The accelerated payments regime, introduced by the Government last year, changes the underlying economics of tax avoidance. People who try to avoid tax have to pay the tax up front while their avoidance is investigated. A number of users of an avoidance scheme challenged notices issued under this regime through a judicial review.
They claimed that HMRC’s action in issuing the accelerated payments notices were unreasonable, breached natural justice and represented an abuse of their rights under the European Convention on Human Rights to a fair trial and protection of property. They also claimed it took away the legitimate expectation they had when they joined the avoidance scheme that they wouldn’t have to pay tax before the dispute had been resolved.
The Court found in HMRC’s favour on all the challenges.
David Richardson, Director of Counter Avoidance, HMRC, said:
This is an important result, and good news for the vast majority of taxpayers who do not try to avoid paying their fair share of tax.
Those who use tax avoidance schemes need to know they can no longer hold on to the money while their affairs are investigated. They have to pay their tax up front like everybody else.
We expect to complete the issue of around 64,000 notices tax by the end of 2016 bringing forward £5.5bn in payments for the Exchequer by March 2020.
HMRC wins 80% of all avoidance cases that people litigate, and many more are settling before things get to that stage.
Anyone who has received an accelerated payment notice but has further questions on what they need to do now should contact HMRC.