Individuals Who Are Forced To Pay Could Launch Misselling Complaints

The introduction of new powers this month which allow HMRC to demand payment from individuals and businesses who have entered into tax planning arrangements could lead to a rise in professional negligence claims against advisers.

The warning from Irwin Mitchell’s Commercial Litigation Partner, Mark Elder, comes ahead of the introduction of Accelerated Payment Notice.

These notices are 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 avoidance scheme into which an inquiry has been opened. It is predicted that the scheme could generate £7bn for HMRC.

The new laws replace the previous approach whereby if HMRC ordered an individual to pay tax which it believed had been unfairly claimed, the matter could be appealed through a tribunal. Crucially, the individual would not have been required to pay unless or until HMRC won through the courts.

An individual can still appeal a decision through a tribunal under the new system, but the amount of disputed tax but must be paid up front with HMRC making a full or partial refund if they lose.

Mark Elder, Partner at Irwin Mitchell in Birmingham, said: