Payment policy nets more than £4bn from tax avoiders

HM Revenue and Customs (HMRC) has collected more than £4 billion through the ‘pay now, dispute later’ rules for people who have used a tax avoidance scheme.

More than 75,000 accelerated payment notices (APNs) have been issued to people under enquiry for tax avoidance since rules were introduced in 2014. And HMRC has now issued APNs on all the schemes that were already under investigation when the new rules came in.

Also, last week, the High Court confirmed that HMRC had won another Judicial Review of the APN regime – the department has now won six out of six Judicial Reviews.

HMRC collected more than £3.6m per day by requiring people in avoidance schemes to pay their disputed tax upfront. The average bill for large companies trying to avoid tax is £6 million, while for individuals and small corporates it’s £74,000. In comparison, the worker on an average salary who doesn’t try to avoid tax pays less than £6,000 in National Insurance and Income Tax in a year.

David Richardson, Director General for Customer Compliance Group in HMRC, said:

“The vast majority of people play by the rules and pay their taxes on time – people who try to do otherwise place an undue burden on everyone else.

“APNs have helped level the playing field by changing the economics of avoidance.

“We are pleased that the High Court has again supported HMRC’s operation of the Accelerated Payments regime. This is our sixth win out of six Judicial Reviews of APNs.”

People who receive an APN have 90 days to pay up or make representation to HMRC if they think it is incorrect – with HMRC upholding 90% of decisions.

HMRC challenges every tax avoidance scheme they become aware of and currently have more than 600 schemes and 80,000 users under investigation. The tax authority wins around eight out of ten cases taken to court, with many more settling before litigation.

Anyone who anticipates problems paying their tax bill should contact HMRC, who may be able to offer extra time to pay based on individual circumstances. HMRC has an outstanding record for supporting those facing genuine difficulty.

Notes for Editors

• Accelerated payments were introduced in the Finance Act 2014 and National Insurance Contributions Act 2015.
• They apply where avoidance schemes are subject to the Disclosure of Tax Avoidance Schemes rules or the General Anti-Abuse Rule, or where they are similar to a scheme that’s already been defeated in the courts.
• An accelerated payment notice is issued to the taxpayer to collect the outstanding tax. After they receive the notice, they have 90 days to pay or make representations to HMRC if they consider the notice is incorrect.
• If a taxpayer has used a scheme that is the same as or very similar to a scheme that HMRC has defeated in court, HMRC can issue a Follower Notice (FN) requesting settlement. If the taxpayer does not settle their dispute and HMRC wins a court case against them, they will face a substantial penalty.
• Anyone wishing to challenge HMRC’s administration of the Accelerated Payment legislation is entitled to commence Judicial Review proceedings.
• The latest decision of the High Court was R (oao Dickinson & Others) v HMRC, handed down on 7 July 2017.
• HMRC is stemming supply and demand for tax avoidance schemes – the number of new schemes notified in 2015-16 under the Disclosure of Tax Avoidance Schemes regime fell by 99% on 2005-06, from 600 to 7.
• Anyone wishing to settle an avoidance issue should contact HMRC immediately on 03000 530 435.
• Follow HMRC Press Office on Twitter: @HMRCpressoffice
• HMRC’s Flickr channel: flickr.com/hmrcgovuk