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HMRC publishes rules for accelerated tax payment

Posted: July 24, 2014

HMRC has published details of the new rules governing the use of accelerated payments.

Under the new scheme individuals and businesses who use tax avoidance schemes will have to make upfront payments of tax in case of dispute.

The issue briefing, Tax avoidance scheme users to make upfront payments, outlines the background to the changes, which HMRC says “removes the cashflow advantage that those who deliberately try to bend the tax rules by avoiding tax currently have over the majority of taxpayers who pay their tax up front”.

HMRC says the accelerated payments regime will apply to schemes that are either notified via the Disclosure of Tax Avoidance Scheme (DOTAS) rules, or have been counteracted by the General Anti Abuse Rule (GAAR) and are similar to schemes that have already been defeated in court.

Accelerated payments will apply to disputed tax avoidance schemes in six broad categories: sideways loss schemes; stamp duty land tax (SDLT) schemes; self-employment schemes; artificial loss deduction schemes; capital gains schemes; and employment schemes.

HMRC says it expects around 43,000 taxpayers involved in avoidance schemes currently under dispute to receive payment notices and says it will be issuing notices to around 33,000 individuals and 10,000 businesses.

As well as its briefing, HMRC has published guidance on accelerated payments and the follower notices, which are issued to taxpayers who have used an avoidance scheme which has been shown in another taxpayer’s litigation to be ineffective. This includes definitions to determine when a judicial ruling is ‘relevant’ to a case and when it is judged to be ‘final’.

The guidance on follower notices and accelerated payments is here: http://www.hmrc.gov.uk/specialist/acc-pymts-f-notices.pdf