HMRC's APN Collateral Damage

Graham Webber, Tax Director of WTT Consulting, is quoted by Contractor UK referring to the high level of withdrawn APNs:

“Except where the sums are large or there is suspected serious abuse or a particular sector is subject to a targeted campaign, such as contractors [have been], the ‘broad-brush’ approach to compliance [which APNs deliver] is sufficient to satisfy those who oversee them.

The fact that it creates confusion and cost and considerable anxiety for individuals on the wrong end of false or inappropriate APNs, we guess is seen as ‘collateral damage’ by HMRC’s strategists.

In short, unless you are worthy of individual attention from HMRC, the ‘one-size-fits-all’ strategy [of APNs] works most of the time, for most people [from the Revenue’s perspective].”

In other words, HMRC doesn't give a flying fuck!

Tax does have to be taxing.

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HMRC Shoot First, Ask Questions Later APN Policy

HMRC has found a very nice little earner wrt its accelerated payment notices (APNs) scheme, which extracted £1.3bn from taxpayers and SMEs in 2016/17.

This is a 21% increase from the previous year, when HMRC extracted £1.07bn from APNs, according to research from accountancy firm Moore Stephens.

APN's are more than a little controversial, as they give HMRC the power to demand tax it believes it is owed before the dispute is adjudicated. Those affected have only 90 days to pay the sum, and have no right of appeal.

"Ironically" HMRC's prime targets are not large businesses but the low hanging fruit of individuals and SME's. The compliance yield from the Counter Avoidance Directorate rose significantly for individuals, whilst the amount collected from large businesses fell significantly from £943m in 2015/16 to £19m in 2016/17.

Dominic Arnold, head of tax investigations and disputes at Moore Stephens, is quoted by economia accusing HMRC of making full use of its powers to “shoot first and ask questions later”:

“Its ability to demand accelerated payments remains a draconian, but clearly increasingly effective mechanism for HMRC to clamp down on what it sees as abusive tax schemes.

That’s all well and good for the Treasury. However, it’s a heavy price for taxpayers to pay before they have even had a chance to put their case. Small businesses and individuals can be put under immense strain, financially and emotionally, while the process is ongoing.

Whether they have crossed a line or not, they don’t have long to find what can often amount to thousands of pounds in disputed tax.”

HMRC is more than happy with the arrangement, its spokesperson said:

"HMRC has an excellent record in supporting those in genuine difficulty, including offering more time to pay if appropriate.

APNs change where the disputed tax sits while the issue is being investigated, ensuring that those who have used avoidance schemes are in the same position as everyone else who pays their tax, up front, and on time. The regime does not change taxpayer appeal rights."

Last year HMRC was forced to withdraw 4,300 APNs issued in error out of a total of 60,000. 

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

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Record Number of HMRC Judicial Reviews

The number of taxpayers seeking to challenge HMRC through judicial review jumped by nearly one-fifth last year.

The FT reports that HMRC faced a record 90 applications for judicial review as aggrieved individuals and businesses tried to overturn what they claimed were illegal or unreasonable decisions.

Adam Craggs, head of tax disputes at RPC, a City law firm, said the upturn was a sign of the growing pressure on HMRC to increase the tax yield:

“Until two or three years ago I could count on one hand the number of judicial reviews against the Revenue. In the past couple of years it has gone through the roof.

HMRC has a duty to act fairly and lawfully, but more and more taxpayers are finding that it is falling short of the mark.”

Mr Craggs said a number of cases were being brought by taxpayers who faced bankruptcy:

“A lot of the arrangements and transactions go back 10 years. The notices arrive on the doormat out of the blue and they don’t have the cash to pay it.”

He said the increase in applications from 42 in 2014 underlined concerns raised in the tax profession about the controversial powers HMRC has gained in recent years. Some of the applications represented claims by several thousand individuals.

Some of the cases involve HMRC’s ability to issue accelerated payment notices (APNs), which allow it to demand upfront payment of disputed tax from people who took part in avoidance schemes. The taxpayer is required to pay the bill within 90 days, without any right of appeal.

HMRC said:

“Accelerated payments have changed the economics of tax avoidance by requiring those under investigation for tax avoidance to pay the disputed tax upfront, putting them in the same position as the majority of taxpayers who pay first and dispute later. HMRC has won all five judicial reviews decided by the courts on the accelerated payments regime.”

