HMRC yesterday dismissed claims that its proposed new powers to force firms and individuals to pay up front any disputed tax associated with a “tax avoidance” scheme will spark a rash of insolvencies.
Accountancy firms have claimed that as many as 10,000 businesses could be affected by the accelerated payment notices, which are part of the 2014 Finance Bill, set to enter the statute books later this month
These would require the taxpayer to pay the disputed sum within 90 days and penalties might apply for late payment.
Accountancy giant Moore Stephens said that these powers could mean a wave of bankruptcies. It said its retroactive nature was unfair and the appeal procedure very limited.
But HMRC spokesman Patrick O’Brian told City A.M.: “The important thing to remember is that taxpayers retain full appeal rights against the substantive tax liability.
“There is no change to the tax liability owed. This is tax the individual would have already paid if they hadn’t entered into the avoidance scheme.
“If they win their case, HMRC will repay the tax with interest,” he added yesterday.