Accelerated Payment Notices (APN) and Follower Notices
HMRC is increasingly using its power to demand upfront payment of tax in cases where the taxpayer has participated in tax schemes. They can do so even before the Courts have ruled on the veracity of a scheme itself and can also demand settlement of disputes and issue large penalties if an appeal/claim in unsuccessful.
What are the Notices?
An APN can be issued to a taxpayer if;
- there is either an open enquiry or appeal, and
- the scheme was notifiable under the Disclosure of Tax Avoidance Schemes (DOTAS) rules, and
- they have issued a DOTAS number
They can also be issued if a Follower Notice has been issued to another taxpayer in relation to the same or similar scheme. This requires payment of the assessed tax within 90 days.
A Follower Notice is issued when HMRC has succeeded in court against another taxpayer, and it believes the issues in that case are relevant. Essentially, this is aimed at the ‘marketed schemes’.
Non-compliance with a Follower Notice can render the tax payer liable to penalties of up to 50% of the tax outstanding.
A PPN (Partner Payment Notice) is similar to a APN, but is used where the tax payer has participated in a scheme through a Partnership.
Anticipating an APN, Follower Notice or PPN.
HMRC publishes a list of schemes where they intend issuing APN’s. Where a tax payer identifies a scheme they have been involved with, they should make arrangements to have their tax exposure properly quantified and if necessary make provision to enable them to pay the tax when demanded. HMRC allow 90 days to pay, however if the notice is challenged and the challenge fails the tax payer has 30 days from the date of the rejection.
HMRC aim to issue 64,000 notices by the end of the year, and any tax payer whose scheme appears on the list should seek advice independent of the schemes promotors in the first instance.
It is possible to negotiate time to pay, however this is discretional, and HMRC are currently only allowing a short time for the discharge of the debt.
What can be done?
There is no right of appeal against the notices, therefore the only potential legal remedy is Judicial review, however those who have taken this route so far have failed.
It is however possible to make written representations objecting on procedural and/or quantum grounds. In relation to quantum, assessments are made on the basis of an Officers ‘best judgement’ and therefore the accuracy of the assessments is always an issue.