Accelerated payment noticesFollowing a consultation that was concluded in February 2014, the Government has indicated that Finance Bill 2014 will include provisions that enable HMRC to issue a notice
Accelerated payment notices
Following a consultation that was concluded in February 2014, the Government has indicated that Finance Bill 2014 will include provisions that enable HMRC to issue a notice to a taxpayer indicating that the "claimed tax effect [of the avoidance structure] has been defeated in other litigation" and requiring the tax to be paid prior to resolution of the dispute in the First-tier Tribunal.
The explicit basis of this policy is to preclude the taxpayer obtaining a cashflow advantage from entering into a tax avoidance structure that may take several years before it is considered by the First-tier Tribunal (and, as a corollary, the implicit basis is that it is the Treasury that should have the cashflow advantage). It is indicated that it is estimated that accelerated payment notices relating to existing avoidance cases currently under dispute will be issued to c.33,000 individual taxpayers and that such disputes concern £5.1 billion of tax.
An accelerated payment notice may be issued only if there has been a relevant final judicial ruling. A final judicial ruling is a decision of the Supreme Court or an un-appealed decision of any other court or tribunal. This is even though a decision of the First-tier Tribunal is not binding precedent. The measure has a degree of retrospectivity – "judicial rulings" includes decisions released before the enactment of Finance Act 2014. Accelerated payment notices issued consequent on pre-Finance Act 2014 decisions may not be issued later than two years after enactment of Finance Act 2014 or one year from the day the return was submitted or appeal made.
This is yet a further weapon to be added to HMRC's ever-burgeoning arsenal to be used against what it perceives to be egregious tax avoidance committed by a minority of taxpayers.
Following a consultation that was concluded in February 2014, the Government has indicated that Finance Bill 2014 will include provisions that enable HMRC to issue a notice to a taxpayer indicating that the "claimed tax effect [of the avoidance structure] has been defeated in other litigation" and requiring the tax to be paid prior to resolution of the dispute in the First-tier Tribunal.
The explicit basis of this policy is to preclude the taxpayer obtaining a cashflow advantage from entering into a tax avoidance structure that may take several years before it is considered by the First-tier Tribunal (and, as a corollary, the implicit basis is that it is the Treasury that should have the cashflow advantage). It is indicated that it is estimated that accelerated payment notices relating to existing avoidance cases currently under dispute will be issued to c.33,000 individual taxpayers and that such disputes concern £5.1 billion of tax.
An accelerated payment notice may be issued only if there has been a relevant final judicial ruling. A final judicial ruling is a decision of the Supreme Court or an un-appealed decision of any other court or tribunal. This is even though a decision of the First-tier Tribunal is not binding precedent. The measure has a degree of retrospectivity – "judicial rulings" includes decisions released before the enactment of Finance Act 2014. Accelerated payment notices issued consequent on pre-Finance Act 2014 decisions may not be issued later than two years after enactment of Finance Act 2014 or one year from the day the return was submitted or appeal made.
This is yet a further weapon to be added to HMRC's ever-burgeoning arsenal to be used against what it perceives to be egregious tax avoidance committed by a minority of taxpayers.