HM REVENUE & CUSTOMS has confirmed it will withhold potential refunds until it is certain claims made are not part of tax avoidance arrangements.
The taxman will make refunds if it agrees claims are not part of - or dependent on - tax avoidance activity. Should its view be that the effect of a claim is to inflate or accelerate a claim or relief in an artificial manner, the department will work with the taxpayer to ensure any refund reflects the portion of the claim that is not disputed.
In an update posted on its What's New page, HMRC said it is "not referring to National Insurance Contributions, where claims for repayment do not normally arise as a result of avoidance schemes".
It added: "We are referring rather to examples such as claims made outside of tax returns, where we may enforce payment of a tax debt where the claim would otherwise have been given effect by discharge or set-off."
In the year ended 31 March 2013, there were 32 decisions in the tribunals and courts in tax avoidance cases. HMRC won in 26 of those cases (82%) with over £1bn protected.
"The small minority who engage in tax avoidance should not gain a tax advantage during the period from the tax due date to the time when we complete our enquiries and resolve any dispute", HMRC said.
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