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  1. #1

    Contractor Among Contractors


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    Default APN representation grounds

    At the risk of upsetting those who favour a different approach to APN, I've put together a (short) list of grounds for a representation against an APN.

    These are NOT looking at the success/failure of a JR which is an entirely separate issue.

    These are not going to apply to ALL schemes - you have to be selective.

    None of them have been proven to be effective or to cause HMRC to withdraw a notice.

    Although I have exercised due care in considering these grounds, I cannot take responsibility for any effects caused by your reliance upon advancing these points to HMRC. You have not engaged me and you are not my client. Please take suitable professional advice.

    In other words, you can't sue me if any of the below don't work.

    Are the conditions met?

    An APN can be issued ONLY where a year is open for adjustment AND the scheme is notifiable under DOTAS.

    Open year:

    Generally means where a section 9A TMA 1970 enquiry notice has been issued. If you're unsure you've had one - ask HMRC for written evidence. A note on an HMRC file that a notice has been or should have been issued, is not enough. You need to see the hard evidence.

    In some cases, a year is open for "compliance". These will generally be later years (2011 onwards) and I'm not sure we've seen APN's for those periods yet.

    In some cases, HMRC allege that they have issued an assessment under the discovery provisions - section 29 et seq ibid. Discovery is a massively complicated matter. Generally however if you were honest in your return, included the DOTAS SRN, declared all P11D values, then HMRC are going to struggle. If you are in this position, ask HMRC to evidence their "discovery" and until they do, the APN should be postponed.

    Discovery assessments can be raised up to 4 years after the end of the year to which they relate. It is NOT enough that HMRC send a letter saying they "intend" to raise a discovery assessment. They MUST issue the assessment within the 4 years. Ask for evidence.

    Notifiable under DOTAS

    You can claim that the arrangements you took part in did not meet the hallmarks of the DOTAS rules and as such were not notifiable. The fact that many were disclosed is a matter for the provider and you were not consulted, nor required to consent to disclosure. Your view however is that the main purpose of the arrangement was to meet the contractors terms and conditions (they did not want permanent employees, short term projects, etc) and as such TAX was NOT a main purpose and therefore the arrangement is not notifiable.

    (There is unfortunately no common language between DOTAS and APN in relations to disclosure and notification. It's not for you to square that circle and unless HMRC can, they are outside the conditions).

    What scheme was disclosed? Was the scheme disclosed in 2004, the same one (exactly) that you joined in 2006? If not, then the SRN from the 2004 scheme should NOT apply to your 2006 version. Ask HMRC why they think the schemes are the same.

    Basics:

    Right name, address, periods, etc?

    Value

    HMRC seem to struggle to obtain information. Ask them to prove their numbers. Be especially careful over periods close to the end or beginning of tax years.

    You may have received some funds on 7th April, but did they relate to an entitlement from before that time? If so, what is the appropriate year? The same could apply at year ends obviously.

    If you don't know, how does HMRC? Ask them to prove it. If they can't absolutely nail it, they arguably can't issue the APN due to inaccurate numbers. In contract law this is called "void for uncertainty" and means that if money is demanded from you it MUST be accurate and have received reasonable care and attention.

    Correct person?

    There are potential grounds where a DOTAS SRN is for a company or partnership and you are an employee. It is arguably the company/partnership that should get the APN.

    HMRC saw this coming for partnerships and have a PPN (Partner Payment Notice). However recent case law (this week) is useful in that it says that the personal tax affairs of partners cannot be taken into account in determining the tax position (in the case published, trading or not) of the partnership. Why then should this principle not apply to APN/PPN. Again, ask HMRC why.

    The company/employee divide is interesting as well. I'm not going to explore that more here but may come back to it.

    Finally, if you received funds from a trust (a loan) which is a separate tax personality from contractor, intermediate employer etc, AND has not disclosed under DOTAS, arguably there is no DOTAS number and therefore no APN.

    As I said a short list. I'm sure the provider's template letters are more elegantly phrased and argued and perhaps have more and better arguments. However where your provider has not done this, consider the above and select which ones you think are most appropriate in making a representation.

    I offer no guarantee that any of them will work. If they are successful, then they will create a DELAY only. You still have to deal with the liability and if you don't have the funds, talk to HMRC as soon as possible.

    I'm interested in some aspects of this and would appreciate some feedback.

    In particular, if you select say three items from the above and make a representation under just one of the grounds and that delays your APN, are you able to advance grounds 2 ONLY when you get the revised APN or are you OBLIGED to make all posisble representations at the same time?

    If somebody wants to try that and let me know, I'd be grateful.

    Finally, finally - the above is self explanatory and can I think be crafted individually.

    There are firms out there who will do this sort of delaying tactic for a fee. The going rate appears to be 0.1% of the APN value per month of delay.

