Latest Change Represents Huge Shift In Tax Collection Powers

Thousands of individuals across the UK who have entered into personal tax planning arrangements and are now under investigation by HMRC could soon be required to pay the full amount of disputed tax before the matter is settled.

The introduction of Accelerated Payment Notices is a key component of the 2014 Finance Bill and once it receives Royal Assent later this month, HMRC will be able to issue 90 day demands for payment to anyone who has used an alleged tax avoidance scheme into which an inquiry has been opened.

The new laws replace the current approach whereby if HMRC require an individual to pay tax which it believed had been unfairly claimed, the matter can be appealed through an independent tribunal. Crucially, under the current regime, the individual is not required to pay unless, or until, HMRC win through the courts.

An individual can still appeal a decision through the tribunal under the new system. The amount of disputed tax must be paid up-front, with HMRC making a full refund if they lose at the tribunal, a process which could take several years.

Phil Berwick, Partner* and Head of Contentious Tax at law firm Irwin Mitchell, said:

* Non lawyer