Of the 65,000 individuals and businesses under investigation for having used UK tax avoidance schemes, some may be required to pay the disputed amount before the end of this year.
It is at this time, that a new requirement (included in the Chancellor's Budget on 19 March) comes into effect: for those involved in avoidance schemes which are the same as or similar to a scheme which a court ruled against, are to pay the tax upfront!
The above will also apply to any scheme reported under the Disclosure of Tax Avoidance Scheme rules (DOTAS), allowing HM Revenue & Customs to keep track of the latest schemes.
It is estimated that it will take three to four years for HMRC to contact and request payment from all of those expected to make upfront payments.
The new upfront tax rules will apply to employee benefit trusts, contractor avoidance, partnership losses and stamp duty land tax. However, contractor avoidance is likely to be the largest category. Contractor avoidance involves individuals using offshore intermediaries (such as employee benefit trusts) to obtain loans instead of remuneration, in an attempt to avoid or defer income tax and national insurance contributions.
HMRC are using this new tax regime "to rebalance the economics of entering into avoidance schemes" by getting taxpayers "to pay disputed tax earlier in the process".
Before these proposed legislative changes take effect, the Finance Bill that details them must be approved by Parliament and then receive Royal Assent, with it becoming law in early Autumn.
It is crucial that these individuals get in touch with us and our tax expert to get specialist advice to deal with these matters, and to obtain the best possible deal, and reduce any applicable penalties. Our experts can guide you through the maze of HMRC procedures in this complex area of tax and help you to resolve your dispute as quickly and economically as possible.