Accelerated Payment Notices and Follower Notices

Historically, where HMRC allege that additional tax is payable, that tax has normally fallen due for payment only once the last of the taxpayer’s appeal remedies is exhausted.

In recent years, HMRC have become exercised about the amount of tax “in dispute” in what they perceive as tax avoidance cases. So, amid some controversy, legislation was introduced in Finance Act 2014 which gives HMRC the power, in some circumstances, to seek early payment of tax even if a tax assessment has not been resolved.

This removes the cash advantage of sitting and waiting during a dispute with HMRC.

Circumstances in which HMRC issue notices

Under these powers, HMRC are able to issue individuals with Accelerated Payment Notices (APNs) to force them to pay the tax which HMRC feel is due from the tax avoidance scheme(s) they have been involved in. In order for HMRC to issue an APN, an individual must have been involved in a tax scheme which has been issued with one of the following:

  • a Disclosure Of Tax Avoidance Scheme (DOTAS) reference number
  • a General Anti-Abuse Rule (GAAR) counteraction notice
  • a “Follower Notice” (FN)

Geraint Jones

Partner, Private Client Tax

T +44 (0)20 8922 9354
E geraint.jones@bkl.co.uk

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    Follower notices

    An FN can be issued in any enquiry or appeal case where HMRC is of the “opinion” that a judicial ruling (which must be a final one) is “relevant” (i.e., establishes principles which would govern the case in question).

    It is possible to make “representations” to HMRC about an FN (which HMRC are obliged to “consider”) but there’s no appeal against an FN. Where an FN is issued (and upheld following representations) individuals will have to amend their return or withdraw the appeal. If this is not complied with, there’s a penalty of up to 50% of the tax at stake.

    Paying an APN

    The tax due under an APN has to be paid within 90 days of issue.

    APNs are not appealable.  However, representations can be made to HMRC in respect of whether an APN is valid and whether HMRC have calculated the correct amount of tax. Any representations must be made to HMRC within 90days of issue of the APN.

    HMRC must consider the representations and will then confirm or withdraw the notice or amend the amount of the accelerated payment. If written representations are made and the notice is confirmed by HMRC, the recipient has 30 days from receipt of HMRC’s decision to make the payment (if this would be a later date than the end of the original 90 day period).

    Published list of scheme references

    In July 2014, HMRC published a list of 1,200 scheme references that will be used in issuing the first APNs to individuals. The list gives the DOTAS reference number, rather than the name of the scheme, although HMRC will consider the possibility of compiling and publishing a list of scheme names alongside the reference numbers. The list is under continual review and updated regularly.

    From August 2014, HMRC have been phasing the issue of APNs over the following 20 months, by reference to the list of DOTAS reference numbers, although it should be noted that not every listed scheme will be considered for APNs. It is anticipated that where negotiations with HMRC and advisors are at an advanced stage in respect of a scheme, then APNs will not be issued.

    Before issuing an APN, HMRC will issue a “factsheet” explaining how the system works. If you receive such a factsheet, you may wish to get in touch with us for further advice.

    HMRC accelerated payment & follower notices specialists

    Our experienced team will be able to assist you with any queries you may have regarding Accelerated Payment Notices or Follower Notices, including whether an Accelerated Payment Notice is valid or whether the calculation of the tax is correct.

    For more information or help from one of our tax investigation specialists, please contact us using our enquiry form.