What are the consequences of the HMRC victory in closing down “the Icebreaker Scheme” after it was ruled that it was set up with the sole intention of sheltering tax.
Well, in addition to the thousand or so clients who will have to pay back the tax said to have been saved with interest and possibly penalties, the revenue under the Finance Act 2014 – which is due to be enacted in July 2014 – have put forward a new “Pay now, Argue later” demand. It has been taken by HMRC in relation to users of schemes.
What will happen is the requirement will be a payment up front of the disputed tax in schemes associated with the “Disclosure of Tax Avoidance Schemes (DOTAS)” or that counter act “General Anti Abuse Rule (GAAR)”. The revenue are also looking at suggestions that they are able to back over the previous 10 years based on proposed legislations.
Well will this be the death of these schemes? It will certainly have a great effect on them. The problem is that if the users of the schemes have not set aside the alleged tax savings or invested it wisely, they could find themselves with huge demands for payments for cash they just haven’t got.