Will I recieve an APN letter from HMRC?

If you have undertaken tax planning it is likely that you will receive a letter from HMRC soon.

Payment is due within 90 days  - so do not delay!

The conditions:

Legislation introduced in July 2014 requires taxpayers to make an advance payment of tax on account where

(1) A tax enquiry or appeal is in progress, 

(2) The return contains a tax advantage and 

(3) Either of the following conditions are met: 
- HM Revenue & Customs has issued a ‘follower notice’; 
- the planning is registered under the Disclosure of Tax Avoidance Schemes (DoTAS); 
- or a General Anti-Abuse Rule (GAAR) counteraction notice has been given.

APNs apply to:

  • Income Tax
  • Capital Gains Tax
  • Corporation Tax
  • Inheritance Tax
  • Stamp Duty Land Tax
  • Annual Tax on enveloped dwellings

What is DoTAS?

Most clients will satisfy condition 3 above, by virtue of their planning falling under DoTAS.

DoTAS was a disclosure mechanism which declared tax planning to HMRC. This was essentially an 'early warning' system that allowed HMRC to gather information and open enquiries on taxpayers who had undertaken tax planning.

DoTAS has since morphed into a tool that allows HMRC to issue APNs. 

As this change was retrospective many taxpayers would not have expected these notices, and are currently facing some hard choices.

As the nature and amount of the required payment under an APN can be uncertain, the potential impact is difficult to determine until you have received a notice. Therefore, it is important to get specialist advice at the earliest opportunity

Payment due within 90 days

Following the issue of an APN, taxpayers only have 90 days to make a payment on account.

Any delay in meeting this deadline could result in enforcement action from HMRC and further penalties.

HMRC have confirmed that it won’t rule out the possibility of pursuing winding up proceedings to enforce the demand.

They can also use bailiffs to enforce payment of the debt including by confiscating and selling taxpayers’ assets.

Missed the 90 days deadline?

If you have missed the deadline, further penalties will be charged, in addition to the original amount due:

  • 5% of the unpaid amount will be due immediately.
  • 5% of the unpaid amount will be due 5 months following the deadline.
  • 5% of the unpaid amount will be due 11 months following the deadline.