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APNs and advising your clients

APNs (Accelerated Payment Notices) have been around for a while now since HMRC acquired power to issue them in 2014/2015.  These, coupled with follower notices, and attacks on disguised remuneration packages demonstrate HMRC’s determination to “up the ante” and increase the tax take from those they feel have flouted the rules.

The creation of HMRC’s Counter Avoidance Insolvency Team has further emphasised the need for your clients to be correctly advised should they receive any sort of demand of this type. Can an Insolvency Practitioner Help me?

Both APNs and follower notices give the taxpayer a very short period of time to pay the tax due. So for example, as far as APNs are concerned, they are issued when HMRC identify a relevant scheme and provide a window of just 90 days to make payment.  They aim to put the taxpayer back into the position they would have been in, had they not participated in the tax avoidance scheme, whilst the outcome of the enquiry into the scheme is determined.

So if the taxpayer has the money to settle the liability, then there is no need to take insolvency advice. However, if the client is struggling to pay, they need to act fast.

HMRC will act quickly to recover sums due, but will take an active interest in any insolvencies that appear to be put in place simply to avoid paying the tax.

It is likely that the tax scheme giving rise to the demand will have been entered into by higher earning individuals. It may therefore be that significant assets  exist, perhaps  in the form of investments or  property.   However this is not always the case, and, in extreme cases personal  bankruptcy procedures may need to be considered.

Directors of companies receiving demands need to be mindful of their general legal duties to act in the best interests of creditors as a whole if the company cannot pay the tax due.  In particular, HMRC may take the view that the uses of such tax schemes constitute an act of “misfeasance” as defined by section 212 Insolvency Act 1986.

The clients therefore need to consult with an insolvency practitioner at the earliest opportunity to see if some form of insolvency or rescue process (company voluntary arrangement, administration or liquidation) may be the best option.

If payments are not made by the due dates, penalties are strict, with surcharge levels starting from 5%.

So in summary……

If you or your clients are worried about the impact of an APN (and/or a follower notice), please contact us.  Our insolvency and tax team can work together to ensure that you get the best advice possible. Please call Jackie Kirsopp or Carol Tindal on 01768 864466 to find out more.