HMRC vindicated over Accelerated Payment Notices

The taxman was last night said to be entering into “full collection mode” because a bid by 154 scheme users to get ‘pay-up first’ avoidance notices quashed as illegal has failed.

Speaking to ContractorUK, tax investigations firm WTT Consulting said that while the users might appeal the ruling, HMRC has won a green light to both collect and keep issuing Accelerated Payment Notices.

In fact, contrary to users’ claims that APNs they received after using three Ingenious schemes were illegal for five reasons, the High Court ruled that HMRC exercised its powers legally.

By dismissing their judicial review (on all five counts), the court has effectively cued up the Revenue to send out the remainder of the APNs that the department has promised to issue.

 “We expect to complete the issue of around 64,000 notices tax by the end of 2016 bringing forward £5.5bn in payments for the Exchequer by March 2020,” HMRC said after the ruling.

Its director of counter avoidance, David Richardson, added that the “important result” proved that scheme users can “no longer hold on to the money while their affairs are investigated.”

But the High Court’s judgement is not necessarily “the end of the line” and it will probably be appealed, says Graham Webber, a director of WTT Consulting.

“[For now though] this is a defeat… and HMRC will move into full collection mode,” he said. “A lot of [other] Judicial Review challenges are backed up behind this one and they must now consider whether to push for a full hearing or not.”

It is not the only setback for those campaigning against APNs. According to new data, since their introduction in July 2014, such notices have generated three times more than forecast.

In its latest accounts, HMRC says that APNs netted £595m in 2014-15, up from the forecast of £210m. About 10,000 of the notices went out last year, protecting £1.7bn of unpaid tax.

But the same document speaks of the Revenue’s disclosure facility for those in crown dependencies – an initiative that is yielding “surprisingly low” returns, says Pinset Masons.

According to the law firm, just £13.9m has been volunteered from once hidden accounts in the Isle of Man and Channel Isles, compared with the Treasury’s reported target of £320m.

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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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