HMRC expect to raise an additional £7bn in tax revenue through the introduction of new accelerated payment notices.
Under these new powers, HMRC will be able to make taxpayers pay disputed tax in advance, rather than waiting for the outcome of a tax tribunal ruling.
43,000 businesses and individuals suspected of tax avoidance will be targeted with the notices as of next week, including hundreds of business leaders, sports stars and entertainers.
33,000 out of this number are individuals, earning an average gross salary of £262,000 and owing and estimated £5.1bn in tax.
Investment company, Ingenious Media, issued a warning to 1,300 investors saying that they may have to pay back all the tax they’d saved with their schemes, plus interest.
Top accountants, Moore Stephens, say that the new powers could trigger a ‘tidal wave’ of insolvencies.
David Elliott, restructuring partner at Moore Stephens, said:
“Receiving a demand to make upfront payment of tax could put some taxpayers under financial strain, and in the very worst cases, could even trigger personal bankruptcies or business insolvencies before the technical merits of the arrangement have been tested.
“Even a remote prospect of being made bankrupt could mean that taxpayers feel under pressure to settle disputed cases rather than take an appeal to the courts.”
Image by HMRC