The Counter Avoidance Team within HM Revenue & Customs (HMRC) is sending out Accelerated Payment Notices (APN) to users of EBT avoidance schemes. As at 13 March 2015, HMRC had already issued 7,712 notices with a value of £1.6bn.
A typical APN will read as follows:
Accelerated payment notice
Issued under Part 4, Chapter 3 of the Finance Act 2014
Notice for the year ended 5 April 20xx
Amount due in respect of this notice:
Payment due on or before:
xx xxxx 2015
(Payment may be due on a later date if representations are made under section 222 of the Finance Act 2014)
This accelerated payment notice relates to:
Scheme name: xxxxxx
Scheme reference: xxxxxxxx
We are giving you this accelerated payment notice under section 219(4)(b) of the Finance Act 2014.
The legislation allows us to give you this notice because certain conditions have been met. Those conditions are that:
- a tax enquiry is in progress into your Self Assessment Tax Return for the year shown above in relation to Income Tax – Section 219(2)(a) of the Finance Act 2014.
- the return is made on the basis that a tax advantage (‘the asserted advantage’) results from particular arrangements (‘the chosen arrangements’) namely the scheme referred to above – Section 219(3) of the Finance Act 2014.
- the arrangements are DOTAS arrangements – Section 219(4)(b) of the Finance Act 2014.
About the accelerated payment
The amount of the accelerated payment is determined by virtue of Section 219(4)(b) of the Finance Act 2014.
The accelerated payment is to be treated as a payment on account of ‘the understated tax’ as defined by section 220 (4) of Finance Act 2014. The understated tax is the additional amount which would be due and payable in respect of tax in accordance with our view of the effect of the DOTAS arrangements.
You have no right to apply to us or to a tribunal to postpone the payment of any understated tax to which this notice relates.
If a court or tribunal later decides that our view of the effect of the DOTAS arrangements is incorrect, then we would normally be required to repay the amount (or part of the amount) that you paid us under this notice. However, if we appeal against the decision to a higher court or tribunal, in certain cases we may also ask for their permission not to repay you. We would do this if we believed that there was a risk that you would not pay the amount due if we were successful with our appeal. If the relevant court or tribunal considered it necessary for the protection of the revenue, then it could give us permission to withhold all or part of any repayment, or require you to provide security before we repaid you.
Penalties for not paying on time
If you do not pay in full and on time, you will be liable to penalties. Any such penalties would be payable in addition to the amount due. If you do not pay in full:
- on or before the date it is due, you will be liable to a penalty equal to 5% of the amount you still owe.
- on or before 5 months of the date it is due, you will be liable to a penalty equal to 5% of the amount you still owe – this is as well as the 5% explained in the previous bullet.
- on or before 11 months of the date it is due, you will be liable to a penalty equal to 5% of the amount you still owe – this is as well as the 2 previous 5% penalties.
If we charge a penalty, we will send you a notice of penalty assessment telling you how much the penalty is and the period to which it relates. You will then have 30 days to pay the penalty.
If you receive a penalty assessment, you will be able to appeal against the penalty if you disagree with it. Your appeal and other rights relating to penalties are set out in section 226(7) of the Finance Act 2014 by reference to Schedule 56 of the Finance Act 2009.
How to pay
We recommend that you pay electronically using Bacs Direct Debit, CHAPS or Faster Payments by online/telephone banking. For details of other electronic payment methods go to www.hmrc.gov.uk/payinghmrc/misc.htm
What if you have problems paying
If you think you will have problems paying the amount due, please phone us straightaway on the number shown at the top of this notice.
What to do if you disagree with this notice
You cannot appeal to us against this notice, or to a tribunal or court. However, under Section 222 of the Finance Act 2014, you can make representations to us objecting to the notice and/or the amount of the accelerated payment if you believe that one or both of the following applies:
- one or more of the conditions shown earlier in this notice for issuing this notice have not been met.
- The amount shown on the notice is not correct – if this is the case you will need to tell us what you think is the correct amount and why.
If you want to make representations, you need to write to us to let us know what they are. You need to make sure that we receive your letter no later than xx xxxx 2015.
We will then consider your representations and let you know our decision. If you make representations in relation to the conditions for issuing the notice we will either confirm this notice, (with or without amendment), or withdraw it. If you make representations about the amount specified in this notice, we will decide whether a different amount should have been specified and then either confirm the amount specified in this notice, or amend the notice to specify a different amount.
The notice is accompanied by a Computation of accelerated payment.
Author: Guy Smith, Tax Investigations Manager on the ReSource Tax and VAT Consultancy Team.