When I was looking for a new accountant a few years ago, I went to one who suggested that I cut my tax bill by investing in a film finance scheme. I said I didn't think that would work for me and hired someone else. Thank goodness I did.
HMRC has now published a list of over 1,200 tax-avoidance vehicles it intends to pursue with its new powers which allow it to demand immediate up-front payment from suspected wrongdoers.
The scale here, says Alison Steed inThe Sunday Times, means that it isn't just the very well-off who are embroiled in the saga: "thousands of ordinary investors" are too (think "nurses, vicars, office workers"). You will know if you are one of them if you soon receive an "accelerated payment notice".
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These are being sent out from the end of August over a period of "approximately 20 months", says Adam Palin in the FT, and will demand that you pay "an amount of disputed tax associated with avoidance scheme investments within 90 days". That amount could be huge.
The result? Anyone dubbed a tax evader rather than just an avoider' could end up paying more in back taxes than the total they were trying to protect from tax in the first place.
You might think this grossly unfair given that the schemes were not considered avoidance schemes by HMRC ten years ago. You are probably right as Jason Collins, head of tax at Pinsent Masons, tells the FT, this looks like a retrospective change in the law and as such has "upended the rules that govern these tax disputes".
But whatever you think of it, if youget a payment notice, take independent advice fast. You will have only 90days to pay up, and while you can try to arrange a delayed payment scheme, HMRC doesn't appear to be in a particularly patient mood. However, you might not want to end things there.
You can challenge the payment through the tribunal system, given that HMRChas not yet proved that all the schemes were illegal.
You might also consider if you should have been sold the scheme in the first place. If you think not (ie, you didn't understand the scheme and its risks), you can appeal to the Financial Omsbudsman and attempt to claim back your original investment and interest on it from the provider.
If you can't do that your provider may no longer be trading and you have lost £50,000 or under, your best bet is the Financial Services Compensation Scheme.
If you are down more than £50,000 (most people will be) and your provider isn't volunteering to compensate you (Coutts, apparently, is), your only recourse is legal action, says Steed.
