New anti-avoidance legislation came into effect on 17 July 2014 giving HMRC significant powers to demand upfront payment of disputed tax from taxpayers using avoidance schemes. This means that taxpayers that have used a tax avoidance scheme, may have to
make a payment of the amount that relates to their use of the scheme, before the final amount has been agreed or determined. This is known as an accelerated payment or in the case of members of a partnership, it is known as an accelerated partner payment.

An accelerated payment notices (APN) may be issued only under certain circumstances such as when the taxpayer has been issued with:

  • a follower notice,
  • the taxpayer is using certain arrangements disclosable under the disclosure of tax avoidance scheme (DOTAS) rules or
  • the recipient is subject to a counteraction notice under the General Anti-Abuse Rule.

HMRC has recently published an updated version of their factsheet on penalties for follower notices (CC/FS30a) and on penalties for partnership follower notices (CC/FS30b). A follower notice is issued to taxpayers that have used the same tax avoidance strategy
as that used by representative case or a different scheme but where, in principle, that scheme is sufficiently similar to the scheme used in a representative case.

The factsheet explains what penalties will be issued by HMRC when a follower notice has been sent and corrective action has not been taken on time. The penalty for not taking corrective action is equal to 50% of the denied advantage, but can be reduced to
as low as 10% based on the co-operation of the taxpayer.

Source: New feed