HMRC withdraws 3,000 demands for upfront payment from those accused of tax avoidance

• HMRC has withdrawn around 3,000 of its accelerated payment notices
• APNs – which give recipients 90 days to settle up – were introduced in July 2014
• The Revenue has come underfire for issuing notices with ‘too little consideration’

HM Revenue & Customs has withdrawn around 3,000 of its controversial notices demanding that tax penalties be paid upfront.

Accelerated payment notices (APNs), which give recipients 90 days to settle up, were introduced in July 2014 as part of a drive to stop tax avoidance cases running on ‘for decades’.
The taxman has now come under fire for having to withdraw around five per cent of the notices it has issued.

Critics claim the backtrack is due to HMRC rushing through notices with ‘insufficient consideration’ – resulting in ‘mistaken’ targets.

However a spokesperson for HMRC told This Is Money, that ‘due to technical reasons in the law’ a percentage of APNs have been put on hold.

He revealed that some schemes had mistakenly been included in the Revenue’s disclosure of tax avoidance schemes (DOTAs). Apparently this was due to tax avoidance promoters submitting declarations under the wrong category.

The Revenue notes that just because a notice has been withdrawn it doesn’t mean there is no tax to pay.

The underlying tax dispute remains active until it is settled or taken to court.

APNs were heavily criticised when they were introduced, with some tax planners accusing the tax authority of using the ‘aggressive tactic’ to rush through payments and avoid costly legal challenges.

Adam Craggs, partner and head of tax disputes at RPC, warned that such ‘ill-considered actions’ could result in taxpayers being made bankrupt or quick-selling assets in a bid to raise the required funds.

Dominic Arnold, head of tax investigations and disputes at the top ten accounting and advisory network Moore Stephens, slammed the HMRC’s move towards APNs.
Explaining his stance, he 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.’

Arnold claims the withdrawal figure could be closer to 4,300.
He advises taxpayers to seek professional advice after receiving an APN as the ‘HMRC’s track record in this area is not perfect’.

An HMRC spokesperson defended the Revenue’s use of APNs.
He told This is Money: ‘Some people claim extremely dodgy losses.
‘After disputing the penalty, it could take eight to ten years for things to get on their merry way.
‘All of that time it’s the taxpayer carrying the financial burden. We want everyone to be on the same ground.’

He concluded: ‘When we make a mistake, we always put our hands up but this is not one of those times. HMRC is bullet proof on this.

‘We have withdrawn less than five per cent, we won’t be very happy if anyone starts suggesting, we have made an error.’

In total the the Revenue has issued more than 60,000 APNs, totalling more than £3billion in tax collections.

Numerous attempts have been made to challenge the legality of the notices, but as of yet, no cases have been successful.