Tax avoidance schemes have long been a thorn in the side of the Treasury, but this week's Budget announcement from George Osborne was a deft manoeuvre. The Chancellor revealed steps which will force anyone in dispute with HMRC over a tax-avoidance scheme to pay the disputed amount up front, and try to win it back later.

Previously, these tax cases would be in a long line of disputes due to come to court, at which point it would be decided whether or not the avoidance scheme was successful or not. In the meantime, the company or individual in question continued to hold on to the tax. HMRC justifiably point out that they win about 80% of avoidance cases that go to the Tax Tribunal.

Now, the Chancellor has simply turned the tables, and in so doing estimates he will bank more than £7bn – the amount gauged to be currently disputed. If a business or individual has a Tax Disclosure scheme number or is caught by the GAAR, they'll have to pay the disputed amount up front, and join the queue of those who want their money back.  VAT specialists may wonder what the fuss is about – since those taking VAT cases to the Tax Tribunal have always had to pay the disputed amount up-front. 

It's an interesting move, and while it may only apply to 33,000 individuals and 10,000 businesses across the UK, it's likely it will make the prospect of entering into these schemes less attractive to others in future.  This is clearly the Chancellor's intention.

Download a copy of Deloitte's comprehensive commentary of Budget 2014 here

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