    There are also moves to achieve a reduction in APN values. if I'm honest I think the scope for that for contractors is limited. HMRC has not much solid data so where would we begin in proving that the figure should be lower? However where this is possible, the going rate for firms to do this seems to be 1% of the reduction achieved.

    Thus a £10k APN delayed 6 months, attracts a fee of 0.6% or £60. Probably have to add VAT to that.

    Where a provider gives you a template letter for APN reps, use it because it might work and is free.

    Where your provider is dust, feel free to select from the above and construct your own rep. This is also free.

    Where you feel you want help, don't pay through the nose. The values above are where the market is.

  2. #2

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    Default Template

    Hi all

    I want to challenge my APN's on value.

    Does anyone have a template we can use, which stands a better chance of not being discarded by HMRC?

    This way if we all use a legitimate template its another headache for HMRC as they will have to respond

  3. #3

    Contractor Among Contractors


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    Default

    Quote Originally Posted by MercladUK View Post
    Hi all

    I want to challenge my APN's on value.

    Does anyone have a template we can use, which stands a better chance of not being discarded by HMRC?

    This way if we all use a legitimate template its another headache for HMRC as they will have to respond
    With respect, I think that a template rep will lead to a template response.

    Better to have the same question asked in 50 different ways?

    There is no prescribed means or format for a rep. It can anything from a formal letter to an email. I think just a phone call or meeting is not enough though.

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    Default

    Good point.

    Letter it is then

  5. #5

    Contractor Among Contractors

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    Default

    Quote Originally Posted by webberg View Post
    There is no prescribed means or format for a rep. It can anything from a formal letter to an email. I think just a phone call or meeting is not enough though.
    Snail mail always!

  6. #6

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    Default

    Quote Originally Posted by webberg View Post
    Open year:

    Generally means where a section 9A TMA 1970 enquiry notice has been issued. If you're unsure you've had one - ask HMRC for written evidence. A note on an HMRC file that a notice has been or should have been issued, is not enough. You need to see the hard evidence.

    In some cases, a year is open for "compliance". These will generally be later years (2011 onwards) and I'm not sure we've seen APN's for those periods yet.
    If an "enquiry" letter makes no mention of 9A TMA 1970, is it a correctly opened enquiry that fulfil the grounds for an APN to be issued?

    I suppose it may depend on the precise wording of the letter?

  7. #7

    Contractor Among Contractors


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    Default

    Quote Originally Posted by lastManStanding View Post
    If an "enquiry" letter makes no mention of 9A TMA 1970, is it a correctly opened enquiry that fulfil the grounds for an APN to be issued?

    I suppose it may depend on the precise wording of the letter?
    Yes. You may be subject to a "compliance check".

    If you have any doubt, make the rep and ask HMRC to prove that a compliance check letter can be used to open an enquiry.

    This is all about tying up HMRC resource to slow down subsequent APN's but more importantly to force them to the table.

  8. #8

    More time posting than coding


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    Default

    If I query my APN value, are HMRC obliged to make a reasonable effort to check it?
    The numbers are wrong, but I also wonder if everyone appeals the APN value then HMRC will be very busy indeed......

  9. #9

    Contractor Among Contractors


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    Default

    Quote Originally Posted by jbryce View Post
    If I query my APN value, are HMRC obliged to make a reasonable effort to check it?
    The numbers are wrong, but I also wonder if everyone appeals the APN value then HMRC will be very busy indeed......
    In my experience challenges on value alone get a short and sharp answer. No harm in trying but I think to be effective, you may have to support this with "real" numbers.

    That carries a risk. If (eventually) one of the grounds of challenge to the substantive issues is that HMRC did not have sufficient information and as such acted outside its remit, does giving them data, harm that?

    I don't want to say too much here but this is a theme that I am developing for BIG GROUP.

  10. #10

    Still gathering requirements...


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    Default

    Quote Originally Posted by webberg View Post
    An APN can be issued ONLY where a year is open for adjustment AND the scheme is notifiable under DOTAS.

    Open year:

    Generally means where a section 9A TMA 1970 enquiry notice has been issued. If you're unsure you've had one - ask HMRC for written evidence. A note on an HMRC file that a notice has been or should have been issued, is not enough. You need to see the hard evidence.
    i have only ever had 2 letters from HMRC (apart from the settlement opportunity letters. Both letters are for consecative years 05/06 & 06/07 and the only ref on these letters do not include the characters: 9A TMA 1970.
    they are something like:
    912/COMP4/7XXXXXX81X/PRC(B)/XXX

    How can i tell if the year is open for adjustment? Are these letters the enquiry notices you mention?
    (the content of the letters look like a template as both years are worded exactly the same

    "I am writing to tell you that i intend to enquire into this return. Each year we enquire into some tax returns to check they they are correct, or because we need further information to understand the figures.....bla bla bla".)

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