Alan Kennedy, managing director of tax advisory firm Trident Tax, said it “remains to be seen” whether further challenges to APNs will be made via judicial review.
Successful challenges could have a wider impact on other taxpayers, he said, suggesting the outcome would depend on how ‘fact-specific’ the decisions are, as opposed to the broad approach undertaken in July’s judicial review.
The high-profile case, where members of film-partnership scheme Ingenious Media argued that HM Revenue & Customs had breached both natural justice and human rights by issuing accelerated payment notices (APNs), was thrown out by the High Court.
This verdict meant the tax office has been able to continue issuing the notices, which demand that suspected tax avoiders pay disputed tax upfront within 90 days of receiving the APN.
Expensive process
Aside from resorting to the expensive judicial review process, Kennedy explained that – as there is currently no right of appeal against APNs – the only potential mitigation for the taxpayer is to make representations if the amount of tax is incorrect or if the APN is invalid for some other reason.
He also pointed out that APNs are often issued years after a taxpayer is suspected of participating in a tax avoidance scheme, meaning people often need ‘time to pay arrangements’, which give them a longer window of time to pay back the tax owed.
“Although HMRC does not charge interest on instalment payments of APNs, there are non-refundable surcharges for late payment, which can be up to 15% of the amount owed,” Kennedy said.
Disastrous
“In some cases the financial impact of APNs for taxpayers could be disastrous and potentially lead to insolvency,” he said. “It is important to take professional advice as soon as possible if you or your business is under threat due to an APN.”
On Monday, news emerged that HMRC had raked in £1bn in disputed tax payments so far from APNs.
Earlier this month, UK-based financial services provider LDF launched a loan facility to help suspected tax avoiders meet payment deadlines arising from APNs.
