Accelerated Payment Notices – HMRC demands continue

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Posted in:Banking and Finance|October 22, 2015 | Join the mailing list

We have

previously outlined
the significant changes implemented by Part 4 of the Finance Act 2014 which created “Accelerated Payments” and some related notices. 

 Under section 219 of the Act legislation provided for the circumstances in which Accelerated Payment Notices may be given by HMRC.  The Act sets out the procedure and content relating to
these Notices which represent a major sea change with the central premise of “pay now, argue later”. We have previously predicted that they will be readily invoked by HMRC.

As a consequence of the Accelerated Payment Notices one media/film investor received an Accelerated Payment Notice from HMRC.  He issued a judicial review against HMRC stating that Accelerated Payment
Notices were unfair, irrational, against natural justice, was a breach of enjoyment of possessions and that they were disproportionate and unreasonable; please see
R. (on the application of Rowe) v Revenue and Customs Commissioners [2015] EWHC 2293 (Admin).

 The High Court ruled on 31 July 2015 that these notices were not unfair and were not insufficient to achieve justice.  This was because “the Accelerated
Payment required by the Notice did not involve a determination of final liability, but rather addressed where the tax should be held pending resolution of the dispute”

 The decision is a decision that assists HMRC in issuing the Accelerated payment notices and will expectedly be relied upon in rebutting other challenges to the legislative changes brought
in under the Finance Act 2014.

There have been some interesting and highly relevant decisions. The First Tier Tribunal handed down a decision on 3 September 2015 in regards the Isle of Man Double Taxation arrangement, which was being
exploited in regards to income.  This complex tax avoidance scheme was primarily used by property developers and IT contractors. Please see Huitson v HMRC

[2015] UKFTT 448 (TC)

HMRC have stated that approximately 2,000 people use this tax avoidance scheme.  The scheme was, according to HMRC, blocked by Parliament in 2008.  The Tribunal case was a challenge by one of the scheme users who took the
matter to Tribunal, but lost.  HMRC suggests that they will now recover up to £200m in unpaid tax. 

The changes to tax, and tax avoidance, together with a change in attitude by HMRC, has seen HMRC recover an additional £1bn in tax payments from users of tax avoidance schemes.  More than 24,000 Accelerated
Payment Notices have been issued since the Finance Act 2014 became law in August 2014.  HMRC has suggested that they are “
Winning around 80% of avoidance cases that people litigate”. 

In the same press release HMRC state: “By the end of 2016, HMRC expect to have completed issuing around £64,000 [Accelerated Notices] bringing forward £5.5bn in payments
for the Exchequer by March 2020”.

Press Release 13 September 2015.

An Accelerated Payment Notice issued under Chapter 3 of Part 4 of the Finance Act 2014 allows HMRC to demand payment of sums that they claim are likely owed under a tax avoidance scheme that is no longer
classified as being a genuine and legitimate tax avoidance scheme.  It requires payment within 90 days, or representations to be made to HMRC if there are any issues. 
It is for this reason that you ought to seek immediate advice should you receive a notice.

Finally on 30 June 2015 a Judicial Review challenging HMRCs declaration that Stamp Duty Land Tax avoidance was unlawful failed at the Court of Appeal.  In that decision there was a challenge under Article
6 of the Human Rights Act.  Article 6 is the right to a fair trial under the European Convention of Human Rights.  At paragraph 68 Lord Justice Vos ruled that Article 6 does not encompass  tax disputes.  It is likely that the decision of the Court of Appeal
would be replicated in regards to the changes brought in regards to the Finance Act 2014.   Please see
R (on behalf
of APVCO 19  Limited and others) v HMRC &
Treasury [2015] EWCA Civ 648.

Numerous parties have been contacting
berg in regards to Accelerated Payment Notices.  If you have any issues in regards to demands made by HMRC you should seek legal advice as a matter of urgency. If you have any questions in regards to any demands made by HMRC under the Accelerated
Payment Notices rules, please contact a member of berg’s banking & financial disputes team.

does not provide tax or financial advice, but works with appropriate experts and counsel, and can refer you to an appropriate advisor.

For more information about any of the above or for practical advice on this or any other aspect of banking and financial disputes, please contact our Banking & Financial Regulation Team on 0161 829 2599 or email

(The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by berg or any of its partners or employees. Professional legal
advice should be obtained before taking, or refraining from taking, any action as a result of this article.)

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