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Tax Tip

Accelerated payments for tax avoidance schemes

 HM Revenue & Customs (HMRC) has published a list of tax avoidance schemes on which users may be charged an upfront tax payment called an accelerated payment.

 
Stuart Coleman, Manager of the Tax Department of ABDS comments:
“HMRC gives a scheme reference number (SRN) when a promoter notifies HMRC of the scheme under the rules for disclosing a tax avoidance scheme (DOTAS).  As a result of this, those people who use a disclosed avoidance scheme on this list may be required to pay an upfront payment of tax called an accelerated payment. Starting in August 2014, HMRC will phase the issuing of notices to current users over approximately 20 months.”
 
On the HMRC website, they have a list containing the SRNs rather than scheme names as taxpayers will have used this to identify their use of an avoidance scheme when completing their Self-Assessment return. Promoters of avoidance schemes are also not required to disclose scheme names to HMRC. The SRN is all the user will need in order to identify whether their scheme is on the list. HMRC will consider whether it is possible to compile and publish a list of scheme names alongside the SRNs.
 
Stuart again: 
“The accelerated payment regime was announced at Budget 2014, and is being legislated for in Part 4 of Finance Bill 2014. It’s being introduced to tackle the very small minority of taxpayers who use tax avoidance schemes. The aim is to remove the cash advantage of sitting and waiting during a dispute with HMRC concerning the efficacy of the planning and we believe HMRC will issue demands from mid July 2014 (following Royal Assent to the Finance Bill 2014).”
 
The application of payment notices to DOTAS arrangements does not require any predicating tribunal or court judgment ie if a taxpayer implements DOTAS arrangements, reflects it on their return and an enquiry is opened following submission, a payment notice could be issued and payment demanded before the outcome of the investigation or substance of the arrangements is known.  
 
For GAAR cases, it is expected that HMRC will have already, to an extent, investigated the substance of the arrangements at the time a payment notice is issued, by virtue of the fact that the case will have already been referred to HMRC's GAAR advisory panel.
 
Non-payment of the disputed tax will result in a 5% penalty for each six month period that the payment remains outstanding. Should the tax planning implemented ultimately be successful, then any disputed tax paid under the accelerated payment provisions will be repaid with interest.
 
If you need any help and advice with your Tax compliance and planning, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help in all your financial planning and business advice.
 
ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900 E-mail: abds@netaccountants.net
 
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Clear and precise with advice
Timely and cost effective
In touch with issues that face our clients
Mindful of our client’s long term strategic goals
 
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