Those receiving accelerated payment notices (APNs) can find the entire experience daunting. However, there are a number of avenues available for those who are on the receiving end of a letter from HMRC.
Beyond the hysteria and the headlines, there are a few things you should be aware of if you think this might affect you. We explore a few commonly asked questions below:
What is an accelerated tax payment notice?
An accelerated payment notice (APN) is a demand from HMRC for a taxpayer with an outstanding tax or National Insurance issue to pay their amount owed first, within 90 days, and resolve the dispute later. APNs are typically received by a taxpayer following their involvement in a tax scheme.
What to do if you receive an APN?
First of all, do not ignore it. Failure to pay an APN by the due date could lead to late payment penalties or surcharges. There is no right to appeal an APN. However, there are limited grounds to make representations during the 90 days. The grounds are:
- The conditions required for the issue of an APN have not been met
- The amount specified within the APN is incorrect
On receipt of the representations, HMRC has a duty to consider how it will continue. It is by no means a certainty that HMRC will continue with the APN. In 2016, they were forced to withdraw 2000 APNs following a judicial review challenge.*
It is vital that you seek appropriate expert advice at this stage.
Can I negotiate with HMRC?
There are two principle methods of engaging with HMRC:
- Negotiating the amount
- Applying for additional time to pay
If you believe that the amount quoted is incorrect or inflated, then the representations mentioned above may help with negotiations to bring the amount owed to a more palatable one. This can include entirely reducing the amount demanded.
The time to pay process requires that you work with your advisor to put together a monthly statement of income and expenses over a recent period, and possibly an asset and liability schedule, demonstrating the hardship that would occur if the tax were to be paid in a lump sum.
That same application should also include your preferred timeframe for clearing the debt. HMRC will consider the application and respond by accepting, rejecting or proposing an alternative timeframe.
What happens if negotiations fail?
There is the chance of further legal proceedings and, if the case continues with a taxpayer victory, there is the strong chance that some or all of the tax paid under the APN will be refunded. It is important to remember that simply receiving an APN is not necessarily the end of the road.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of publication.