Tax authorities have dismissed claims by the chairman of the Treasury Select Committee that it acted in a heavy handed manner, causing people "very severe financial distress".
Andrew Tyrie has written to chancellor Philip Hammond to highlight concerns about the way HM Revenue & Customs (HMRC) cracked down on people who had arranged their financial affairs by using tax breaks originally introduced to promote investment into the British film industry.
"Arguably these tax breaks were too generous and ill designed," wrote Tyrie, adding they provided "scope of confusion and also some abuse".
However, Tyrie added: "An increasing number of representations have been made to me expressing concern that the outcomes are not always fair nor what anyone could have expected. This has resulted in financial calamity for some of those involved."
Tyrie cited press reports that HMRC was issuing draconian "life changing bills" to people. He said: "Many individuals are facing very severe financial distress as a consequence."
But HMRC rejected Tyrie's claims, highlighting it wasn't simply a case that tax authorities slap individuals with a demand notice and expect immediate payment.
Sources at HMRC told City A.M. that individuals are made well aware that the tax is due and given plenty of notice before demands are issued. They stressed anyone who feels they may have difficulty paying the what is owed should get in touch to discuss a repayment programme and the best way forward.
Meanwhile, Tyrie added many people who had contacted him felt the goalposts had been moved.
When the schemes were sold to them "they were not considered to be aggressive avoidance but just a deferral of tax, and were marketed as routine tax management".
A spokesperson for HMRC said: “We have worked hard to tackle abuse in the system on behalf of the vast majority of investors who play by the rules, ensuring they are enforced fairly, and with sensitivity.”