Are HMRC’s Accelerated Payment Notices proof of the taxman’s aggression?

City-headquartered law firm, RPC, has recently announced that HMRC has withdrawn another 2,600 of their controversial Accelerated Payment Notices (APNs).

It has once again been called into question whether the taxman is proving to be too aggressive when dealing with taxpayers and issuing APNs. As a result, HMRC is under increasingly close scrutiny when it comes to its handling on this loan charge.

RPC stated: “APNs were introduced by HMRC in 2014 as a way of forcing taxpayers to pay disputed tax before their appeals had been determined by the tax tribunal.”

“There is a suspicion that HMRC may have commoditised the process for administrative convenience, with little thought for the devastating impact receipt of an APN can have on [the] taxpayer.”

Since 2014, over 10% of issued APNs have since been withdrawn as the tax tribunal has ruled there are no grounds for the APN, or the taxpayer has contested it.

“The fact [that] HMRC has had to withdraw over 10% of all APNs they have issued suggests they need to exercise far greater care when exercising this power,” said Adam Craggs, partner at RPC.

In the past five years in which APNs have been in circulation, 81,000 notices have been issued in the UK overall; 8,600 of these have since been withdrawn. RPC has stated that this could suggest that HMRC is not exercising “sufficient care and attention” when it comes to issuing APNs.

“The sums demanded by APNs can create a huge financial burden for businesses and individuals—and even push some into insolvency or bankruptcy.”

Craggs continued: “There is a suspicion that HMRC may have commoditised the process for administrative convenience, with little thought for the devastating impact receipt of an APN can have on [the] taxpayer.”

APNs are considered to be a rather controversial practice, for they can be issued before an independent tax tribunal or court has determined tax is even due to be paid to HMRC. The legislation, much like HMRC’s ‘loan charge’, is retrospective. This means that the taxpayer can receive APNs in relation to events which took place many years before the legislation was enacted.

RPC added: “The sums demanded by APNs can create a huge financial burden for businesses and individuals—and even push some into insolvency or bankruptcy.”

“HMRC regularly refers to ‘fair’ in its various press releases; however, it is gaining a reputation as a department which is out of control and is anything but fair.”

Due to this more aggressive approach by HMRC when it comes to issuing APNs, it is likely that a number of these notices have been issued in error—hence why 10% of these have since been withdrawn by HMRC.

RPC has argued that this shows that it is vital that any taxpayer who has received an APN from HMRC seeks expert legal advice before paying the tax upfront, particularly if they feel it has been issued in error. The taxpayer has the right to challenge the legality of the APN they have been issued with by way of judicial review proceedings where it is deemed appropriate.

“HMRC regularly refers to ‘fair’ in its various press releases; however, it is gaining a reputation as a department which is out of control and is anything but fair,” said Craggs.

He concluded: “The unprecedented criticism of HMRC by the All Party Parliamentary Group of MPs in their report, published on 3 April 2019, is of concern.”

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