The Finance Bill has now received Royal assent and controversial accelerated payment notices are now law. This means from next month HMRC can issue accelerated payment notices to people HMRC consider have been involved in tax avoidance vehicles and demand the full disputed tax is paid upfront.
The more interesting point is not how HMRC use these powers with current tax avoidance vehicles, but how it applies the powers to schemes and investments made many years ago, where investors will have got tax relief and the scheme is now a distant memory in the tax payers mind.
Will HMRC use these new powers to demand back payment of associated tax relief, penalties and interest?
The treasury have published a list on gov.uk website which lists the avoidance schemes HMRC are targeting and state HMRC may issue notices to people using such schemes over the next 20 months or so.
This will be an interesting story to follow, as the sums involved are likely to run into millions of pounds plus the powers have been criticised by leading accountants and lawyers as they do not give the taxpayer an option of disputing the tax before paying at a tribunal and also not giving a right of appeal. Perhaps a more fundamental issue, one which HMRC disputes, is that it is changing the tax law retrospectively. It is going to get interesting!
Tax avoidance is an all too common headline in the papers these days, it seems as though almost every celebrity is at it to some degree or another, while the man or woman in the street is struggling to make ends meet.
With tax paying being an almost moral question, how to pay one’s fair share of tax, and what is ones fair share? The papers have always taken an interest in celebrity tax payers, be it the Beatles or the Rolling Stones it has always made good headlines, so is today any different? Is tax avoidance by the rich and famous any more prevalent these days than in the past, probably not, according to HMRC’s figures the top 1% of earners now contribute 30% of the UK’s income tax, whereas in 1999 it was just 21%.
Well media scrutiny is much more intense these days, with the rise of the internet, twitter and Facebook as well as the traditional channels of television and newspapers have increased the spotlight on tax avoidance and also the new phenomenon of ‘celebrity’ where you only need to go into the newsagent and see magazines devoted to people who are famous for being famous.
Plus HMRC has more powers and access to information than it ever has, and with more powerful computers and data mining techniques the playing field is changing. An interesting example of this may happen in the next few months when HMRC will be allowed to demand tax on disputed tax amounts, and then the tax payer will be allowed to contest the disputed amount in the courts.
This will no doubt cause some tax payers significant cash flow problems or maybe bankruptcy, the playing field is definitely changing and it it towards HMRC.