Accelerated Payment Notices and Regulatory Compliance Disputes

Regulatory Compliance Disputes – HMRC Gains New Powers with Accelerated Payment Notices (APNs). 

HMRC gained new powers in 2014 to issue Accelerated Payment Notices (“APN’s”) across a range of circumstances. This article looks at some of the key points regarding APNs, especially the area of no right of appeal, which has been challenged via a regulatory compliance dispute in the Courts as being unfair and breaching natural justice – an issue which remains very much alive.

What is an APN and What Taxes Do APNs Apply To?

APNs demand an advance payment of tax even in circumstances where HMRC are continuing to investigate the question of whether the tax ought to be paid or where an appeal to a tax tribunal remains outstanding. It really is a question of ‘pay first and argue later’. APNs now apply to a range of taxes including income tax, capital gains tax, corporation tax and inheritance tax.

When May an APN be Made?

Ordinarily, an APN will be issued by HMRC where a taxpayer has entered into arrangements which give rise to a ‘tax advantage’, where that ‘tax advantage’ is subject to an ongoing enquiry or appeal, and one of the following applies:

1. A “follower notice” is issued to the taxpayer; or

2. The arrangements are subject to a counteraction notice under the General Anti-Abuse Rule (“GAAR”); or

3. The arrangements come inside the Disclosure of Tax Avoidance Schemes (“DOTAS”) regime

When Must a Payment Be Made?

Ordinarily, a payment must be made within 90 days of the date of the notice. Representations can be made to HMRC within this 90 day period. Following a decision released by HMRC on those “representations” a payment must be made within 30 days.

No Right of Appeal if a Regulatory Dispute Occurs

The legislation implementing APNs contains no right of appeal to an independent tax tribunal. This is unusual and reflects a hardened approach by the Government to the collection of tax revenues, and one that has resulted in court proceedings.

A Judicial Review Finds in HMRC’s Favour

The Courts have already seen Judicial Review proceedings taken against this new regime in the case of Ingenious Films. Those proceedings were taken on the basis that APNs were unreasonable, breached “natural justice”, and offended rights to fair trial and protection of property (as guaranteed by the European Convention on Human Rights). In their regulatory compliance dispute over the APN, It was also claimed by Ingenious that they held a legitimate expectation that payment of tax would not have to be made until any potential tax controversy with HMRC was determined by an independent tribunal.

The Upper Tier Tax Tribunal found in HMRC’s favour on all submissions.

However, there remain other unexplored arguments that ought to be put before the Courts in the near future.

As of the date of this article (11 December 2015) it is understood that the case of Rowe [2015] EWHC 2293 has permission to appeal the Judgement of Mrs Justice Simler so that the Court of Appeal will now determine the matter. Issues relating to natural justice, ultra vires, breach of legitimate expectation, irrationality and Article 6 infringements, are all still very live.

How We Can Help in  Regulatory Compliance Disputes

We at Neil Davies & Partners have extensive experience in commercial litigation involving HM Revenue & Customs, especially in this area of regulatory compliance disputes. We can assist in getting the right result in law for you.

Judicial Review proceedings require you as the tax payer to bring your claim promptly and in any event not later than 3 months following the decision you require to be reviewed. That ‘decision’ is likely to be the Accelerated Payment Notice or a subsequent letter so you must act quickly.  If you do not commence Judicial Review proceedings within the permitted time you may lose your ability to seek redress entirely.

If you are involved in an APN dispute, or any other regulatory compliance dispute, our expert team of regulatory compliance disputes solicitors can help. Call us on 0121 200 7040 or contact us for a free initial discussion.

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