Despite being described as light on new laws, the Queen’s Speech, delivered yesterday (June 4) did contain at least one proposal that could give HM Revenue & Customs (HMRC) powers that would effectively make them judge and jury before a case even gets to court.
The Queen announced that, as part of the National Insurance Contributions Bill, HMRC is to get the power to force people using tax avoidance schemes to make “accelerated payments”, in a move that could affect 65,000 taxpayers and raise £2bn for the Treasury.
As part of the plans, people accused of using avoidance schemes will be made to pay their tax up front while HMRC and the courts decide whether or not the arrangements are legal.
The Bill would allow HMRC to issue a notice to taxpayers who had used avoidance schemes that had failed before the courts in another party’s litigation, more commonly called a “follower notice”.
Follower notices would also be issued to taxpayers involved in schemes that had to be disclosed under the Disclosure of Tax Avoidance Schemes (DOTAS) rules and under the General Anti-Abuse Rule (GAAR), where the Advisory Panel had given its opinion that the arrangements were not reasonable.
In a move that goes against the face of the British justice system, people suspected of tax avoidance will be treated as “guilty until proven innocent” by the taxman and, most worryingly, the new rules will apply to a “legacy stock” of pre-existing cases where people invested money in contentious schemes years ago.
However, Chancellor George Osborne dismissed the concerns earlier this year, saying that if people feel they have been wronged, they can go to court and, if they win, they will get their money back with interest.