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The Budget 2014 included an announcement that the government will legislate to give HMRC the power to issue Accelerated Payment Notices’ in the following situations:

 

  • Follower Cases – where HMRC consider that a taxpayer’s claimed tax effect has already been defeated in another taxpayer’s litigation.
  • Schemes falling within the Disclosure of Tax Avoidance Scheme (DOTAS) regime where there is an open enquiry on or after Royal Assent 2014.
  • Schemes that HMRC counteracts under the General Anti-Abuse Rule (GAAR).


The Impact Statement sets out the expectation that notices will be sent to approximately 33,000 individual taxpayers and around 10,000 corporates. The expected yield from the follower cases is anticipated to be £900m. However, the extension to DOTAS and GAAR increases the expected yield to over £7bn (£2.1 bn of which is expected from corporates).

 

Accelerated payments notice

 

HMRC may issue an accelerated payment notice to a taxpayer when:

 

  • There is a return under enquiry or an open appeal
  • The return or claim has been made on the basis that a tax advantage arises from arrangements with a DOTAS number or a GAAR counteraction notice or a follower notice (see below) has been issued in relation to that return or claim

 

The taxpayer must pay the tax within 90 days or face penalties.

 

The taxpayer can make a request for HMRC to reconsider the decision to issue an accelerated payment notice on the grounds that the conditions have not been met, or make representations about the amount of tax demanded. However, there is no appeal process.

 

Follower notice

 

HMRC may issue a follower notice to a taxpayer when:

 

  • There is a return under enquiry or an open appeal
  • The return or claim has been made on the basis that a tax advantage arises from arrangements
  • HMRC believe that there is a judicial ruling relevant to those arrangements
  • The notice is given within 12 months of the ruling or, if later, the date of receipt of the return or claim (there is a transition rule which allows notices to be issued after Royal Assent in respect of older decisions)


We expect this to be used where there is an arrangement which was not disclosable but where another taxpayer has lost a “test case”. This applies where the judicial ruling is final, and this could include a First Tier Tribunal case where the appeals process has been exhausted.

 

The taxpayer must amend their return or claim (ie concede) within the specified time limit or face penalties.

 

The first notices can be issued after Royal Assent (expected to be late July).

Contact

Derek Scott

Derek Scott

Director

KPMG in the UK

020 7311 2618

derek.h.scott@kpmg.co.uk

Liechtenstein Disclosure Facility (LDF)

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