'Pay-up first' tax notices to hit contractors from August

Accelerated Payment Notices from HM Revenue & Customs will begin hitting tax scheme users from August, not July as initially thought.

HMRC has specified that such notices, which will tell recipients to pay disputed tax upfront, will be sent out from next month and until April 2016.

The 20-month exercise is due to affect up to 65,000 cases currently under investigation, including 16,000 contractors who used offshore intermediaries and 6,300 EBT users.

As a result, HMRC claims that every taxpayer who receives an AP notice will have already been notified by the department that their tax affairs are “under consideration.”

But a letter of notification will also reportedly be sent to taxpayers a couple of weeks beforehand to warn them that an APN, demanding payment within 90 days, is incoming.

Some of these notification letters (and the subsequent APNs) will be received by individuals who invested in one or more of a 1,000 schemes that HMRC last week listed under DOTAS.

Even though the investments may have been made up to ten years ago, and regardless of whether investors have left the schemes, APNs permit HMRC to backdate the payment demand.  

However the government does not agree with its critics who say APNs facilitate retrospective taxation, arguing that the notices do not change the underlying tax liability or rules.

It has also rejected calls for an independent appeal process, preferring that recipients of APNs can only appeal on the grounds of process (i.e. the notice was sent by HMRC to the wrong address).

Now that the finance bill has received royal assent, legal and tax bodies have moved from requesting amendments to advising taxpayers of their options if they receive an APN.

In particular, seek professional and - equally importantly - independent advice, because neither HMRC nor the scheme promoter is likely to have your best interests at heart.

Accountancy firm UHY Hacker Young explained its top tip to those who receive an APN: “Often promoters of these schemes will provide advice but this may be subject to their own interests.

“New tax investigation businesses and claims firms have also emerged…but often these are staffed by people who created or sold the schemes in the first place.”

The firm recommends seeking help from advisories who are both regulated by a recognised professional body and have a verifiable track record in dealing with tax investigations.

Get their help “as soon as possible,” APN recipients were urged, as while an extra 30 days can be afforded by asking HMRC to reconsider the amount, penalties will hit late payers.

Editor's Note: Related reading -

What the taxman isn't telling you about APNs

Contractors' guide to APNs

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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