skip to navigationskip to main content

Accelerated Payment Notices: HM Revenue & Customs 1 – 0 Taxpayers

6 August 2015

The High Court recently rejected a judicial review application, made by 154 taxpayers involved in film partnership schemes, which challenged the legality of partner payment notices.


The accelerated payments regime was introduced as part of the Finance Act 2014.  The ensuing changes fundamentally altered the underlying economics of tax avoidance.  Historically, taxpayers entering into tax avoidance schemes would usually gain their tax advantage or repayment in the year the scheme was carried out.  However, they were generally advised that any repayment received may need to be paid back to HMRC if the scheme was successfully challenged at a later date.

Since the introduction of the new laws, individuals who use marketed tax avoidance schemes can be required to pay the disputed tax up front while their scheme is investigated.  Only if the planning within the scheme is upheld would the tax advantage or repayment be obtained by the taxpayer.

For those individuals who have historically entered into tax schemes which are undergoing investigation by HMRC, this has led to tax demands being issued for planning entered into some years ago.

Judicial Review application – failed

A number of participants of film and game production partnerships decided to challenge the payment notices issued under this regime through a judicial review in R (on the application of Rowe and others) v Revenue and Customs Comrs [2015] EWHC 2293 (Admin).

They argued that HMRC had not properly applied its discretion in issuing the notices, in that they had been and will continue to be issued on a wholesale basis to all tax planning arrangements that have been disclosed under the DOTAS rules.

They contended that natural justice had been breached and the issuing of the demands represented an abuse of their rights under the European Convention on Human Rights to a fair trial and protection of property.

The participants also argued that the changes to the regime took away the legitimate expectation they had when they joined the avoidance scheme that they wouldn’t have to pay tax before the dispute had been resolved.

Despite these arguments, the Court found in HMRC’s favour on all the challenges.

What next?

It is highly likely that this decision will be appealed. Furthermore there are a number of applications currently underway in respect of other tax avoidance schemes and we await the outcome of these as they make their way through the court process.

However, for those who have engaged in historical tax planning using marketed schemes, it seems apparent that the environment we are in remains to be very much against individuals who have taken part in what is perceived to be aggressive tax avoidance practices.

If you are unsure about your position, or wish to discuss your affairs in more depth please contact our tax team on 0161 767 1200.

View other blog posts