Andrew Watters, director and tax expert at leading law firm Thomas Egger LLP, called HMRC’s attempt to clear a current backlog of 65,000 tax evasion cases a result of its “frustration” at the current system.
The proposals will enable HMRC to demand upfront payments of tax in cases similar to those which have already been successfully tried for evasion.
The measures were previously criticised by the Chartered Institute of Taxation.
Watters said: “The report on HMRC proposals to target disputed tax bills is a sign of their frustration at the delays in collecting what they believe to be the ‘correct’ amount of tax.
“HMRC believe that some are simply using the legal process as a delaying tactic to paying their tax.
“In a balanced playing field, one might think that when the taxpayer wins the HMRC should pay a penalty for inconveniencing the taxpayer and forcing him to litigate. No such plans have been proposed.”
He said the availability of the names of taxpayers affected by the new legislation contradicted HMRC’s previous standards of confidentiality, adding “it would be a shame if such confidentiality would only extend to the right kind of taxpayer.”
As reported, the measures are aimed at disputes involving an avoidance scheme HMRC considers similar to another that has already been defeated in a tribunal or court hearing.
The proposals would allow payments to be demanded from untried cases, removing the traditionally need for a claim to be formally settled before payment can be demanded.
HMRC say the guidelines, which will be included in next week’s Budget, will “rebalance the economics of entering into avoidance schemes”.
Gary Richards, tax partner at Berwin Leighton Paisner, says the proposals are not specific enough when identifying what cases will be grouped.
He said: “HMRC are frustrated and have been criticised for the length of time such cases take but the problem is partly of their own making.
“The proposals run the risk of, in effect, removing people’s right to appeal.
“For some of the cases that were mass marketed one decision may be appropriate, but the proposals do not specify what type of cases they are aiming at.
“There are subtle differences in the law and facts; this means that in many cases it is hard to use one case to determine thousands of others.
“They haven’t thought through the principles, they need to be more targeted.
“If people receive a notice telling them they have to pay they may be deterred from going to court, when in reality they could appeal on the grounds that their case is different to the one it is being grouped with.
“People may end up paying tax after receiving one of these notices but only realise that they did not need to pay if a later decision goes against HMRC.
“It is the absence of the ability to challenge notices that is the most pernicious problem.”
As reported last week, the proposals have already come under fire from the Chartered Institute of Taxation (CIOT).
The Institute said the measures were acceptable as a temporary solution but opposed their wider use.
CIOT president Stephen Coleclough said: “Handing HMRC almost unprecedented executive powers to decide who falls within the mischief they intend to deal with, without the usual safeguards and appeal lightly, is not something which should be done lightly.
“If this is to proceed, HMRC should issue comprehensive guidance at the same time as the Bill is published to show what situations are to be tackled in this way. It should only apply to members of the same scheme or very close variants of it.
“These emergency measures should not be a permanent state of affairs.”
Yesterday it was revealed that celebrities including David Beckham and Andrew Lloyd Webber could face a tax bill of up to £1bn after HMRC questioned the validity of a film scheme they invested in.
Ingenious Film Partners 2 LLP qualified for tax breaks under rules aimed at stimulating the British Film Industry. But HMRC argues that it was simply a tax avoidance scheme.
The scheme was launched under the previous government and helped to fund films such as Life of Pi, Avatar and Girl with a Pearl Earring.
Click here to see and download the 57-page consultation document regarding the proposals
