The Accelerated Payment Notice (APN) was introduced in 2014 as a method of recovering more than £2 billion worth of unpaid tax and National Insurance contributions that companies might have thought was beyond the reach of HMRC.
HMRC was concerned about the amount of tax that was ‘in dispute’ in what are considered to be tax avoidance cases. Rather than waiting for judicial rulings in those cases to be made, legislation was introduced to give HMRC the power to seek early payment of tax even where a tax assessment has not been resolved.
Since then, APNs have been sent to thousands of companies that HMRC believes have been part of a tax avoidance scheme. The notice requires that the recipient pays the amount of wrongfully avoided tax, which will be stated in the notice, within 90 days of its receipt.
What is an Accelerated Payment Notice?
An Accelerated Payment Notice is a formal requirement to pay an amount of tax or National Insurance contributions (NIC) It is commonly used in relation to tax avoidance schemes listed by HMRC under its Disclosure of Tax Avoidance Schemes (DOTAS) rules, or under the under the General Anti Abuse Rule (GAAR).
Why have you Received an Accelerated Payment Notice?
If you have received an Accelerated Payment Notice it is because HMRC believes you, as an individual or a company, have been involved in tax avoidance schemes disclosed under the Disclosure of Tax Avoidance Schemes (DOTAS) rules, or have been in breach of the General Anti-Abuse Rule (GAAR).
In some cases, these have been companies and individuals who knew they were acting wrongfully, while others have fallen foul of the rules without their knowledge.
As well as the two breaches listed above, in order for an APN to be issued there must also be:
- An open inquiry relating to a tax return or claim submitted by the taxpayer; or
- An open appeal relating to a tax return or claim.
Regardless of the reasons why companies are now receiving accelerated payment notices, the result for all will be the same. That is, a sizeable tax demand being made on them or in their organisation that they had not necessarily anticipated or budgeted for. It’s likely you will have had some dialogue with HMRC before receiving this notice, but with only three months for the associated payments to be made, the consequences of receiving an APR can still be severe.
HMRC has some detailed documentation on this subject which you can access here.
In many cases, Follower Notices are sent out before or alongside APNs to act as a deterrent against using tax avoidance schemes. The Follower Notices outline a number of stipulations that the recipient must adhere and can force taxpayers to amend their tax returns in cases where judicial rulings that are favourable to HMRC have been made. Failure to respond to a Follower Notice in the proper way, or make the necessary payments, can lead to penalties worth up to 50 percent of the taxes due.
Timeframe to make Representations
Once you receive an Accelerated Payment Notice, you have 90 days to pay the amount shown or ‘make representations’, in which case the payment period may be longer. The payment does not need to be made in one lump sum, but it will need to be paid in full by the due date. Ignoring an accelerated payment notice is likely to lead to further penalties, surcharges and even enforcement action to recover the amount due.
Can I Appeal an Accelerated Payment Notice?
If you choose to make representations to HMRC in respect to the validity or the amount detailed in the APN, you must do so within 90 days of its issue. HMRC will then consider the representations and confirm, withdraw or amend the notice accordingly. If the notice is confirmed, the recipient then has 30 days to make the payment.
In the past, there have been errors made in the issuing of APNs where they were not applicable. In fact, thousands of APNs have had to be withdrawn. So, if you think the necessary requirements have not been met, it’s essential you make representations.
Will HMRC Consider Time to Pay?
While HMRC has no policy on this in the public domain, we believe they are open to accepting time to pay arrangements for accelerated payment notices within one year time-frames or, in rarer cases, two years.
What’s the Makeup of HMRC’s Counter-Avoidance Directorate?
Currently, the department is staffed by some 800 people which include specially picked members of the old Anti-Avoidance Group, Specialist Investigations, and Local Compliance. These operational teams are further divided into some 22 delivery channels, each focussing on specific avoidance schemes. A handful with a focus on what are called cross-scheme issues, principally things like high-risk cases and serial tax avoiders.
The directorate also contains units to offer specialist insight (behavioural analysis) or to deal with specific legislative areas such as GAAR – the General Anti-Abuse Rule, or DOTAS.
The department is responsible for specific anti-avoidance measures such as DOTAS and GAAR, as well as focussing on what is called ‘marketed avoidance’, which is where tax advisers are actually facilitating non-tax compliance.
It is also responsible for running the Accelerated Payment Notices scheme and reducing the overall tax avoidance deficit as effectively as possible.
The department also works closely with HMRC’s Criminal Investigations team since a number of the tax avoidance cases cross the threshold of civil law.
What should you do if you receive an APN?
As with all dealings with HMRC, the key to dealing with an APN and Follower Notice successfully is to communicate with HMRC in the most effective possible way. The key is to act swiftly and not to wait. Early settlement is advisable if you are in a position to do so. However, if funds to pay the unexpected liability are limited, early contact will increase the likelihood that time-to-pay arrangements can be put in place, thereby reducing the scope for late payment penalties and helping to keep your company in a financially viable position. There may be other acceptable solutions too such as a company voluntary arrangement via the HMRC Debt Management and Banking team – though this will usually need the DMB team approval. Call us on 08000 746 757 for a no-obligation discussion or use the live chat function below.