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Christopher Andersen
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Reviewed by Christopher Andersen
Chris is an Insolvency Practitioner regulated by the ICAEW since 2014,. He is experienced in contentious insolvency with excellent analytical skills and strong knowledge of both general and technical insolvency matters.
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19th April 2024

The Accelerated Payment Notice (APN) was introduced in 2014 as a means for HMRC to counter tax avoidance.

Read our complete guide below, including the reasons why you may have received an APN, and your best course of action.

Accelerated Payment Notices (APN)

1. Understanding Accelerated Payment Notices (APN)

An Accelerated Payment Notice (APN) is a tool used by HM Revenue and Customs (HMRC) to collect taxes that are under dispute more quickly. Introduced under the Finance Act 2014, APNs require taxpayers to pay up front if they are using avoidance schemes disclosed under the Disclosure of Tax Avoidance Schemes (DOTAS) or are caught by the General Anti-Abuse Rule (GAAR).

The authority to issue APNs comes from the Finance Act 2014, which aimed to counteract aggressive tax avoidance. This Act empowers HMRC to demand payment of disputed tax amounts within 90 days without the taxpayer having the right to appeal the notice itself, only the underlying decision if there is an ongoing tax inquiry or tribunal case.

2. Why You Might Receive an APN

Receipt of an APN typically follows involvement in tax avoidance schemes listed on the DOTAS, or breaches of the GAAR. These legislative frameworks are critical as they provide specific criteria under which HMRC can act to ensure taxes due are paid in advance of the resolution of any dispute.

Role of DOTAS and GAAR in APNs

DOTAS was introduced to identify tax avoidance schemes and those using them, requiring promoters and users to report to HMRC. The GAAR, a later addition, targets abusive tax arrangements that fall outside the spirit of the law, providing a broader basis for challenging avoidance.

3. The Consequences of Ignoring an APN

Ignoring an APN can lead to significant financial penalties. Once issued, the demanded amount must be paid within 90 days; failure to comply can result in interest on unpaid amounts and additional penalties, which can accrue until the full amount is settled.

Continued non-compliance can lead to more severe consequences, such as HMRC using enforcement actions to recover debts. This could include seizing assets or pursuing court actions, which could have a lasting impact on a taxpayer’s financial and legal standing.

4. Navigating APN Appeals and Disputes

Although the APN itself cannot be appealed, taxpayers can challenge the decision or the tax liability through existing tax inquiry or tribunal procedures. It is critical to respond within the statutory 90-day period to make representations about discrepancies in the APN.

What to Expect During the Appeal Process

During an appeal, taxpayers must present evidence to contest the HMRC’s assessments or calculations. This process can be complex and may require legal and tax advisory expertise to navigate effectively.

5. Preventive Measures to Avoid APN Issuance

To avoid receiving an APN, entities should ensure full compliance with tax laws, avoid using listed avoidance schemes, and engage transparently with HMRC. Regular reviews of tax arrangements with qualified advisors can help preempt issues that might later result in an APN.

Consulting with Tax Professionals

Engaging with tax professionals who understand the intricacies of tax law and HMRC processes is crucial. They can provide guidance on compliance and help interpret complex tax legislation, potentially averting the circumstances that lead to the issuance of an APN.

FAQs

Upon receiving an Accelerated Payment Notice, you should first verify the accuracy of the notice, checking the amount demanded and the reasons cited. Immediately consult a tax advisor for guidance on compliance and to prepare for any potential dispute process.

You should also review your financials to ensure that you can meet the payment deadline or explore options for arranging a payment plan with HMRC if necessary.

Yes, if an APN contains factual errors, you can contact HMRC to request an amendment. You will need to provide evidence supporting your claim that the information is incorrect. HMRC will review your submission and can adjust the notice accordingly if they find the evidence valid.

To dispute an APN, compile all relevant documentation related to your tax returns, communications with HMRC, and any evidence related to the tax avoidance scheme cited in the APN. This may include financial statements, emails, and documentation of your tax advisory’s recommendations. Legal advice is strongly recommended to ensure that your dispute is as robust as possible.

The response time for an APN dispute can vary, but HMRC typically aims to reply within 90 days of the representation. During busy periods or complex cases, this time frame may extend. Continuous follow-up with HMRC is advisable to monitor the status of your dispute.

Deferment of an APN is generally not allowed; however, if you are facing genuine financial hardship, HMRC may consider alternative arrangements such as a payment plan. It’s essential to communicate openly with HMRC about your financial situation and seek professional advice.

An APN can significantly impact a business’s cash flow since it requires the payment of disputed taxes upfront. This can affect liquidity and potentially the overall financial stability of the business. It’s critical to manage these risks proactively through financial planning and legal consultation.

To ensure your tax arrangements are not considered tax avoidance schemes under DOTAS, consult with a qualified tax advisor to review any schemes or strategies you consider using. They can provide guidance on compliance with current tax laws and ensure that your tax planning strategies do not fall within DOTAS’ disclosure requirements.

Tax professionals can help identify potential risks associated with APNs, provide advice on tax planning to avoid falling into avoidance schemes, assist with compliance, and represent you in disputes with HMRC. Their expertise is crucial in navigating the complex landscape of tax laws and regulations.

Generally, APNs themselves do not directly impact credit scores or business credit ratings. However, if an APN leads to financial distress, resulting in unpaid debts or legal actions, it could indirectly affect credit ratings. Managing these risks through timely payment or dispute resolution is essential.

A DOTAS-listed scheme refers to tax arrangements that must be reported to HMRC under the Disclosure of Tax Avoidance Schemes regulations, aimed at transparency and early warning of avoidance tactics. GAAR non-compliance involves arrangements that are abusive and contravene the spirit of tax law, intended to combat aggressive tax avoidance. Understanding these distinctions can help in ensuring that your tax strategies remain compliant.