In the above Brief, HMRC sets out their policy on withholding repayment claims in avoidance cases. The stated aim of the policy is to stop tax avoiders from acquiring an advantage, however temporary, over other taxpayers who do not use such schemes.

Setting out the background to the policy, it is noted that in the year ended 31 March 2013, 32 decisions in the Tribunals and Courts dealt with tax avoidance cases with HMRC seeing success in 26 of those cases.

HMRC’s policy is that in “appropriate circumstances”, income tax repayments are withheld where the claims which produce them constitute, in HMRC’s opinion, tax avoidance and where HMRC are challenging or considering challenging those claims by enquiry.

If HMRC are satisfied that a claim for repayment does not depend (or does not wholly depend) on tax avoidance, an appropriate provisional repayment will be considered. Accordingly, if the repayment included (say) £100k in respect of a scheme and £50k in respect of other transactions, HMRC would expect to repay the £50k quickly (unless there was some specific reason for HMRC to doubt that it was correctly claimed).