Under new powers introduced last year H.M. Revenue & Customs (‘HMRC’) can demand disputed amounts of tax, using Advanced Penalty Notices (‘APNs’), where tax tribunals are yet to rule in favour of a given tax avoidance scheme.
Since the start of August 2014 25,000 of such APNs have been issued. They give the recipient only 90 days in order to settle the disputed liabilities which can be for hundreds of thousands of pounds. Several Law firms have now stepped in on behalf of individuals facing the prospect of significant tax demands, going as far back as a decade where such schemes were first incepted. These demands have led to a number of individuals losing their homes or facing bankruptcy.
Anyone whose scheme ultimately triumphs over the tax authority would be reimbursed for their advanced payment. They will, however, face financial loss in the period whilst a tax tribunal makes a decision in relation to the scheme. Depending on HMRC’s leverage over the scheme the amount demanded could even be in excess of the initial investment made.
Although the amount of tax can be queried the bills themselves cannot be appealed which is a bone of contention amongst tax professionals. HMRC have confirmed that anyone who cannot pay their APN should contact HMRC in order to agree on a schedule known as a ’time to pay agreement’ typically of a period of up to 12 months.
In a recent court case involving Ingenious Media Film Partnerships, the Court of Appeal has granted investors the right to appeal a High Court decision dismissing their right for a judicial review to challenge an APN issued by HMRC. This appearing to readdress the balance of fairness in such cases.
If you or anyone you know has been issued with such a notice from HMRC then it is important to seek professional advice at an early stage in order to consider the range of options available to you. One of our experienced practitioners would be more than happy to arrange a meeting, initially free of charge. To take advantage of our service, please contact us.