The increased powers given to HMRC coupled with the increased pressure on it to bring in more money is a toxic combination.

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

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HMRC's View of Due Process

#APN s, in #HMRC s own words (circa 2014). Due process? Those plebs don't need that! pic.twitter.com/fu2W2e70GB

— DotasScandalDotOrg (@dotasscandal) November 30, 2016

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



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WTT Big Group

If you are bullied by #HMRC over imagined tax "due", join forces with thousands others in Big Group https://t.co/y86cSHVUiZ#APN #FightBack

— DotasScandalDotOrg (@dotasscandal) October 17, 2016

I have just come across the above tweet about the WTT Big Group, and popped over to look at the website:

"WTT BIG GROUP is an action group of current and ex-contractors directly affected by the existing and proposed legislative changes granting HMRC wide ranging powers. Our focus is on mobilising a collaborative voice to develop a strategy for resolution of the existing enquiry in a fair and appropriate way ensuring the future sustainability of the contractor profession. 

The primary objective of the group is to arrive at a tax analysis and consequent settlement with HMRC, which can be regarded as fair and reasonable for both parties. This is not limited to the tax position whilst engaged in the scheme but will extend to agreement in respect of any obligations or rights that still exist, such as loans from trusts. This will be essential in order to reach overall finality following recent budgetary announcements indicating that all outstanding loans received via an EBT will be taxed as income on 05 April 2019."

Other than that I know nothing about the group.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC Withdraws APNs

As a result of a judicial review, lodged by law firm RPC, HMRC has withdrawn hundreds of accelerated payment notices (APNs). APNs have not been flavour of the month with taxpayers, as APNs enable HMRC to demand tax it believes it is owed before the dispute is adjudicated. Those affected only have 90 days to pay the sum, and have no right of appeal.

Unsurprisingly, giving HMRC such powers has resulted in many cock ups. Earlier this year, HMRC backtracked 2,000 APNs because conditions for their issuing were not satisfied.

RPC challenged HMRC on a number of grounds, including that the Employee Benefit Trust arrangements under consideration were not "notifiable" to the Revenue under the DOTAS regime. The firm said HMRC has now admitted that it did not have the right to issue the APNs related to those arrangements.

Adam Craggs, partner and head of tax disputes at RPC, is quoted by economia:

“HMRC’s policy of issuing accelerated payment notices seems to be ‘shoot first and ask questions later'.

It is regrettable that the taxpayers concerned were put to the inconvenience and expense of having to commence judicial review proceedings before HMRC acknowledged that the APNs were unlawful."

An HMRC spokesperson said:

“We don’t comment on individual cases. There is no mass withdrawal of APNs. We have withdrawn accelerated payment notices from schemes where their promoters brought them to our attention when they did not legally have to. We have issued over 50,000 such notices and collected over £2.5billion for the UK.

Just because a notice has been withdrawn it doesn’t mean there is no tax to pay. The underlying tax dispute remains until it is settled or taken to court.”

Mr Craggs intimates that HMRC is talking bollocks:

"HMRC appear to be issuing APNs on an industrial scale with little consideration to the constraints contained within the legislation.

There were repeated warnings from many in the tax profession when the Accelerated Payment Notices legislation was announced that there were insufficient safeguards for taxpayers and the lack of independent judicial scrutiny was a concern to many.

As this case demonstrates, any taxpayer in receipt of an Accelerated Payment Notice should not assume that HMRC has followed the correct internal processes and exercised its powers lawfully.”

As noted above, if you give an organisation power to demand money upfront with little or no checks and balances that organisation will misuse that power.


Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC U-Turn on Montpelier APNs

Whilst everyone has been focused on Homer's Damehood, HMRC has been forced into an embarrassing u-turn and has had to withdraw 2,000 Accelerated Payment Notices (APNs) demanding payment of disputed tax after admitting the demands should never have been issued.

APNs are used by HMRC to demand tax that it believes someone owes before the underlying dispute has been adjudicated on by an independent tribunal or court. Taxpayers then have 90 days to pay HMRC the tax demanded, but are not allowed to appeal the decision.

However, it seems that one of the conditions necessary for issuing an APN wrt those who participated in the the Montpelier IR 35 Manx Partnership arrangement was not satisfied.

HMRC originally issuing notices to taxpayers involved in the scheme in April 2015.
AccountancyAge reports that HMRC has now admitted that the APNs should not have been issued because although the arrangements were notified to HMRC, they were not 'notifiable' to HMRC, under the DOTAS regime.

