Erroneous Accelerated Payment Notices retracted by Revenue
HMRC was forced to do a U-turn and withdraw up to 2,000 Accelerated Payment Notices (APN’s) that it had erroneously issued in April 2015 to taxpayers who participated in the Montpelier IR35 Manx Partnership arrangements.
The APN’s should not have been issued in the first place because although the scheme was notified to HMRC there was no requirement to do so under the Disclosure of Tax Avoidance Schemes (DOTAS) regime. Before HMRC can issue a taxpayer with an APN there are certain conditions that must be satisfied, one of which is that a person has used arrangements that are disclosable under the DOTAS legislation.
APN’s are used where a tax enquiry is in progress or there is an open appeal in relation to a tax advantage and allows HMRC to demand tax up front before the matter is settled. Tax is payable 90 days after the issue of the APN.
Whilst HMRC have issued an apology for their mistake they are yet to offer any sort of compensation for the distress their actions caused to the individuals who were on the receiving end.
Adam Craggs, partner and head of tax disputes at London law firm RPC, said that many individuals have sold their assets in order to meet the swingeing up-front tax demands.
A spokesperson for HMRC said:
“APN’s are only issued in tightly defined circumstances, set out in legislation. We act quickly to correct the position once we become aware that things are not correct. If an APN is withdrawn that doesn’t mean there is no tax to pay. The underlying tax dispute remains until it is settled or litigated.
We have issued over 32,000 APN’s and collected over £1 billion of tax since Accelerated Payments (AP) were introduced in 2014. We remain tough on avoidance and the AP regime is a key part of our work on tackling avoidance.”
This incident serves to support the concerns that many professional bodies shared about handing HMRC such draconian powers unchecked. Mr Craggs said:
“This case vindicates the objections raised by many in the tax profession – disputed tax, like any other amount in dispute, should only be payable once a tribunal or court has decided it is payable. One party should not be able to demand payment from the other party in advance of their dispute being determined. Such a system accords with the rule of law and is how most people consider the justice system should operate in England and Wales.”
It beggars belief that HMRC should have been able to do this in the first place which means that there are no internal checks in place to safeguard against this but if there is its not working.
This is serious and needs to be taken seriously. Individuals are being put through huge amounts of stress to the point where families are being broken up.
For years HMRC has known about these loopholes in the tax system that in the main where used by corporations and the wealthy (via there financial advisers/accountants). I know first hand that HMRC has not taken steps with normal individuals using these schemes until they hatched a plan to introduce legislation and back-date. HMRC were happy to take the benefit in kind payments individuals were liable for with their tax returns, not once notifying individuals that they were using a scheme which in HMRC’s opinion meant liability for tax was due until they had this plan. A plan that would only enter into opening enquiries for previous tax years before the deadline was up knowing that they had APN in the bag (that if would be pushed through as it was).
Its a bloody disgrace and the money they hope to raise from the 65,000 normal individuals is just a fraction of the percentage that the UK gov are allowing multinational corporations to save in tax by making UK Ltd the place to head up their organisations.
There needs to be a level playing field. If the rules are changed then those braking from that date forward should be liable, however, all these APN’s being issued are for retrospective tax years where schemes where used before the legislation was brought in. If I drive down my road at 30 mph when the speed limit is 30 mph for years I do not expect to get a speeding ticket retrospectively when it’s changed to 20 mph and I’m told that for 2 years prior I’ve been speeding.
Gov is wasting too much money. Work on sorting out the legislation and rules governing tax but only punish those that break those new rules going forward.
What recourse will people have who sold their homes to pay APN’s that have now been proven invalid? I dont consider issuing something in April 2015 to find it invalid in Jan 16 acting “swiftly”. The “tightly defined circumstances” are not being adhered too. The whole situation is incredibly worrying and proves HMRC have wielded a power whose rigour has not been applied. David Gauke was adamant during parliamentary debate this would be tightly applied, wrong!
I had one of these a couple of years ago after using Norla. Thankfully I had the 50k offset against my mortgage. Still hurt paying them back.
Shame.
Let’s just hope these parasites save the money when they finally get what’s coming to them.
fuck you DHother. you’re a cunt.
[quote name=”joe”]fuck you DHother. you’re a cunt.[/quote]
My sentiments exactly
Awww, does baby have to pay something back into the system like the rest of us? Poor baby .. now now .. don’t start throwing your toys out of the pram.
Just pay up you greedy abhorrent fucks.
Oh do shut up Dhother, you dont know what youre talking about. And you’re a cunt.
DHother give your head a shake, they will be going after you soon
[quote name=”DHother”]Awww, does baby have to pay something back into the system like the rest of us? Poor baby .. now now .. don’t start throwing your toys out of the pram.
Just pay up you greedy abhorrent fucks.[/quote]
you miss my point at least, if HMRC can apply rules incorrectly and unchecked then where does it end and how can those affected get recourse? They have been granted too much power and someone needs to stop it. This is not about the rights or wrongs morally or legally of individual cases.