The Financial Secretary to the Treasury, Jane Ellison MP, announced last week that HMRC has collected £3 billion up-front from tax avoiders. The move continues the government clampdown on tax avoidance following last month’s announcement that enablers of tax avoidance will face tough new sanctions.
The 60,000 accelerated payment notices (APNs) issued since the new rules were introduced in 2014, have required tax avoidance scheme users to pay up £3 billion of disputed tax upfront while their tax affairs are investigated by HMRC.
Under the scheme, which removes the economic advantage of taking part in tax avoidance, a taxpayer with an outstanding tax bill has 90 days once an APN is received to pay up or make representation to HMRC if they consider the notice incorrect.
Speaking at HMRC’s stakeholder conference today the Financial Secretary said:
I’m delighted to announce that we’ve collected £3 billion upfront since 2014 from people using avoidance schemes as HMRC puts its new powers to use.
The vast majority of avoidance schemes just don’t work. We’re determined to change the economics of tax avoidance by making it harder for the dishonest minority to cheat the system - collecting disputed tax upfront and tough new sanctions for enablers of tax avoidance will mean people will think twice.
HMRC has successfully defended the accelerated payment rules in five out of five Judicial Review challenges. With HMRC winning almost 90% of avoidance litigation cases brought against it, the vast majority of individuals choose to settle their tax bill rather than entering into lengthy and costly litigation.
In the latest High Court ruling brought by tax avoidance scheme users, HMRC’s decision to issue APNs on a scheme that companies had used to try to reduce their tax bill was challenged by arguing that the tax authority hadn’t properly arrived at the amounts included in the APNs. The Court ruled in HMRC’s favour. This decision means that an estimated £28 million in disputed tax will be protected.
This year has seen HMRC win several large scale tax avoidance cases, including a win against Eclipse 35 worth £635 million.