- Wednesday, 16 July 2014 07:32
- Written by Andy Vessey
Accelerated payments to raise billions
The Finance Bill is due to receive Royal Assent later this month and when it does HMRC will be given draconian powers to force those involved in tax avoidance schemes to make an upfront payment of tax, even though their use of the scheme is still in dispute.
'Accelerated Payment' notices will be issued to 43,000 taxpayers, 33,000 being individuals and 10,000 businesses, progressively over 20 months starting in August. They can find out if they are affected by visiting this site where they will find a list of scheme reference numbers (SRN's). SRN's are allocated to promoters when they notify HMRC of their scheme under the Disclosure of Tax Avoidance Schemes (DOTAS) rules. If an SRN appears on that list then any affected person should brace themselves, although before HMRC issue a notice they will write to them first.
Over the next 2 years HMRC estimates that it will rake in £7 billion through the use of these notices. Of this £7 billion, individuals will weigh in with £5.1 billion. This would equate to each person having a gross income of £262,000.
Last week the Financial Times reported that Ingenious Media, an investment company, warned 1,300 of its investors, including business leaders, entertainers and sporting celebrities, such as David Beckham, to expect substantial tax bills with interest, as reward for using its tax avoidance scheme.
Exchequer Secretary to the Treasury, David Gauke 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.”
Except that in an ordinary tax enquiry people are not compelled to make advance payments and settle the liability once the investigation has been concluded.