Accelerated Payment Notices

A lot has been written about APNs, or Accelerated Payment Notices, recently. Now that HM Revenue & Customs (HMRC) has new powers to clamp down on alleged tax avoidance, APNs allow the tax authority to make tax payers pay disputed tax in advance instead of having to wait for the outcome of a tax tribunal.

APNs can be issued to any tax payer that has, in the past, disclosed that it has benefited from a tax avoidance scheme. HMRC will have created a number with which to identify the relevant scheme and the tax return will disclose that number.

HMRC issued a list of the schemes under which it required payment. When those notices have been issued, it will select the next range of schemes.

Under the new rules, the tax payers who received an APN have 90 days to pay the disputed tax. They can make their case in court or at a tribunal.

Realistically, it will take a number of years for the tribunals or courts to resolve whether these schemes are valid ways to save tax or not. With the advent of APNs, HMRC will become the custodian of any notional “saved tax”. If the schemes are valid, HMRC will refund the tax.

The sums owing may, of course, be inconsequential. On the other hand, they may be sufficient to cause the tax payer a significant cash flow problem previously unaccounted for in budgets and projections. As a consequence, this may mean that the tax payer has to consider restructuring their business or contemplate insolvency.

Asking for help is often the most difficult thing to do, but it is the first step to tackling issues which could otherwise lead to insolvency. I would recommend being proactive and speaking to your tax adviser and accountant early on. You may also want to take specialist advice from an insolvency practitioner now, as this could provide you with the tools you need to avoid insolvency.

John Cullen is a Partner at Menzies delivering business turnaround and insolvency services to SME businesses. For more information about our turnaround advisory services contact John by email at JCullen@menzies.co.uk or by calling +44 (0) 29 2044 7510