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.
HMRC confirmed to International Adviser that it has handed out more than 70,000 APNs in the last three years. In a tiny proportion of cases, the UK tax office has had to step up action against taxpayers who cannot or will not pay the penalties, resorting to asset seizures or court and insolvency proceedings.
“Anyone who anticipates problems meeting their tax obligations should contact HMRC, which may be able to offer extra time to pay based on an evaluation of individual circumstances.
“The department has an outstanding record for supporting those with genuine problems: around 95 per cent of requests for extra time to pay accelerated payments debts have been agreed,” said the tax office.
Karen Millen bankruptcy
Last week, a UK court declared Millen bankrupt after she failed to pay £6m to HMRC in connection to tax avoidance scheme known as ‘Round the World’.
She told the Times her accountants had advised her to use a tax planning scheme, the validity of which was successfully challenged by HMRC in 2010.
The scheme took advantage of a double taxation treaty between the UK and Mauritius and was designed to avoid capital gains tax.
Meanwhile, Dominic Arnold, head of tax investigations and disputes at Moore Stephens, an accountancy firm, told the FT that he expects HMRC to step up APN enforcement actions in the future.
“In the first 18 months to two years they have applied a light touch . . . But the sense and the feeling is they are pressing ahead. The conversations are now a lot more direct. We sense the tide is beginning to turn,” he told the publication.
HMRC revealed that it has collected more than £3bn in disputed tax from suspected avoiders since it introduced the APNs.
Legal challenges
Last December, Moore Stephens also revealed that the tax office has withdrawn 4,300 APNs after sending them out in error.
London-based law firm RPC won a landmark ruling which found that HMRC was wrong to issue APNs to taxpayers under the employee benefit trust (EBT) arrangements, meanwhile a lawsuit in 2015 questioned the legality of the penalty system.
