These are being noticed more and more because HMRC have been winning a lot of court cases since 2007, which are narrowing the field for those seeking to use schemes to minimise their tax bills via esoteric thinking. HMRC has an entire directorate called the Counter Avoidance Teams, who look at nothing else. These have reinvented the market place and are constantly looking at ways and means to adjust or write new rules to ensure they get what they believe the correct level of payment should be.
We have a separate Tab handling some of the schemes and what can be done.
The first and currently hottest topic amongst these relate to looking at the use of past schemes and how they can best get the money paid now, even though they have yet to ‘win’ the argument in the courts that the schemes do not work. So, they have come up with Accelerated payment notices, along with legal rewrites to the PAYE and income tax legislation.
An accelerated payment notice (APN) is a requirement to pay an amount which HMRC consider due as they believe they have not had the full of tax or National Insurance Contribution. HMRC issues accelerated payment notices (APNs) to taxpayers involved in avoidance schemes disclosed under the Disclosure of Tax Avoidance Schemes (DOTAS) rules or counteracted under the General Anti Abuse Rule (GAAR). There are well over 1,000 tax avoidance schemes that HMRC have, or are, investigating, many relating to the Film industry and many going back well over 10 years. These schemes were promoted by accountants and tax advisers and most people joined these schemes in good faith and on advice from specialists, but HMRC are now unravelling these schemes and large sums of tax are becoming payable.
Our staff have dealt with many of these areas, from helping write the legislation and advising on policy for HMRC, to assisting those on the receiving end, to deal with their requests.
An APN can also be issued to taxpayers who have received a Follower Notice in relation to a scheme, as decided upon by HMRC. HMRC decides that the arguments to be made in court are the same across the scheme used for many other individuals or schemes, so it decides to group them altogether and say they are the same. The effect of these notices is to ensure that the disputed tax or NICs rests with the Exchequer case, so removing the cash flow advantage enjoyed by users of the schemes and the benefit they currently have over most taxpayers who pay their tax and NICs up front. They can be repaid, but only once the scheme has been proven to work.
Here are some things you need to know if you have received an APN
- Don’t ignore it
- Failure to pay an APN, or appeal against it, by the due date could lead to late payment penalties or surcharges becoming due and potential enforcement action being taken to recover the tax or NICs. So, make sure that you act.
- You may not get all your APNs at once
- APNs are being issued on a scheme by scheme basis and so, if you are in several schemes, you may not get all the APNs that HMRC plans to issue at the same time.
- You can receive more than one APN
- APNs are sent out for each year of the avoidance scheme you are in and for each type of tax involved. For example, if you have used an employment scheme for two years and that scheme gives both a tax and national insurance advantage you may receive up to four APNs.
So, what can you do if you receive an APN?
- HMRC only gets a limited time to make the APN, and must state several things in it, not least of which is how much to pay and what scheme it relates to.
- You have a right to make representations against the APN, because they have not followed the right procedures.
- You also have a right to appeal against the underlying tax or NICs that are in dispute, because you think that the amount in the statement is wrong. However, caselaw says you cannot postpone the payment.
- You cannot directly appeal an APN.
If you feel the amount quoted is incorrect or the conditions have not been met, you may make a representation which HMRC will consider. However, we now have a general defence following caselaw that the officer in HMRC must have considered each case separately, yet they tend to take the scheme wide approach and not consider individual cases.