Widespread tax avoidance schemes have overwhelmed HMRC in the past but HMRC are now coming up with more effective ways to deter and dissuade those involved from defending them.
One such method is the use of an Accelerated Payment Notice (APN) that can be issued to those currently using a tax avoidance scheme identified by the Disclosure of Tax Avoidance Schemes (DOTAS) Regulations.
In essence, it does exactly what the name suggests – accelerating tax payments so that scheme users have to pay them early, instead of waiting to see if the scheme is successfully challenged through the tax tribunals.
If you have received an APN you might be concerned about why you received it or struggling to pay within the time allowed. Below we have listed all of the up-to-date information on accelerated payment notices and how you can deal with them.
What does an Accelerated Payment Notice mean?
An Accelerated Payment Notice is issued by HMRC asking the receiver to pay a tax contribution (or National Insurance contribution) within 90 days of the letter being delivered.
The whole idea behind them is to disrupt the behaviours of people who are currently enrolled in tax avoidance schemes, stopping them from gaining a cash flow advantage in the first place.
Set out in legislation dating back to the Budget 2014 and put into effect from April 2015, the APN is part of a relatively recent tactic to stop taxpayers gaining an advantage over others.
It comes with the introduction of Follower Notices that are used to dissuade people from using tax avoidance schemes from continuing to resist a challenge by HMRC.
Follower Notices were introduced in order to dissuade taxpayers using a tax avoidance scheme to continue with their tax appeals. Recipients may be liable to pay a penalty of up to 50% of the tax at stake if they do not amend their tax returns and accept that their scheme does not work.
You will receive one APN for each year you are deemed to be enrolled in the tax avoidance scheme as well as one for each type of tax that is being avoided.
That means that if you were in the scheme for three years and it affects your tax and national insurance contributions you could end up with 6 APN’s being sent out altogether.
Will I get any other warnings before receiving an accelerated payment notice?
You may receive a Follower Notice as described above as an initial warning that HMRC has found you linked to one or more tax avoidance schemes.
If this isn’t acted upon or followed up, then you may also receive a further letter that indicates that you will receive an APN soon.
This letter will detail exactly how the APN works and why you are receiving it. This prior warning will give you the opportunity to get your tax affairs in order and potentially dissuade you from using tax avoidance schemes in the future.
How are accelerated payments calculated?
Now you have received an APN, you will notice that there will be a certain amount stated that will need to be paid within 90 days. This is calculated by HMRC who have identified that the amount is related to the tax avoidance scheme you have been a part of.
This is usually calculated for a single tax year and is attributed to a single form of tax contribution, such as National Insurance.
HMRC accelerated payments are calculated in this way, but you should be aware that this might not include the entire amount that you will need to pay overall. There may also be added interest and further penalties in place that will still be due after the APN is settled.
What are my options with an accelerated payment notice?
Ideally, you will have already started researching APN’s from the moment you received a Follower Notice or the pre-warning letter indicating an APN would be sent to you. This will give you plenty of time to decide exactly what you want to do next before the 90-day window is up. The following options will be available to you:
- Pay within 90 days – you have been sent an APN with a fixed time limit meaning that there will be further penalties incurred if it is not paid.
- Contact the HMRC – if you are having problems paying the amount listed or need more information about the APN, get in touch with HMRC as soon as you can.
- Object to the APN – if you feel the amount indicated is not correct or you do not agree with the decision of the HMRC to send you an APN, you can make a representation in writing. You should send this as soon as possible so it can be processed and reviewed by HMRC. You will be sent a letter back indicating the next steps and if your representation has been successful or not
For any further information or advice for those who have received an APN, get in touch with Patrick Cannon today.