April 11 2014

The 2014 budget brought forward two proposals that may have far reaching implications for struggling businesses.

Most worrying of which is the proposal that, with effect from 2015, HM Revenue & Customs (HMRC) will be given new powers to directly access individual and company taxpayer bank accounts to recover tax and tax credit debts of £1,000 or more directly.

It was also announced that where the application of the potentially wide reaching General Anti Abuse Rule (GAAR) or disclosure regimes are asserted, HMRC is to be given powers to require prepayment of any tax in dispute. This is prior to the determination from a court that such amounts are in fact due at all.

Where the need arises, HMRC will issue a “Notice to Pay” to any taxpayer for whom there is an open enquiry, or the matter is under appeal. This will be limited to situations where HMRC is asserting that a tax advantage has arisen by the use of arrangements that should either have been disclosed under the disclosure of tax avoidance scheme rules or which should be counteracted by the application of the GAAR.

The notice will require the taxpayer to pay the tax in dispute within 90 days, or a further 30 days where the taxpayer requests that HMRC should reconsider the amount of the payment notice. The measure will operate so as to remove any postponement of the disputed tax while the matter is under appeal. Penalties will apply for late payment.

Both of these arrangements could have a significant adverse impact on the rescue culture for companies in financial difficulties. CLICK HERE for more information and turn to pages 52 and 53.