David Beckham among 33,000 to receive new tax demand
- 9 July 2014
- From the section Business
Some of the biggest names in business, entertainment and sport will soon be receiving letters demanding payment of disputed tax bills.
Under the new finance bill, which will become law in the next few weeks, HM Revenue and Customs (HMRC) will gain new powers to make them pay upfront.
About 33,000 people who invested in tax avoidance schemes will be affected.
Among them are footballer David Beckham and business leaders such as Centrica chief Sam Laidlaw.
The list also features current regulators including former London Stock Exchange boss Clara Furse.
They will be asked to pay the disputed tax within 90 days of receiving the letter.
They will only get the money back if the dispute is eventually settled in their favour.
They may get the money back if HMRC ultimately loses legal arguments, but in the meantime, the money will be in the Exchequer rather than in their pockets.
The government hopes the new rules and the inability to defer tax payment for years will make these schemes less attractive.
A spokesman for HMRC described the new powers as a "game-changer" in the battle against tax avoidance.
There are many different types of scheme, but most involve the investor putting money into a venture that, on paper at least, makes losses.
Those losses can be set against other earnings, bringing the individual's total income down, resulting in a lower tax bill.
The tax authorities consider this to be deliberate avoidance of tax and are challenging the legality of many of these structures.
Investment schemes to finance films share some of these characteristics.
A spokesman for one company that arranged film-financing schemes said they helped fund investment in films including Avatar and The Life of Pi.
He pointed to successive governments' policy of encouraging investment in UK films by offering favourable tax treatment.
Speaking to the Treasury Select Committee, HMRC's chief executive, Lin Homer, said that some of these schemes required investors to pay into a potential litigation fighting fund and to promise not to come to any personal agreement or settlement with HMRC.
That, she said, should have set alarm bells ringing and was evidence of the true nature of these arrangements.
In addition to being granted the powers to demand payment now for tax bills still in dispute, HMRC is also seeking additional powers to take money directly from individuals' bank accounts.
It says it needs this power in exceptional circumstances when tax bills that are not in dispute are still not paid.
It says there are some 17,000 of what Lin Homer called "recalcitrant debtors".
That proposal is currently undergoing a consultation process that ends in three weeks.
If approved by parliament, which is by no means certain, it will be in force in a year's time.