One of the most contentious points in the 2014 Finance Bill is a new power enabling HMRC to demand the payment of tax upfront in disputed situations. This will apply in cases where a "follower" notice has been issued, where a similar case has been decided in HMRC's favour in a Tribunal or the Courts, or where the taxpayer has used a marketed tax avoidance scheme, such as the “Liberty” scheme used by Katie Melua and the Arctic Monkeys.
This is part of HMRC's continued attack on tax avoidance and will impact on taxpayers using sophisticated tax planning schemes. However, the powers are wide ranging with little scope for appeal against a Revenue demand so the powers could be used in simpler cases where the Revenue don’t agree with the taxpayer.
It is thought that up to 43,000 tax demands will be issued in September 2014 to a combination of companies and individuals and those affected will need to review the demands, confirm to HMRC that they are correct (or otherwise!). Due to the amount of tax involved, this may mean that the taxpayer has to agree time to pay proposals or consider alternative forms of finance in order to make payment.
Scott Burkinshaw
Scott is Tax Partner at Shorts, specialising in providing strategic corporate and personal tax advice.
View my articlesTags: Business Taxes
