Moore Stephens argues that the new accelerated payment rules, due to come into force this month, could put some taxpayers under “financial strain”.
Under the new rules, HMRC will have the power to make individuals and businesses who have entered into avoidance schemes pay any disputed tax, rather than waiting for the outcome of a tax tribunal ruling. This would then be repaid if the tax tribunal rules in their favour.
This, said David Elliot, restructuring partner at Moore Stephens, could put taxpayers under financial strain. “And, in the very worst cases, could even trigger personal bankruptcies or business insolvencies before the technical merits of the arrangement have been tested,” he said.
However, HMRC insisted that payments would only amount to what would have been paid had the individual or business not entered into a tax avoidance scheme. A HMRC spokesperson said, “They are only paying the money that is legally due.”
The Revenue also reiterated that cases would be dealt with on individual merit, “Instalment plans are available for those who genuinely need them.”
Elliot believes the potential impact of the new powers is "so huge" that an independent appeal process should be introduced.
“HMRC has said that it will use its discretion under its time to pay arrangements if a taxpayer can’t afford to pay the money upfront, but that is not good enough when the taxpayer’s entire way of life may be at stake.”