Amanda Brown, tax partner at KPMG in the UK, comments on Wednesday’s Autumn Statement.
Commenting on detail in Wednesday’s Autumn Statement that HMRC will increase the tax take as a consequence of additional investment in counter avoidance, Amanda Brown, tax partner at KPMG in the UK, said:
“Detail in the Chancellor’s green book shows a significant increase in the tax collected from activity on countering avoidance to over £450 million by 2021-22. This is something of a misnomer as it won’t necessarily increase the overall tax take but simply accelerates the collection of tax from the midterm to the shorter term.
“As part of the Autumn Statement announcements, a package of resources has been allocated to HMRC to expand activities countering avoidance allowing it to do more and do it faster. The largest revenue raising element of this package is to provide resources to expand HMRC’s use of accelerated payment (APNs) and follower notices (FNs) in the pursuit of avoidance cases. With the introduction of legislation on APNs and FNs HMRC have sought to prevent taxpayers benefitting from the cash flow advantage achieved by implementing unsuccessful avoidance schemes where tax is not paid until any dispute on the scheme is finally determined in court. This process can take years so this investment in particular reinforces HMRC’s desire to remove this benefit so taxpayers pay now and argue later and so further fast-track the collection of disputed tax. It’s also anticipated that this additional resource will help address some of the inconsistencies we have seen in the market where some but not all participants in a challenged arrangement receive APNs.
“Also included in the figure is news that the Government will increase the number of cases challenged under the General Anti Abuse Rule (GAAR). So far there have not been any, but what this does mean is that anyone who is possibly within the reach of the GAAR could now be subjected to increased intervention by HMRC in a much shorter timeframe.
“The APN regime applies to arrangements within the Disclosure of Tax Avoidance Schemes (DOTAS) regime and also to arrangements HMRC has successfully litigated. Taxpayers who have implemented DOTAS schemes or otherwise engaged in activity post the implementation of the GAAR which is susceptible to challenge should prepare themselves to receive APNs.
“It’s evident that the Government is planning to step on the gas when it comes to collecting taxes relating to perceived avoidance. There is no right of appeal to the tax tribunal against an APN though there is a right to make representations and/or make an administrative law challenge. Challenges are underway but anyone in receipt of an APN needs to consider the relevance of the successful challenges to the context of their case.”
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