Funding for businesses facing APNs

A funding line has been launched to help business taxpayers facing payment deadlines arising from Accelerated Payment Notices (APNs)

APNs, introduced in 2014, enable HMRC to request full upfront payment of disputed tax within 90 days. They are issued to individuals and companies suspected of partaking in aggressive avoidance schemes.

LDF, a commercial finance group, has expressed concern about the cost of covering these demands for those affected.

Peter Alderson, LDF managing director said, “A lot of taxpayers receiving APNs are going to struggles to make the payments that HMRC is demanding.

“In many cases, these are fairly ordinary, successful- middle class professionals and entrepreneurs, for whom finding a lump sum of tens of thousands of pounds will be extremely difficult.

“These taxpayers need to be aware of all their options when it comes to meeting HMRC’s demands. There is alternative finance available to cover these costs, allowing taxpayers to regularize their tax positions with HMRC over a period that fits their finances.”

HMRC has already issued 10,000 APNs, and aims to issue 54,000 more. Some of these include cases where individuals are trying to avoid £10m in tax.

This means many more members of tax planning schemes on HMRC’s Disclosure of Tax Avoidance Schemes (DOTAS) register face potentially considerable tax demands in the coming months.

With late payments fees estimated at 15% of the tax balance owed, LDF urges those affected to explore all options available to them, should they wish to make payment against an APN.

APNs have so far resulted in an estimated £768m in tax revenue outstanding.

Despite their assumed success, there is much controversy surrounding APNs.

Although there is no right of appeal, some taxpayers have sought judicial reviews to challenge the legality of the notices.

The first such review, brought by investors in Ingenious Media partnerships, was defeated in the High Court in late July, enabling HMRC to pursue £5.5bn in extra tax through APNs by 2020.

So far, 824 APN recipients have written to HMRC requesting a review of tax demanded. This resulted in 100 demands being reduced, with £28m being repaid by the Revenue.

Previously, HMRC was required to win a tribunal before taking disputed tax, now however, individuals must pay-up within 90 days regardless, before pursuing their case after payment, which can be a costly procedure.

If taxpayers are successful in their case to the tribunal or court, their money will be returned with interest.

In July, the High Court threw out a challenge to the legality of HMRC’s APN regime. The challenge was mounted by a number of avoidance scheme users, who challenged the use of APNs via a judicial review of legislation.

They claimed that APNs were unreasonable, breached natural justice, and were an abuse of the European convention on human rights.

The use of tax avoidance schemes has been highly publicised in recent months with a string of celebrities and high-profile business people – including George Michael, four members of the Arctic Monkeys and Sir Michael Caine – among those that have invested in the hyper-aggressive Liberty tax strategy.