Second time HMRC have undertaken a mass withdrawal of APNs
Controversial and draconian APN system seems to be in turmoil
HMRC has withdrawn Accelerated Payment Notices (APNs) it issued to hundreds of taxpayers as a result of a Judicial Review lodged on their behalf by City law firm RPC.
Under the controversial APN regime, HMRC can demand tax that it believes a taxpayer owes before the underlying tax dispute has been adjudicated on by an independent Tribunal or Court. Taxpayers have only 90 days to pay the amount demanded in their APN with no right of appeal.
RPC had challenged the APNs concerned on a number of grounds including that the Employee Benefit Trust arrangements under consideration were not 'notifiable' to HMRC, under the DOTAS regime.
HMRC has now admitted that it did not have the right to issue the APNs in relation to these arrangements. APNs are often accompanied by threats to use debt collection agencies to repossess the taxpayer’s property and make them bankrupt.
This is the second time that HMRC have undertaken a mass withdrawal of APNs that they had previously issued. RPC says that this is another indication that the new APN regime seems to be in turmoil – which is of particular concern given there is no right of appeal against an APN.
Taxpayers not in a position to challenge the legality of their APNs may have paid the APN – it is not clear whether HMRC has notified those taxpayers who were not claimants in the judicial review of their U-turn.
Adam Craggs, Partner and Head of Tax Disputes at RPC, says: “HMRC’s policy of issuing Accelerated Payment Notices seems to be “shoot first and ask questions later.”
“It is regrettable that the taxpayers concerned were put to the inconvenience and expense of having to commence judicial review proceedings before HMRC acknowledged that the APNs were unlawful.”
“When Parliament granted this power to HMRC I am sure it assumed APNs would be issued after careful consideration and only once the necessary conditions in the legislation had been satisfied – HMRC appear to be issuing APNs on an industrial scale with little consideration to the constraints contained within the legislation.”
“APNs can result in taxpayers being made bankrupt or being forced to conduct a fire sale of their home or other assets, in order to raise sufficient funds to pay the sum demanded.”
“There were repeated warnings from many in the tax profession when the Accelerated Payment Notices legislation was announced that there were insufficient safeguards for taxpayers and the lack of independent judicial scrutiny was a concern to many.”
“As this case demonstrates, any taxpayer in receipt of an Accelerated Payment Notice should not assume that HMRC has followed the correct internal processes and exercised its powers lawfully.”
Since November 2015, HMRC is also able to collect a debt due as a result of an unpaid APN directly from taxpayers' bank accounts, under provisions introduced in the Finance (No. 2) Act 2015.