HM Revenue & Customs could seize hundreds of millions from up to 65,000 individuals under plans to crack down on tax avoidance schemes.
In a consultation which closed this week, HMRC is proposing to extend powers currently in draft legislation which allow it to issue payment notices to anyone who has used an avoidance scheme that a court has ruled against.
The measure was announced in last year’s Autumn Statement and will be introduced in the 2014 Finance Bill.But in its consultation paper, HMRC now says the draft power “does not go far enough”.
It wants payment notices to be extended to anyone who has used a tax avoidance scheme into which HMRC currently has an open inquiry.
If the proposals go ahead, it will publish a list of these schemes before the Finance Bill is given Royal Assent and begin issuing notices immediately afterwards. Notices must be paid within 90 days.
HMRC is currently investigating 65,000 individuals and businesses that have used marketed avoidance schemes. It says 85 per cent of these cases took place more than four years ago. The rules will apply to both existing and new cases.
Tax investigation firm Trident Tax managing director Alan Kennedy says: “This will be a game changer. Some inquiries have been open for six years, meaning there will be a lot of unexpected bills.”
He says the proposals will see HMRC collect hundreds of millions in unpaid tax.
Taxbriefs editorial director Danby Bloch says: “This is another nail in the coffin for old-style tax avoidance.
“One of the reasons for a client chancing it with a tax scheme has been that they could probably hang on to the money for a fair amount of time.”
Exchequer secretary to the Treasury David Gauke says: “We are sending a clear message: that if you try to avoid paying the tax you owe, we will pursue it. The vast majority of people work hard and pay their fair share in tax. It is not right that a small minority think they can avoid doing the same.”