Avoidance scheme users face ‘pay now’ demands

Users of avoidance schemes will be expected to pay tax upfront under proposals issued by HMRC.

A new consultation document, Tackling Marketed Tax Avoidance, outlines plans to extend accelerated payment of disputed tax to arrangements subject to the disclosure of tax avoidance schemes (DOTAS) regime and to taxpayers being investigated under the general anti-abuse rule (GAAR).

The paper follows the chancellor’s autumn statement announcement that the Revenue will make ‘pay now’ demands of any taxpayer using an avoidance scheme the same as or similar to one previously defeated in the courts.

The measures are intended to prevent businesses and individuals from using the popular tactic of holding on to disputed tax – sometimes for years – while a case is being investigated and litigated, and they will help to resolve around 65,000 cases currently being scrutinised, said the Revenue.

Payment may be required under DOTAS in existing cases not settled and new cases from anyone:

• who has entered a scheme reference number (SRN) on their tax return or otherwise notified the taxman of the SRN; or
• whose details feature on a DOTAS client list; or
• who should have entered an SRN  or appeared on a client list but has not done so.

HMRC intend to issue a payment notice when the GAAR was not the only challenge to an avoidance scheme. It would be sent after the GAAR advisory panel has given its opinion on the arrangements.

The tax department believes it is likely some matters will involve both DOTAS and the GAAR – in which case the former criterion would take precedence because it would apply from an earlier date.

Responses to the consultaion should be emailed no later than 24 February.

Issue: 4437 / Categories: News , Avoidance