Business Finance: Stuart Wilkinson of KPMG highlights new powers for HMRC

Stuart Wilkinson, head of tax at KPMG in East Anglia

Stuart Wilkinson, head of tax at KPMG in East Anglia - Credit: Archant

Under the Finance Act 2014, which gained Royal Assent last week, HM Revenue & Customs will receive new powers to issue a tax demand and collect the tax in dispute in relation to certain tax planning arrangements.

HMRC has issued a list of more than 1,000 scheme reference numbers indicating the arrangements disclosed under the Disclosure of Tax Avoidance Scheme (DoTAS) regime they will be focusing on.

It is clear that this will be of major concern to companies and individuals. The Treasury says it plans to issue 10,000 payment notices to businesses and 33,000 to individuals. The notices are expected to raise £7billion for the Government in total.

Although HMRC has indicated that it will issue notices over a 20 month period, it is possible that some payment notices may start to be received soon. It is vital that companies and individuals work out now if they are affected by these changes and consider how they will pay any tax owed.

It is important to act early and take advice as soon as possible. Where one of these notices is issued, payment must be made within 90 days. The draft law includes no formal right of appeal against the notice although taxpayers may make representations to HMRC.

Although HMRC has said that “time to pay” arrangements will be available in certain situations, receiving a large bill which must be settled quickly will leave some companies and individuals severely cash constrained, Early appraisal of the bill and how to pay it can give those affected time to consider all of the options available to them.

Three questions which businesses and individuals should ask themselves now are:

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Have you entered into any tax planning which is, or you think may be potentially, subject to HMRC challenge or has been disclosed under the Disclosure of Tax Avoidance Scheme (DoTAS) regime?

Are you aware of the new rules on accelerated tax payments and have you considered whether the rules will apply to you?

To the extent you think any of the above may apply to you, have you considered how any tax payments might be funded, or the potential impact on the financial statements and cash flow forecasts of your business?

: : Stuart Wilkinson is head of tax at KPMG in East Anglia.