2014
Author: Cathy Corns


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