HMRC’s clampdown on tax avoidance with the implementation of Accelerated Payment Notices (APNs) in 2014 is having a very significant financial impact on recipients. The most severely affected are individuals (and as we have seen in the papers, some very prominent individuals at that) although some businesses are facing the prospect of serious consequences too.

The notices continue to be served on those who invested in schemes which were disclosed to HMRC by promoters under the Disclosure of Tax Avoidance Schemes rules. APNs oblige the taxpayer to pay the disputed tax upfront whereas before they were entitled to keep the money (and invest it, use it in their trade or receive interest on it) until HMRC took the case through the courts.

HMRC’s APN net is being cast

Following their introduction in August of 2014, HMRC have been issuing notices in phases . We are told that they expect 43,000 notices to be served by March 2015, demanding advanced payment of £7bn in tax within 90 days.

While the badge “Tax Avoidance” suggests that only egregious schemes will be targeted, in fact many investments which were thought of as vanilla are being subjected to APNs in HMRC’s post New Year wave. For example, Business Property Renovation Allowance (“BPRA”) and Enterprise Zone (“EZ”) investments have now been targeted. Many of these were previously thought to be safe, but it seems HMRC are taking a very robust position which is leaving promoters and investors in some shock.

Consequences of receiving an APN

It is likely that a significant number of individual bankruptcies in the UK will follow the speight of APNs. HMRC opened tax enquiries into most of these schemes at the time (though in some cases, they mistakenly failed to do so), but in many cases those enquiries remained dormant for up to 10 years. Given the lapse in time and the perceived complicity of HMRC, many investors have long since spent the money and retired.

The legislation does not permit an appeal from an APN. The only specific redress against an APN is to write a letter of representations to HMRC asking them to reconsider based on certain prescribed criteria. Many people are choosing to put in representations even if they feel their objections will be rejected, because this triggers a delay in the payment deadline which may provide valuable time to pull the money together.

The only other route is to bring judicial review proceedings. Several judicial reviews of APNs are now before the Courts and the taxpayers appear to have won the first skirmish by obtaining an order that HMRC cannot enforce those APNs until the Court has come to its final decision. However, given the draconian nature of the legislation, it remains to be seen how the judicial review challenges will fare when it comes to the final hearing. Judicial review against any public authority (particularly HMRC) on Human Rights grounds are notoriously difficult to win.

The silver lining is that APNs are designed to obtain advanced payment “on account”. This money will be returned by HMRC with interest if the schemes are ultimately found to be successful in the courts. However, taxpayers will have to spend significant amounts of money and time in actually taking these schemes to court. Previously the onus was on HMRC (a rather stretched government department) to push these cases forward. The boot is now firmly on the other foot. Further, HMRC are having a very strong run in the courts in tax avoidance cases (they claim an 80% success rate), so it is more likely than not that HMRC will be able to keep the money they are now holding “on account”.

Mis-selling claims and limitation deadlines

For many, receipt of an APN will be the first wake-up call that investments previously thought to be secure are in fact under serious challenge by HMRC. Many such investments only yielded a return (or in more severe cases, only returned the capital invested) if the tax reliefs were permitted, with substantial losses arising if HMRC’s challenges are ultimately successful. Investors may now be looking to their advisers and the promoters of the schemes for redress. For investors in this position, there is another point to be concerned about. The limitation period for claiming against their advisers is likely to expire before the courts hand down judgment on whether the schemes work. This is another effect of HMRC taking up to 10 years to conclude their investigations into these schemes. As a result, investors need to take at least some action now to ensure their position is protected if the worst happens (which in many cases is very likely).

Put very simply, one of three parties is going to lose money: HMRC, the investor or the seller of the scheme. Given the introduction of APNs and HMRC’s claimed 80% success rate in avoidance cases, it looks ever more likely that the investor or the seller of the scheme will be the one left out of pocket. But if the investor doesn’t take action on limitation in time, the seller of the scheme gets off the hook, leaving the investor to take the hit.


Receipt of an accelerated payment notice is likely to be highly stressful and it is important to act quickly to ensure you keep all your options open. Call our specialist tax team headed by David Pickstone for advice today.



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Media contact: Lydia Buckingham, Senior Marketing Executive, +44 (0) 20 7822 8134,

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