Accelerated Tax Payments

Posted 29/07/2014

The issue of tax avoidance schemes has received a great deal of media attention recently and the Government announced in the 2013 Budget, that they were looking to put in place legislation to restrict their use. The Finance Act 2014, which received Royal Assent on 17th July 2014, introduces new laws in an attempt to clamp down on such tax avoidance schemes.

The Act has brought in a raft of small changes and tweaks to the current tax regime, the most controversial of which is the requirement for taxpayers who have entered into certain tax planning arrangements to pay any tax deemed due by HMRC before being allowed to dispute whether any tax is due, and if due, how much. The Act enables HMRC to request payment or issue a notice to pay to any taxpayer where:

• a follower notice has been issued;

• the taxpayer is using tax planning arrangements that were issued with a disclosure of tax avoidance schemes reference number and HMRC has opened an enquiry; or

• a general anti-abuse rule counteraction notice has been issued.

The notice will require the taxpayer to pay the tax in dispute within 90 days, or a further 30 days where the taxpayer requests that HMRC should reconsider the amount of the payment notice. The aim of the Government is one of cash flow management, ensuring that tax money is held by HMRC, before and during any litigation with HMRC regarding the efficacy of a particular tax planning scheme.

This element of the Act has caused much criticism and concern as it effectively proposes a system where one party is required to pay the other party in full before a matter is heard or decided. This accelerated payment regime has implications for partnerships and could also apply to large corporations, as well as the much publicised high net worth individuals.