HMRC begins crackdown on unpaid APNs

HMRC is cracking down on unpaid accelerated payment notices (APNs), issuing a first round of ‘enforcement actions’ against 14 taxpayers who have failed to meet terms and pay disputed tax within 90 days.

APNs are issued when HMRC suspects individuals or businesses of using a tax avoidance scheme. APNs require an upfront payment of the full amount of disputed tax within 90 days, prior to any hearing and without the right to appeal.

Enforcement actions to pursue the tax HMRC believes are owed under APNs include asset seizures, court proceedings, and insolvency action such as liquidation and personal bankruptcy. HMRC has issued more than 60,000 APNs since being introduced in July 2014 and collected more than £3billion through the new tool.

The number of enforcement actions will only rise as more investigations come to a close. HMRC has been under consistent pressure from the government to clamp down on tax avoidance.

APNs have been a source of controversy since they were introduced, as payments under the notices are compulsory and carry no appeal mechanism.

Dominic Arnold, Head of Tax Investigations and Disputes, comments: “This first group of enforcement actions is the very tip of the spear.

“It looks like the phoney war is over – we expect the trickle of APN enforcement actions to gather pace.

“With over 60,000 APNs issued, and HMRC commitment to close in on those involved in ‘abusive’ tax schemes, the courts could be kept very busy by HMRC’s debt collection action.

“APNs will not disappear. Businesses and individuals who face an APN are running out of time to decide whether to challenge their APN or reach a settlement with HMRC. Ignoring them, in the hope they will go away, will only result in higher eventual penalties.

“HMRC is determined to make a success of APNs – it is keen to show that it is effectively tackle tax avoidance.”

Mike Finch, Restructuring & Insolvency partner says: “Regardless of whether you think receiving an APN is fair or not, it is an issue that taxpayers need to deal with.

“Some of the tax that HMRC is owed under APNs is so substantial that some individual taxpayers have just hoped the issue would go away. But HMRC is obliged to chase these debts down. It has been relatively patient over pursuing APN debts from taxpayers who have needed time to pay but that patience has its limits.”

Previous research has suggested that one in 14 APNs has been issued in error by HMRC, so it is important to take expert advice before paying what can be substantial sums.

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