What are the options if you receive an APN notice from HMRC

Debbie Cockerton explains what it means when you receive an APN, and what you can deal with it;

One area receiving attention in the news lately is the Accelerated Payment Notice (APN) from HMRC. These notices are served on both individuals and companies who have entered into registered tax avoidance schemes that HMRC are seeking to challenge (so if you have been paying your taxes this will not affect you). However, this can be very worrying for anyone who has previously entered into a tax avoidance scheme.

HMRC have advised that they will send out a letter some weeks in advance of the APN being issued, to explain that the notice is on its way and also to provide some information about it.

Receipt of the notice means you must pay the estimated tax due within 90 days of the date of the notice – this is in advance of any court notice, or checks on the validity of the APN, which may leave some recipients of these notices worried about what their options are.

If disclosure has been made under the Disclosure of Tax Avoidance Schemes (DOTAS), then you have to pay an APN even if the planning was previously disclosed and HMRC have not yet litigated.

No appeal process

On occasion, HMRC have succeeded in the courts against one scheme user, meaning it is then able to issue an APN to every other scheme user.

Quite worryingly, there is no appeal process; you have 90 days to pay the amount shown on the APN. If you make a representation to HMRC then the period may be longer. If you feel that the amount on the notice is incorrect, or the conditions have not been met, you can make a representation that HMRC will consider. These representations have to be made in writing to the address shown on the notice, within the 90 days before payment becomes due.

The results of the review will be sent in writing by HMRC, and will explain what you need to do next. Each scheme is dealt with on an individual basis, so if you are in several schemes you may not get all the APNs in one go. You may also get more than one APN notice, as the notices are sent out for each year of the avoidance scheme you are in and also for each type of tax involved.

If monies are available to pay the APN then everything is fine, but if not, what are the options?

If the company or individual is having cash flow issues – in essence just needs time to pay – then a voluntary arrangement will be needed, and this can be an individual or company voluntary arrangement (IVA or CVA). This has to be put together by a licensed insolvency practitioner, and if accepted by creditors is binding on all of them, and no other action can be taken by the creditors included in the proposal. This method will give the individual or company time to pay the debt. An IVA or a CVA does not have to be payment in full and the percentage to be paid is based on the individual’s or company’s assets and what they can afford to pay back each month.

An example of what will have to be paid back can be as low a payment of 25 pence in the pound, with no interest to be paid and all spread over a five-year period.

If the monies cannot be found then another insolvency option will need to be looked at. This may mean personal bankruptcy or insolvent liquidation of the company. The recipient will need advice on what they should and should not be doing to remain within the law, as there are other ramifications for the directors.

This can mean the ‘final nail in the coffin’, but if the monies are paid personally by the director, then they cannot take the monies out first as this would result in a preference if the company subsequently enters into an insolvency option.

Receiving an APN can be very distressing and the earlier that advice is sought from an insolvency practitioner, the better.

Help is at hand

Should you receive an APN, call DCA Business Recovery. We offer advice and will assess the situation and look for a solution to the problem. The dedicated ICPA Freephone Hotline – on 0800 066 2540 – is open 365 days a year, from 8am to 8pm.

  • Debbie Cockerton is a Partner at DCA Business Recovery

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