The introduction of Accelerated Payment Notices (APNs) by the Finance Act 2014 remains one of the most talked about measures introduced by the UK tax authority to clampdown on what it considers to be tax avoidance.
HMRC consider that APNs are a valuable weapon to deliver revenue to the treasury via a fairer taxation system. The notices are designed to inform taxpayers that they are required to make a payment on account of tax due which is the subject of an inquiry, the logic being that the disputed tax is better held by HMRC than the taxpayer. The notices amount to a demand for payment within a 90 day period with limited scope for appeal.
APNs have met with considerable criticism from taxpayers, practitioners and professional bodies; with concerns about the lack of a clear and effective appeals process and the retrospective effect of the rules, together with the very real prospect of forcing taxpayers who receive them into an insolvency process.
Who Are Recipients of APNs?
A taxpayer who has participated in any scheme registered under Disclosure of Tax Avoidance Schemes (DOTAS), where a registration number has been issued, an inquiry commenced but tax relief has not yet been agreed by HMRC. These taxpayers may receive an APN.
HMRC estimated that they will issue APNs to 33,000 individuals and 10,000 businesses to try and collect up to £7.1 billion of unpaid tax. HMRC’s aim is for the taxpayer and HMRC to agree a settlement figure or for the taxpayer/HMRC to conclude matters by means of a tribunal hearing.
The media has brought to light a number of celebrities who have participated in tax mitigation schemes, such as film finance. However, most recipients of APNs are not well known personalities but taxpayers who have participated in similar tax saving arrangements, devised over the past decade. A number of these schemes include Government backed Enterprise Zone Trusts, designed to rebuild rundown towns and cities.
What Should Recipients of APNs do?
If a taxpayer receives an APN, they can seek to repay by instalments subject to HMRC’s agreement on the timing and quantum of repayments. There have been no successful challenges to APNs in the Courts to date.
Conclusion
If an instalment agreement is not reached, then the short 90 day period to repay an APN may require assets to be sold and/or cash to be raised and may force many taxpayers into a formal insolvency procedure. In this situation, it is imperative that correct advice is sought and Bridgewood may be able to assist in this regard.
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