Yahoo Finance HMRC steps up chase for tax avoiders, with use of legal action doubling in a year
The taxman has doubled efforts to recoup unpaid bills using legal enforcement measures.
In 2017 HM Revenue & Customs initiated twice as many enforcement actions against taxpayers who had ignored an “accelerated payment notice” (APN) as in the previous year, figures released in response to a Freedom of Information request show.
APNs are sent to suspected tax avoiders to demand payment within 90 days, forcing taxpayers to pay first and challenge the decision later if they dispute it.
A total of 79,000 have been issued since their introduction in 2014, of which 6,000 were later withdrawn by the tax office.
The notices have always been controversial, according to Dominic Arnold of law firm Moore Stephens. He said HMRC effectively issued APNs in bulk once a tax tribunal had established that a particular type of avoidance scheme was unlawful.
Before 2014 the tax office would have to challenge taxpayers individually. He cited the example of Rangers, the Scottish football club that lent players money via complex offshore structures in order to save tax.
“Many people got APNs with the Revenue saying ‘we think your scheme is like the Rangers one’,” said Mr Arnold. “It could be argued that HMRC should have the benefit of the tax while an argument is going on. But is it fair to bankrupt someone [for non-payment] if there’s a chance you could be wrong? That can’t be undone.”
Experts say the increased use of legal enforcement action is evidence of a cultural shift at the Revenue towards demanding tax up front and asking questions later.
According to the Loan Charge Action Group, a collective of contractors who face massive fines for using tax avoidance schemes, almost 70pc of its members have experienced depression, anxiety or other mental health problems as a result of HMRC’s pursuit.
An HMRC spokesman said payment arrangements had been reached in 90pc of cases where requested and that staff were briefed to assist those experiencing anxiety.
Last week the tax office unveiled plans to bolster its powers by allowing it to bypass tribunals and go direct to banks to gain access to a taxpayer’s banking records.
The crucial change, said Martina Fitzgerald of Menzies, another law firm, is that banks will no longer be obliged to inform the customer when a request is made.
“Currently the bank is obliged to tell the account holder, but this would change,” she said. “That’s quite disturbing.”
