HMRC refunds Montpelier contractors after APN 'blunder'

Refunds from HM Revenue & Customs over ‘pay-up front’ tax demands that the department should never have issued have begun to reach IT contractors.

In fact, despite its reticence to outline the refunds process, HMRC is reimbursing up to 2,000 IT contractors who wrongly received APNs since they used a tax scheme by Montpelier.

The refunds come in the same month that HMRC raised fresh alarm about tax schemes –  in a new 10-point guide; in its Spotlights section and via its enforcement boss Jenny Granger.

In Spotlight 29, the Revenue reproduces 15 claims often touted by scheme promoters and warns they are “made without context and are usually misleading.”

But Montpelier hints it is the taxman who is being selective with the truth, notably in a letter he sent to scheme users notifying them of their APN being withdrawn. In its own letter to users, Montpelier says:

“The aforementioned letter refers to the HMRC view following Huitson in the First Tier Tax Tribunal that the scheme does not work. But what HMRC does not say is that:

  1. An application has been made to appeal Huitson to the Upper Tribunal
  2. The Article 56 point, being the free movement of capital, which we say prohibits Section 56 FA 2008 has yet to be heard.”

Montpelier is continuing with these two appeals, and is understood to also be filing a claim against HMRC for legal costs, such as those from it initially challenging the unlawful APNs.

A similar claim against HMRC is being considered by No To Retro Tax, a member of which says it incurred “significant costs in professional fees as a result of HMRC’s [APN] blunder.”

But the department isn’t blinking. Last week it trumpeted APNs for collecting more than £2billion since 2014, representing a total of 41,000 APNs, equating to 3,000 a month.

“By the end of 2016, HMRC expects to have completed issuing notices, bringing forward over £5bn in payments for the Exchequer by March 2020,” said Ms Granger.

“Those who take part in tax avoidance now have to pay up-front and dispute later. It really is time to get out of avoidance - HMRC wins the vast majority of cases that people litigate”.

A tax adviser thinks HMRC is trying to send the message ‘We’re watching you’ or ‘We’re on the ball,’ but says contractors in dispute with it would just see it as ‘We haven’t gone away.’  

Editor’s Note: Related Reading –

Contractors’ Questions: What if HMRC sends me an APN?

Some contractors’ APNs demand ‘up to £100,000’

APN contractors mustn’t rob Peter to pay Paul

Feb 17, 2016