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Celebrities and sports personalities have frequently made the headlines around tax avoidance schemes and the area most recently under the spotlight is that of Accelerated Payment Notices (APNs). The harsh reality is that it is not just celebrities who are threatened by APNs, any business could be affected.
APNs are designed to remove the cash advantage of waiting during a tax avoidance dispute. These notices give HMRC the power to require payment of monies which they believe are owed to them within 90 days of the date of demand. HMRC no longer have to wait until a case has been decided before demanding that payment of this tax is made.
Critics say that the structure of the APNs goes against our legal principle of “innocent until proven guilty”. Balanced against this, HMRC are under pressure to increase tax revenues and the backlog of tax disputes continues to rise (it is estimated that £7.1bn of tax is now in dispute). The use of APNs allows HMRC to collect any monies due under specified tax avoidance schemes before a final decision has actually been made on the legitimacy of those schemes.
APNs are being issued to thousands of businesses and individuals across the UK. Consequently, this has been and continues to be a concern to companies and their directors, across all sectors, who could be left with an unexpected tax bill which has not been budgeted for.
It is important to note that there is no appeal process following the issue of an APN. Representations can be made to HMRC that the APN has been issued in error. If the minimum requirements of an APN are not complied with then the notice could be invalid and it may be possible to obtain a declaration from the court that a notice is void. However such cases are rare.
Even where a company is trading well, making good profits and has cash reserves, it is unlikely to have budgeted for a large, unexpected demand such as an APN. Where the demand dates back a number of years, the sums involved can be significant.
Receiving an APN is not indicative that HMRC will succeed in the dispute, it is an interim demand for payment which will be repaid if HMRC are unsuccessful at the end of litigation. Unfortunately that will often be of little comfort to those in receipt of an APN.
We are experienced in dealing with such issues. If you have received an APN, or alternatively have been notified that you have been involved in a scheme which could attract an APN, you should seek legal advice urgently.