In the last financial year (2015/2016), the HMRC collected £943m of Corporation Tax via Accelerated Payment Notices (APNs) from larger companies, as reported by law firm Pinsent Masons. Introduced in 2014 by HMRC, Accelerated Payment Notices (APNs) are issued as part of a tax legislation that affects those who have used a tax avoidance scheme.
Both businesses and individuals that have received an APN have just 90 days to make full payment of disputed tax, with no right of appeal. If no payments are made, HMRC can enforce significant penalties, such as late payment penalties and even deductions directly taken from bank accounts, under the Direct Recovery of Debts.
Since the scheme began, the HMRC has collected £3 billion upfront payments, from issuing over 60,000 notices.
According to Pinsent Masons, the figure collected highlights the excessive use of avoidance schemes, particularly the use of Employee Benefit Trusts (EBTS). Although a legitimate scheme, some companies use the scheme to reduce income tax, NI and corporation tax payments. The HMRC deem cases as ‘disguised remuneration’ and are cracking down on those involved in such schemes.
Heather Self, partner at Pinsent Masons commented: ‘The amount collected from large businesses via APNs is surprisingly high and a signal that HMRC is continuing to employ the tool widely.’
‘The sums involved can be substantial and without the right of appeal, the notices present the potential for significant disruption,’ Self said. ‘It is also, of course, sensible to question the validity of any notice received. The use of APNs in a number of circumstances has now been subject to judicial review, with the Court of Appeal due to hear in July the Rowe case challenging the circumstances in which APNs were issued to film scheme users.’
What can you do if you have received an APN?
We understand that with just 90 days to pay disputed tax, many taxpayers will struggle to meet the HMRCs demands, due to the significant strain it could place on cash flow. Our dedicated tax funding line provides people that have received APNs with the option to spread the cost of these payments over terms between 12 to 36 months.
"We know that in many cases, people who receive APNs are professionals and entrepreneurs. For a lot of them, finding tens of thousands of pounds up front is going to be incredibly difficult.
If you have received an APN and decided to settle, but you’re not sure how you’re going to find the cash up front, we’re happy to talk you through how you can spread the cost over a longer period.”