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Office Hours: 9am to 5.30pm

HMRC Scheme Enquiries and Accelerated Payment Notices

Contractors are often the prey of promoters of tax avoidance schemes promoted by offshore providers. These schemes are invariably promoted as 100% compliant, risk free and often as QC approved.

If you’ve ever been tempted by the promises made by these scheme promoters then the chances are you will receive (or may have already received) notification that the scheme you joined is being investigated.

This has now happened to thousands of contractors and many have now received Accelerated Payment Notices (APNs).

Accelerated payment notices

Accelerated payment notices have two main purposes. Firstly, they are just one part of HMRC’s increasingly robust approach to tax avoidance that shows they are taking the matter very seriously.
The other purpose is to remove the cash-flow advantages companies linked to tax avoidance schemes once benefited from when they could avoid paying tax until HMRC had gained successful court rulings. HMRC have been able to recover billions of pounds in tax via the use of APNs.

What are the implications of APNs?

This has now happened to thousands of contractors and many have now received Accelerated Payment Notices (APNs). So do not panic and read what we recommend: every case is unique, but as long as you follow the right procedures, you’ll know what to expect.

Below you can see how an APN looks

APNs Letter

Click here to see some APN letter exmaples.

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Stay onshore

One of the simplest ways to avoid receiving any form of demand would be to use a UK based umbrella firm. The One Click Group provide Umbrella services for contractors and whilst we can’t guarantee a 90% return on your contract, we can guarantee that you won’t lose any sleep from the way we look after your affairs.

Have you used a named scheme?

Taxpayers that have been caught using schemes named in the Disclosure of Tax Avoidance Schemes (DOTAS) rules can be affected, as can those that have received Follower Notices following participation in such schemes.
You may also have action taken against you if you have been caught by the General Anti Abuse Rule (GAAR). An APN can be issued if a tax enquiry relating to a return or claim that you have submitted, or if there is an open appeal linked to this. The return or appeal must have happened because you have received a tax advantage from a scheme.

What are Follower Notices?

Follower Notices are handed out to taxpayers after HMRC receives judicial rulings that it suspects could apply to tax avoidance arrangements individuals or businesses have been involved in. You could be met with a penalty of up to 50% of the disputed tax figure if you don’t make the payments asked for in the Follower Notice or amend their returns.

Is my APN valid?

However, mistakes have been made in the past by HMRC. They have incorrectly issued a considerable number of APNs and recently, HMRC withdrew more than 2,000 APNs following a judicial review which found out the scheme in question was not notifiable under DOTAs, despite its original claims.

Am I likely to receive an APN?

Few people are surprised when they receive an Accelerated Payment Notice. You are only really likely to be affected if you have used a scheme designed to reduce the amount of tax you are eligible for. You will also be told you are going to receive an APN a number of weeks before it is sent out to you, either via a Follower Notice or in a letter.

A growing trend

The use of APNs has been on the rise over recent years. Now HMRC is able to use APNs, it no longer has to wait until assessment and appeals periods are over to source the tax, penalties and interest that is owed to them. Growing numbers of schemes that require a tax avoidance scheme reference number to be disclosed means that this looks trend seems unlikely to slow down any time soon. Nonetheless, HMRC withdrew twice as many APNs in 2017 as it did in 2016.

How common are APNs?

It’s thought that well over 80,000 APNs have been issued by HMRC since 2014. HMRC says tax can still be payable even when APNs are withdrawn. Those that suspect they could be targeted by HMRC are encouraged to seek professional advice to ensure any demand they do receive is valid prior to making a payment.

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