APN – interrupted

An APN is an Accelerated Payment Notice. It is a device by which HMRC can claim that there is tax in dispute and that it should be held by them until the dispute is resolved. These notices cannot be appealed in the usual way and require representations to be made within 90 days over the conditions required to issue the APN in the first place. The representations have always presented a narrow route to challenge and whilst WTT saw some success in raising these, for many, early engagement with HMRC to avoid 15% late payment penalties was required.

The majority of APNs were issued in 2014 and 2015. The schemes that were targeted include Edge (aka Norla), Montpelier, AML EBT, White Collar, and a number of smaller arrangements. In some instances the APNs were withdrawn because of technical errors. In the main these technical problems have been resolved.

At that time, we explored the position with counsel and concluded that alternative routes to challenge via the Judicial Review route lacked credible chance of success. Several Judicial Reviews were raised at this time, traditionally by the promoters themselves, however these attempts were unsuccessful.

Running alongside these Judicial Reviews, cases as to the liability arising from some of the above schemes – notably Edge and AML – were commenced.

It seems that HMRC made a decision to suspend all action on APNs whilst both sets of litigation were ongoing. Following the final case as to the lawfulness of an APN (a case called Rowe), HMRC has reactivated their pursuit of money due under an APN.

This has understandably come as a shock to many

Given the often-long delay between a representation being made or a cessation of activity from the Debt Management arm of HMRC (“DM”), perhaps five years, to suddenly have a demand is scary.

Worse, it appears that DM has in some instances breached its own procedures by making unannounced house calls.

If you have in the past had an APN (and if you’re unsure ask HMRC to check either directly or via your agent) but have not paid it or arranged to pay it in instalments, you will either have heard from DM recently or you will soon. If you are in this situation, do not ignore any communication that mentions the prospect of tax being due. If you have had a visit from DM, then you need to take action.

The action required is initially to contact HMRC and/or DM and establish what they are seeking. Usually this will be payment, immediately or over time.

Due to the lack of legal options to prevent payment, we would recommend conducting an initial review of the legislation to see if any error has been presented, but assuming this was exhausted at the point of receipt of the APN, engaging with DM to negotiate a time to pay if (as is usually the case), immediate payment is not possible.

There are no particular rules as to what is or is not a suitable offer or one that will be accepted. In practice a commitment to pay the outstanding sum in regular instalments over five or fewer years seems to be acceptable.

Longer periods can sometimes be agreed but must be accompanied by some good reasons such as ill health or not being employed.

It is unfortunately sometimes the case that an agreement is not possible. In that situation, DM may seek an order from the County Court for the sum due (CCJ)

A CCJ will appear on your credit record and will impact your ability to borrow or obtain a credit card. If you work in financial services, this may also be unwelcome. CCJ’s are relatively rare to date in this regard. For so long as a genuine attempt has been made to reach an agreed payment position – and that is a position that will not be improved by a Judge – a referral to the Court is not going to achieve much. More often these cases involve those who can pay but will not.

Even if a CCJ is eventually granted to DM if there are no assets available that can be realised against the debt, not much progress has been made.

DM can however apply for a bankruptcy order. Bankruptcy and the orders leading to such a situation are even rarer than applications for a CCJ. There are also different forms of insolvency and these often fall short of full bankruptcy.

There are also some situations in which even if the above process is pursued to a conclusion, payment of outstanding amounts cannot be made. Here the guidance available to taxpayers via the DM internal manuals, runs out. It is unclear what DM can or will do.

All of the above can usually be prevented by engagement with HMRC and DM, early.

The reappearance of an APN liability could well be a surprise and an unwelcome shock but it needs to be dealt with. Contacting HMRC/DM is a good first step alongside letting your agent know the situation.

We can help

WTT is very happy to help in such situations. We always discuss circumstances and offer initial guidance for free. If you need help, reach out.

Contact us today by email at info@wttconsulting.co.uk or call us on +44 (0)20 3468 0000 for more information.