HMRC has broadened its new requirement for taxpayers to pay any disputed tax upfront in this year's Budget announcement.
Individuals accused of tax avoidance will be forced by HMRC to pay the disputed amounts upfront - a move that was first flagged in the Autumn Statement last year. At this point the government said it would, following consultation, introduce a new requirement for taxpayers to pay disputed tax upfront where the avoidance scheme being used has been defeated in another party’s litigation through the courts.
But today’s Budget has announced plans to go even further. The government intends to extend the new requirement for taxpayers to pay upfront any disputed tax associated with schemes covered by the Disclosure of Tax Avoidance Scheme (DOTAS) rules or the General Anti Abuse Rule (GAAR).
This is intended to remove the cashflow advantage for the taxpayer of holding onto the disputed tax during an avoidance dispute.
The move could provide HMRC with additional tools to address a ‘legacy stock of an estimated 65,000 avoidance cases’. The Revenue
will only be able to issue an accelerated payment notice where they have first sent the taxpayer an enquiry notice or issued them with a notice of assessment.
Tackling tax avoidance promoters
The Budget also stated that tax avoidance scheme promoters must give HMRC information about schemes they promote under the DOTAS rules’.
Following consultation, the government is planning to introduce new rules to allow HMRC to identify and place new obligations and penalties on what is described as ‘high-risk promoters’ of tax avoidance schemes.
Tax recovered ‘for highest earners’
The Budget also set out an increase in tax credit debt recovery rates for the ‘highest earners in the tax credit system’.
‘This means that households with higher incomes and smaller tax credit awards will repay their debts earlier,’ the budget reads.
This will apply to debtors who owe over £1,000 of tax or tax credit debts, while a minimum of £5,000 will be left across their accounts.
‘This brings the UK in line with many other tax authorities which already have the power to recover debts directly from an individual’s account, such as France and the US,’ the budget said.