Controversial ‘accelerated payments’ of disputed tax to HMRC up 21% in a year - hitting £1.3bn

  • Rich seam for Treasury – but APNs could put taxpayers under intense strain

HMRC received £1.3billion in disputed tax upfront from taxpayers using its controversial ‘accelerated payment’ powers last year – a 21% increase on the previous year when it received £1.07billion*.

HMRC can issue individuals or businesses it suspects of using a tax avoidance scheme with an Accelerated Payment Notice (APN).

This requires full payment of disputed tax within 90 days, before any tribunal hearing takes place. Payments are compulsory and there is no right to appeal.

Dominic Arnold, Head of Tax Investigations & Disputes says: “HMRC is making full use of its powers to ‘shoot first and ask questions later’.

“Its ability to demand accelerated payments remains a draconian, but clearly increasingly effective mechanism for HMRC to clamp down on what it sees as abusive tax schemes.

“That’s all well and good for the Treasury. Not only is the tax take swelled as HMRC ramps up its use of APNs, the authorities will be hoping that accelerating the payment process will deter people from testing the boundaries of tax planning in the future.

“However, it’s a heavy price for taxpayers to pay before they have even had a chance to put their case. Businesses and individuals can be put under immense strain, financially and emotionally, while the process is ongoing.

“Whether they have crossed a line or not, they don’t have long to find what can often amount to thousands of pounds in disputed tax.”

APNs are a relatively new power. They were introduced in July 2014 to help HMRC combat tax planning schemes, such as those often used by high earners and entrepreneurs or businesses aiming to reduce income tax or NICs, that it considers ‘abusive’.

Dominic Arnold adds: “Given that accelerated payments are proving to be such a rich seam, HMRC is likely to continue to see this as an important area of focus for some time to come.

“Taxpayers who receive an APN should not simply ignore it or they could make a bad situation worse.”

HMRC receives £1.3bn in disputed tax upfront through accelerated payments – up by 21% in a year



*2016/17 compared to 2016/15. Source: HMRC. Figures relate to the compliance yield from the Counter Avoidance Directorate
 

If you would like to discuss any of the issues raised in this article in more detail, please contact Dominic Arnold.

 

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