As I noted in September 2015, APNs have been an utter shambles!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Petition Demands Open Enquiry Before HMRC Issues APN

The BIG GROUP (an action group of contractors directly affected by the existing and proposed legislative tax changes) has launched a petition asking that HMRC evidence the existence of an open enquiry before issuing an APN.

As per the petition website:

"This petition is organised by WTTBig Group (http://goo.gl/RK7xXp). This action group represents Contractors who are being pursued by HMRC for alleged retrospective tax liabilities arising from working in a manner that was and remains perfectly legal and was disclosed to HMRC between 2006 and 2010.

Legislation introduced by Finance Act 2014 allows HMRC to issue a demand (Accelerated Payment Notice) for an amount they, unilaterally, consider to be in dispute but which has not yet been held in a Court to be payable.

These demands are being made five to ten years after the legal arrangements were made. They create significant personal distress, send carefully considered financial plans into disarray and will cause many to declare bankruptcy, leading to loss of family homes, careers and credit rating.

As a minimum, HMRC's obligation is to ensure the demand meets the conditions of, and is compliant with the spirit and letter of, the legislation.

Unfortunately experience shows that HMRC's error rate is unacceptably high.

The first condition for issuing an APN is valid open enquiry into the year in question. Big Group is able to evidence many examples of HMRC issuing these terrifying demands without meeting this first requirement. This event leads to one of two outcomes:

1) The recipient does not know their rights and therefore either makes the payment or is forced into bankruptcy by HMRC's Debt, Management and Banking operation for their inability to pay an amount which is not due.

2) The recipient challenges HMRC's APN following which HMRC fail to respond for as long as six months, leaving months of uncertainty and worry. Again, Big Group is able to evidence this outcome occurring.

This petition is to demand that HMRC qualify any APN's issued by attaching evidence that the year in question is validly opened, with a copy of the S.9A notice sent to the taxpayer for the year in question."

Those who are affected should sign the petition.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

APN's - Your Money Or Your Life

HMRC is using powers, initially aimed at aggressive wealthy tax avoidance schemes, to demand £5.5BN from thousands of contractors and freelancers. HMRC is demanding that the backdated taxes be paid, in full, within a three-month deadline.

The Telegraph reports that HMRC’s powers to demand “accelerated payments” are being used to target more moderately well-off individuals, who are only now being told to pay back-taxes from jobs they held years ago.

Among them is freelance IT technician Mr Adams (not his real name), who since April has received three demands totalling £27,900 from a job he held seven years ago.

In the event that it later found that he was innocent of using an “aggressive avoidance” scheme, he will get a refund. In the meantime he has to find the money within months.He is quoted:

“The latest deadline I’ve been given is the end of September

If I don’t get the money, I’ll go bankrupt.”

Between 2008 and 2010, Mr Adams freelanced at various banks in London, during this time he received a letter from HMRC telling him it was looking into his tax affairs, and saying it would “let him know” if anything was untoward.

Five years of silence followed. Mr Adams considered the matter closed. That was before April, when HMRC’s “accelerated payments team” gave him three months to pay the £27,900.


HMRC’s brief notification in 2010 was enough to open an “inquiry” meaning it can sidestep rules ("schedule 39") that impose a four year time limit (six if HMRC proves you were careless, or twenty if you are a "deliberate" avoider) on demanding back-taxes.

An HMRC spokesman said:

“Anyone who can’t pay should talk to us as soon as possible and we will do all we can to help, such as a suitable payment arrangement.”

Mr Adams has now attempted to set up a payment plan with HMRC, but has been told the money owed will be passed to a debt collector if he doesn't pay up within nine months.

Low hanging fruit is always the easiest to harvest!


Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance




HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC's APN Calculation Shambles

Check this one out, @ken_frost ! https://t.co/Ubc0JDBMai Looks like #APN's have taken #HMRC's lack of care for anything to a whole new level

— DotasScandalDotOrg (@dotasscandal) September 1, 2015

BG Survey Update 73.4% who received APNs say HMRC have incorrectly calculated but 48% havent made a rep/dont know how http://t.co/151m50A21M

— WTTConsulting (@WTTconsult) September 1, 2015

I would be pleased to hear from others who have had issues with APN calculations, please feel free to post you stories in the comments section.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"