Individuals that have taken part in one or more of the 800 tax avoidance schemes listed by HM Revenue and Customs (HMRC) in July 2014 can expect to receive demands this month for prompt payment, warns tax law firm Winckworth Sherwood.
Using new powers introduced through the Finance Act 2014, HMRC will start to issue Follower Notices and Accelerated Payment Notices to some 33,000 people it believes have taken part in deliberate tax avoidance schemes, giving people just 90 days to settle demands that could be in excess of £1 million.
Simon Newsham, a Partner in Winckworth Sherwood’s Tax team said: "This is the most significant of the many clampdowns by HMRC on those taxpayers that have engaged in tax avoidance schemes and practices. Individuals will be naturally concerned when they receive these demands and it is entirely possible that they will not be able to afford to pay straightaway and face the threat of bankruptcy."
A Follower Notice can be issued by HMRC where it believes there has been a court or tribunal decision in a case that is similar to the tax treatment that has been claimed by the taxpayer. Where a Follower Notice has been issued, the taxpayer will be required to amend their tax return or claim or withdraw any appeal against an HMRC closure notice, assessment or determination.
Accelerated Payment Notices are issued where a taxpayer has entered into a tax avoidance arrangement that has been notified to HMRC under the disclosure of tax avoidance scheme rules (DOTAS) or where a counteraction has taken place under the general anti-avoidance rules (GAAR).
Taxpayers who receive an Accelerated Payment Notice will have to pay the tax due to HMRC within 90 days.