Introduced in 2014, APNs enable the UK tax authority to request full upfront payment of disputed tax within 90 days without the right of appeal.
The notices were designed to combat what HMRC sees as ‘abusive’ tax avoidance.
Limited resources
Moore Stephens believes that the number of APNs issued in error, however, calls into question the level of resources available to HMRC’s Counter Avoidance Directorate (CAD).
This is despite HMRC having assured ministers that the CAD team, which investigates suspected tax avoidance and issues APNs, will have access to the resource it needs to resolve legacy tax avoidance cases.
“Taxpayers receiving APNs shouldn’t automatically accept that they should have been issued or the amount demanded are accurate."
Face value
Moore Stephens has advised that any taxpayer who receives an APN should not simply take it at face value.
Given that HMRC has made errors in issuing APNs, it is important to take expert advice before paying what is often a very substantial sum to HMRC, says the accountancy firm.
The firm cited judicial review proceedings that have forced HMRC to withdraw APNs after it was found that the schemes were not subject to the Disclosure Of Tax Avoidance Schemes (DOTAS) regulations – non-DOTAS scheme members are not liable for APNs.
Shoot first…
Dominic Arnold, head of tax investigations and disputes at Moore Stephens, said: “HMRC risks falling into a ‘shoot first, ask questions later’ approach with APNs.
“APNs are HMRC’s weapons of mass destruction so they need to be used with care.
“Taxpayers receiving APNs shouldn’t automatically accept that they should have been issued or the amount demanded are accurate – HMRC’s track record in this area is not perfect. Getting expert advice is essential, as there are hundreds of thousands of pounds at stake in some cases.
“It’s critical that the Counter Avoidance Directorate gets the right number of staff with the right level of seniority and experience to keep errors to a minimum,” Arnold said.
