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Accelerated Payment Notices & Tax Avoidance – Footballers amongst those under scrutiny
Over 100 Footballers Facing Financial Difficulty Following HMRC crackdown on Tax Avoidance Schemes The Guardian reported last week that over 100 footballers, some retired, are facing financial difficulties, even bankruptcy. This is due to HMRC serving Accelerated Payment Notices on tax payers who were using certain registered tax avoidance schemes.
The issue surrounds powers granted to HMRC last autumn. HMRC can now, by serving an Accelerated Payment Notice (APN), require the taxpayer to make an upfront payment where the tax due is disputed, and they wish to continue that dispute. Historically this was not the case. If a sum was disputed it was only paid if the Tribunal/Court held it was due. You didn’t have to pay up until the dispute had been dealt with and a ruling had been made requiring you to pay the sums due. By imposing this requirement retrospectively, many investors in certain tax schemes are put in the difficult position of being unable to fight HMRC, even where they are advised they should win. This is simply because they can’t raise the funds to pay the new demand. It’s a bit like two boxers starting a fight under one set of rules, and after 5 rounds one of them having both hands tied behind his back unless he can pay the purse money within a few minutes!
Few members of the general public, who mainly have their tax deducted at source, are likely to be sympathetic, when those paid hundreds of thousands of pounds a year bemoan their fate just because HMRC change the rules. Going forward this new system makes Tax Avoidance Schemes less attractive when you can expect to receive an APN, seeing the sum demanded tied up potentially for several years, whilst you fight HMRC. It is difficult to argue with that. Ultimately a cynic might suggest that the way in which this has been introduced is more a political statement than a fiscal one. HMRC and the Government may live to regret it if ultimately the scheme providers successfully defend their position and the schemes are held to be lawful. Looking at it from the footballer’s perspective, especially those without the funds to meet the APN, it seems that they will have to consider Individual Voluntary Arrangements, Informal Arrangements with HMRC or Bankruptcy. Whichever way it goes they will no doubt be left feeling yet another group of advisers has taken a fee from them.