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Accelerated Payment Notices challenge scuppered at High Court

A CHALLENGE by investors in Ingenious Media film partnerships over the legality of accelerated payment notices has been comprehensively rejected by the High Court.

Investors led by Nigel Rowe and Alec David Worrall claimed that HM Revenue & Customs’ accelerated payment notices were unreasonable, breached “natural justice” and represented an abuse of their rights under the European Convention on Human Rights to a fair trial and protection of property.

It was also claimed the notices removed the legitimate expectation they had when they joined the schemes that they wouldn’t have to pay tax before the dispute had been resolved.

Under the accelerated payment rules, HMRC is able to make taxpayers pay disputed tax in advance, rather than waiting for the outcome of a tax tribunal ruling. If the taxpayer wins their case, the money is reimbursed with interest.

HMRC said it expects to issue 64,000 accelerated payment notices to individuals and businesses currently involved in tax avoidance schemes. In 2014/15, around 10,000 accelerated payment notices were issued to people involved in tax avoidance schemes. It was expected some £210m would be gleaned through the move by March 2015, but HMRC actually received £596m – refunding £28m after legal challenges, gaining it a net £568m.

In all, 154 investors who used the Ingenious Media schemes had challenged HMRC over its use of accelerated payment notices, including the two lead cases involving Rowe and Worrall.

Rowe contributed £750,000 to Ingenious’s ‘Ingenious Film Partners’ scheme in 2004 and 2005 and was later issued with a payment notice demanding £270,147.60 in tax, which he disputed.

Worrall in total contributed £267,638 to Ingenious’s ‘Ingenious Film Partners 2’ and ‘Ingenious Games’ schemes, and was issued with a notice worth £96,406, which he also disputed.

The High Court found in HMRC’s favour on all the challenges.

Ingenious Media partnerships have been at the centre of much tax avoidance-related controversy, despite involvement investing in several blockbuster films including Avatar (pictured), Life of Pi, The Best Exotic Marigold Hotel and The Girl With the Pearl Earring.

HMRC director of counter avoidance David Richardson said: “This is an important result, and good news for the vast majority of taxpayers who do not try to avoid paying their fair share of tax.

“Those who use tax avoidance schemes need to know they can no longer hold on to the money while their affairs are investigated. They have to pay their tax upfront like everybody else.

“We expect to complete the issue of around 64,000 notices tax by the end of 2016 bringing forward £5.5bn in payments for the Exchequer by March 2020.”

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