HMRC wins High Court battle over tax avoidance demands
HM Revenue & Customs (HMRC) has secured victory after Ingenious tax avoidance scheme investors’ challenge to its tax avoidance crackdown process were rejected.
Accelerated payment notices were introduced in July in the Finance Act 2014. They allow tax avoidance scheme users to pay disputed tax 90 days before HMRC challenges the individual’s scheme in court.
As of this month HMRC has issued 1,750 notices to collect £400 million in tax. Most of the notices have not reached the 90 day deadline.
154 investors who used the Ingenious Media plc schemes had challenged HMRC over its use of accelerated payment notices to demand investors pay the disputed tax amounts, including two lead cases involving Nigel Rowe and Alec David Worrall.
Rowe, who contributed £750,000 to Ingenious’s ‘Ingenious Film Partners’ scheme in 2004 and 2005, was later issued with a payment notice demanding £270,147.60 in tax, which he disputed.
Alec David Worrall, who in total contributed £267,638 to Ingenious’s ‘Ingenious Film Partners 2’ and ‘Ingenious Games’ schemes, was issued with a notice worth £96,406, which he also disputed.
The investors who disputed their accelerated payment notices did via a judicial review at the High Court said the notices were unreasonable, breached natural justice and represented an abuse of their rights under the European Convention on Human Rights to a fair trial and protection of property.
The High Court found in HMRC’s favour on all the challenges.
David Richardson, director of counter avoidance at HMRC, said that the result was important as those using tax avoidance schemes should know they can no longer hold onto their money while their affairs were being investigated.
‘This is an important result, and good news for the vast majority of taxpayers who do not try to avoid paying their fair share of tax,’ he said.
‘Those who use tax avoidance schemes need to know they can no longer hold onto the money while their affairs are being investigated. They have to pay their tax up front like everybody else.’
HMRC expects to issue around 64,000 such notices by the end of next year, a move which it said would bring forward £5.5 billion in payments for the Treasury by March 2020.
