HMRC’s Accelerated Payment Notices (APN) are currently being sent out to alleged users of tax avoidance schemes and have generated a huge amount of controversy since being introduced in July, but how do they work, and why have they come about? Here, Andrew Watters, director at Thomas Eggar, explains.
“APNs have been introduced by HM Revenue & Customs as it believes that in some instances, taxpayers are unfairly delaying tax using the legal system of appeal. Normally, until liability has been legally established, HMRC isn’t entitled to income tax. HMRC will use this new power where it believes the taxpayer’s appeal is not supported by past legal judgements.
“HMRC has indicated its use of the notices will be restricted to tax planning which it regards as aggressive (e.g. certain tax schemes). If the taxpayer’s appeal is ultimately successful, HMRC will repay the money.
However, in the short term, some taxpayers will be faced with the requirement to pay tax which they do not believe is owed, and before a court has the opportunity to decide their case. Any short term financial hardship may or may not be able to be remedied should they subsequently win their argument in court.
“Pre APNs, the taxpayer was entitled to keep his money in his pocket until the authorities proved that they owed it. Post APNs, this position has been reversed. There are some grounds to argue against an APN, but that judgement will be made by HMRC, not the courts.”
Click here to see International Adviser’s eight point explanation of how APNs work.
