On 20 August 2015 the UK tax authority HMRC published on its website a fact sheet containing updated information on the requirement to make accelerated payments in connection with tax avoidance schemes. A tax avoidance scheme is defined for this purpose as a set of arrangements that attempt to make use of the tax law to gain a tax advantage that was not intended in the legislation.

The requirement for persons using tax avoidance schemes to make accelerated payments of income tax was first introduced on 17 July 2014. With effect from 12 April 2015 the legislation has been extended to include national insurance contributions. Where an avoidance scheme has been used the person may have to make an accelerated payment that is equivalent to the amount of tax relating to the use of the scheme. This payment will be required before the final amount of tax has been determined.

HMRC may issue an accelerated payment notice if there is currently a compliance check on the tax return or an open tax appeal and the return or appeal was made on the basis that there is a tax advantage arising from the use of an avoidance scheme.

For an accelerated payment notice to be issued one of certain other conditions must apply. The other conditions are:

• The person has been given a follower notice;
• The person has used arrangements that should be disclosed under the Disclosure of Tax Avoidance Schemes (DOTAS) provisions; or
• The person is the subject of a counteraction under the general anti-abuse rule (GAAR).

The accelerated payment notice will state how much must be paid and by what date, detailing how the amount of the payment was calculated. Where there is a compliance check taking place this will be the amount of understated tax (in the view of HMRC) and where there is a tax appeal this will be the amount of disputed tax.

The accelerated payment is due within 90 days after the receipt of the accelerated payment notice. Penalties or surcharges may apply where a payment is not made by the due date.