The Government introduced the Accelerated Payment Notice Regime in the Finance Act of 2014 to remove the cash flow advantage that taxpayers obtain from participating in tax avoidance arrangements. The new legislation has the potential to impact individuals, partnerships, companies and trusts who have entered into any planning arrangements that fall into the criteria below. There are two types of notices that taxpayers should be aware of:

• Accelerated Payment Notices

• Follower Notices

Accelerated Payment Notices (“APN”)

An APN may be issued to a company or an individual where they have obtained a tax advantage from one of the following types of arrangements;

• Arrangements that have been disclosed (or ought to have been disclosed) under the Disclosure of Tax Avoidance Schemes (‘DOTAS’) rules;

• Arrangements that have been subject to a counteraction notice by the General Anti Abuse Rule (‘GAAR’) panel; or

• Arrangements that have been subject to a ‘Follower Notice’ under the Finance Act 2014 (broadly those arrangements where HMRC consider there to have been a final judicial ruling that applies to the arrangements in their favour).

An APN can only be issued where the arrangements are subject to an open enquiry. The APN will be calculated so as to deny the tax advantage that arises from the specific arrangements.

Failure to pay the APN could result in penalties of up to 15% of the disputed tax.

It is those taxpayers who may have participated in a DOTAS scheme who will most likely be feeling the most anxious at this time as it is likely that most APN’s will be issued in the next 12/24 months. This will mean most individuals will need to start thinking about arrangements to pay the disputed tax.

Follower Notices (“FN”)

HMRC can use a FN to compel a company or individual to amend its tax return where the company or individual has an open enquiry and is pending a court ruling and that lead case has finally been decided. The Courts are deemed to decide that the arrangement does not succeed when there is a:

• Ruling of the Supreme Court on the scheme, or

• Ruling of any other court or tribunal against which no appeal is made, or

• Ruling of any court or tribunal but permission to appeal against it is refused.

Effectively HMRC is trying to stop each individual litigating against the same scheme if HMRC believes it has failed via the Courts. The biggest concern with an APN is the fact that there is no formal right of appeal against them and penalties of up to 50% can be applied if a company or individual fail to amend their tax return as instructed by the notice.

What will happen if I receive an APN or FN?

Any tax in dispute will be required to be paid by the taxpayer within 90 days or a further 30 days will be granted where the individual requests that HMRC should reconsider the amount of the payment notice. Penalties will apply for late payment.

How can we help?

If you or your Company have any concerns with the Accelerated Payment Regime then please speak to us. We have the experience to assist your clients if they are looking to either litigate or settle (with possible time to pay arrangements) with innovative solutions if you are caught by either Follower Notices or Accelerated Payment Notices.

Please call 01789 201 912 or email david.logan@zenithtax.co.uk