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Advanced payment notices chasing debts from the past

HM Revenue and Customs have made no secret of the fact that they are keen to ensure that so-called ‘aggressive tax avoidance’ schemes are not worth the risk, with several high profile cases pursuing household name celebrities for unpaid tax and using the media to name and shame them. The aftermath of a court case […]

By Laura Nixon on 22 Sep 2015
Read time: 3 minutes

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HM Revenue and Customs have made no secret of the fact that they are keen to ensure that so-called ‘aggressive tax avoidance’ schemes are not worth the risk, with several high profile cases pursuing household name celebrities for unpaid tax and using the media to name and shame them. The aftermath of a court case in which taxpayers hoped to prove that the system of Advanced Payment Notices was unlawful found in favour of the taxman, allowing the department to go ahead full-throttle to pursue those who they believe have avoided tax.

The original hype was about cases where those who had avoided sums of tax running to the millions were being chased for the money, with Premier League footballers, millionaires and other high profile personalities being targeted with demands for payment within ninety days of being issued.

However, these powers are now being used to chase the more ‘moderately well-off’ business people, some of whom have been issued with demands for payment for unpaid back-taxes which date back to jobs that they held years ago. One such individual has claimed that he has been chased for £27,900 based on underpaid tax from a job that he had seven years ago. This means that he has three months to find the money that HMRC have asked for, which will only be refunded if he is found not to have been guilty of using an aggressive avoidance scheme at some point in the future. The sum that has been demanded by HMRC amounts to around a third of his annual salary, meaning that a three month deadline to repay the sum could make it almost impossible for him to find the money in the time-frame stipulated.

The sum comes from a period between 2008 and 2010 during which the individual in question worked as a freelancer for a number of banks in London. Although he received a letter from HMRC at the time, saying that they were looking into his tax affairs and would let him know if they needed anything, after a five year silence from the department, he assumed that there would be no further action taken.

When he received the APN in April, the three month time limit was not long enough for him to access the money without depriving his family. The notification that HMRC sent in 2010 was the opening of an ‘enquiry’ which extends the time limit on the pursuit of back taxes under ‘schedule 39’ which allows a 20 year period for investigating cases where the department believe there to have been deliberate avoidance.

Although HMRC are open to the idea of discussing payment schedules and coming to agreements over the time periods during which they will accept payment, the latest round of APNs shows that they are not letting up on their plans to pursue tax avoiders at every level.

If you are concerned about your tax arrangements and want to be sure that you are getting the best advice on how to organise your finances, then a freelancer accountant can help to save you time and money through legitimate means. Call today on 01253 362062 or email us at contractoradvice@nixonwilliams.com for more information on our services.

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