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APNs – more where they came from

by Contractor Weekly 

contractor weekly


£3 billion collected already by using Accelerated Payment Notices

HMRC have now laid their hands on £3 billion up front from those involved in tax avoidance, through the use of Accelerated Payment Notices (APNs).

APNs are used where a tax enquiry is in progress or there is an open appeal in relation to a tax advantage and allows HMRC to demand tax up front before the matter is settled. Anyone receiving an APN has 90 days to either pay the tax bill or make representations to HMRC if they consider the notice to be incorrect.

Since the new rules were introduced in 2014, HMRC have issued 60,000 APNs that have led to the £3 billion revenue haul.

The Revenue have recently added a further 15 schemes to their blacklist of tax avoidance schemes, giving a total of 1,181.

Whilst HMRC are quick to point to the five Judicial Review challenges to the accelerated payment rules that they have successfully defended, they give no mention to the U-turn they were forced into earlier this year when they had to withdraw up to 2,000 APNs. These had been erroneously issued in April 2015 to taxpayers who participated in the Montpelier IR35 Manx Partnership arrangements.

Jennie Granger, Director General for Enforcement and Compliance at HMRC said:

“Accelerated payment notices are at the forefront of the Government’s drive to tackle tax avoidance schemes. Recipients must pay the tax owed within 90 days, changing the economics of tax avoidance.

We want to encourage as many avoidance users as possible to come forward and settle their schemes with us.”

In the most recent High Court ruling a challenge was mounted by companies using a tax avoidance scheme, on the basis that HMRC hadn’t properly arrived at the amounts included in the APNs. The Court however found in HMRC’s favour thereby freeing the department to collect £28 million in disputed tax.

This year has seen HMRC win several large scale tax avoidance cases, including a win against Eclipse 35 worth £635 million.

Financial Secretary to the Treasury, Jane Ellison MP said:

“The vast majority of avoidance schemes just don’t work. We’re determined to change the economics of tax avoidance by making it harder for the dishonest minority to cheat the system – collecting disputed tax upfront and tough new sanctions for enablers of tax avoidance will mean people will think twice.”

It is clear that HMRC are determined to keep using APNs mercilessly, especially when the courts continually support their actions. This is very bad news for those involved with tax avoidance schemes as they can end up facing huge crippling tax bills that could even bankrupt them.