I've been asked the same question via PM and other means a few times and clearly there remains some confusion out there. The below is a very simplified list of what is possible if you get an APN.
What is an APN?
It's a demand for tax in dispute. It is not a final settlement of the dispute.
Do I have to pay it?
No.
If you don't you risk a penalty that can rise to as much as 15% of the value after 11/12 months of non payment. You may also face County Court action to recover the demand as it appears to be an enforceable debt.
Can I appeal against it?
No.
There is no right of appeal.
Can I resist paying?
Yes.
There are a number of legal challenges (Judicial Review) running which are accompanied by an injunction preventing HMRC from collecting in certain circumstances. Anecdotally it appears that HMRC is not enforcing collection action on any APN where you are a named person in a legal challenge.
Joining a challenge managed by the provider or a connected party or an independent party will incur a fee. These vary enormously. The lowest I've seen is £250. The highest I've seen is £4,000. These are usually the costs of making the application. If you actually get to Court, you may be asked for more. If you lose in Court, you may have to pay HMRC's costs.
You can make a representation within 90 days of receipt. If this is on valid grounds (see elsewhere) then HMRC must consider it and respond. If that happens and the APN is confirmed or reduced, you have 30 days to make payment (assuming this is later than the original due date).
In theory the APN could be withdrawn but it appears this happens ONLY when HMRC has made a procedural error and is usually followed by a new APN.
There is evidence that a substantial proportion of APN's are incorrect in many ways ranging from the wrong reference for the scheme, incorrect calculation, issued for closed years, etc. You need to check it very carefully.
Do I have to pay it all on the due date?
No.
It's better if you do but you can ask for time to pay. Whilst HMRC seems reluctant to publish a policy here, it appears that payment staged over 12 months is acceptable and in some cases, perhaps up to 24 months.
If you do make this sort of arrangement, ensure that you keep to it. Failure to keep to the plan will result in an immediate demand for the difference.
What if I have ZERO ability to pay anything?
Honestly, I don't know what HMRC policy is.
In theory either they or you can seek some form of creditor management. That may not be jumping straight to bankruptcy but perhaps an intermediate stage such as an individual voluntary arrangement. Seek advice.
It would be better for HMRC to publish something and I'm working on that but unlikely to see much in writing for a couple of months.
What happens to the HMRC enquiry if I pay/don't pay?
It continues. The underlying position has to be agreed. This may take some years.
Once settled, the final tax due is known. You may have to pay some more or you may have overpaid and will get a refund.
Can I make my own representation against the APN?
Yes.
I have published reasons why the APN may be incorrect and how you can do this yourself.
You can choose to go to an adviser. They will all charge fees for this. These will vary. I have seen quotes from a few hundred pounds to thousands.
My scheme provider says they are dealing with this, are they?
I don't know.
Ask them what they are doing and how. Ask them if they are accepted by HMRC as having the right authority to act on your behalf. Ask them what grounds are being put forward.
If they refer you to a "preferred party" to deal with APN and subsequent enquiry, ask them why and whether there is a connection between them and the preferred party and whether that involved any commissions.
The key here is that you have to decide whether the provider and preferred party, if any, has a better chance of reaching an APN deferment and enquiry settlement, than another adviser.
On the one hand, the provider has the best information on the scheme and knows the history. They have access to the original tax opinions and perhaps resources to sustain what is going to be a long fight.
On the other, they may not be tax specialists, may not have resources and will leave you stranded half way through, may be conflicted as they have a business elsewhere to run, may not offer entirely unbiased and objective advice.
If you have doubts, check Google for tax enquiry specialists.
What do I do next?
If you get an APN or a warning letter about an APN, send a copy to your provider and/or adviser.
If you don't have an adviser, find one who will look at the APN.
If you belong to a group, tell them you have it. If you don't belong to a group - join one.
If you decide you want to pay the demand over time, contact HMRC as soon as possible to discuss terms. Your adviser can do this.
If you decide you can't/won't pay, seek to delay payment date as long as possible by making your representation around day 85 of the notice period (registered post) and/or join a JR challenge.
If you think some form of creditor arrangement is inevitable, contact a specialist as soon as possible.
Disclaimer
The above is offered gratis and as such you cannot rely upon it and no responsibility is accepted for any such reliance. I would strongly recommend that you seek suitable professional tax advice if you receive a notice. Be aware that if you seek advice from the scheme provider, you must factor in their motives.
As mentioned, I've had a number of PM's on the above. I have replied to all but unfortunately I have to draw a line at some point to focus on earning fees for my business. I will therefore be referring all new enquiries here in the first instance. If further help is required, I'd be happy to quote a fee.
What is an APN?
It's a demand for tax in dispute. It is not a final settlement of the dispute.
Do I have to pay it?
No.
If you don't you risk a penalty that can rise to as much as 15% of the value after 11/12 months of non payment. You may also face County Court action to recover the demand as it appears to be an enforceable debt.
Can I appeal against it?
No.
There is no right of appeal.
Can I resist paying?
Yes.
There are a number of legal challenges (Judicial Review) running which are accompanied by an injunction preventing HMRC from collecting in certain circumstances. Anecdotally it appears that HMRC is not enforcing collection action on any APN where you are a named person in a legal challenge.
Joining a challenge managed by the provider or a connected party or an independent party will incur a fee. These vary enormously. The lowest I've seen is £250. The highest I've seen is £4,000. These are usually the costs of making the application. If you actually get to Court, you may be asked for more. If you lose in Court, you may have to pay HMRC's costs.
You can make a representation within 90 days of receipt. If this is on valid grounds (see elsewhere) then HMRC must consider it and respond. If that happens and the APN is confirmed or reduced, you have 30 days to make payment (assuming this is later than the original due date).
In theory the APN could be withdrawn but it appears this happens ONLY when HMRC has made a procedural error and is usually followed by a new APN.
There is evidence that a substantial proportion of APN's are incorrect in many ways ranging from the wrong reference for the scheme, incorrect calculation, issued for closed years, etc. You need to check it very carefully.
Do I have to pay it all on the due date?
No.
It's better if you do but you can ask for time to pay. Whilst HMRC seems reluctant to publish a policy here, it appears that payment staged over 12 months is acceptable and in some cases, perhaps up to 24 months.
If you do make this sort of arrangement, ensure that you keep to it. Failure to keep to the plan will result in an immediate demand for the difference.
What if I have ZERO ability to pay anything?
Honestly, I don't know what HMRC policy is.
In theory either they or you can seek some form of creditor management. That may not be jumping straight to bankruptcy but perhaps an intermediate stage such as an individual voluntary arrangement. Seek advice.
It would be better for HMRC to publish something and I'm working on that but unlikely to see much in writing for a couple of months.
What happens to the HMRC enquiry if I pay/don't pay?
It continues. The underlying position has to be agreed. This may take some years.
Once settled, the final tax due is known. You may have to pay some more or you may have overpaid and will get a refund.
Can I make my own representation against the APN?
Yes.
I have published reasons why the APN may be incorrect and how you can do this yourself.
You can choose to go to an adviser. They will all charge fees for this. These will vary. I have seen quotes from a few hundred pounds to thousands.
My scheme provider says they are dealing with this, are they?
I don't know.
Ask them what they are doing and how. Ask them if they are accepted by HMRC as having the right authority to act on your behalf. Ask them what grounds are being put forward.
If they refer you to a "preferred party" to deal with APN and subsequent enquiry, ask them why and whether there is a connection between them and the preferred party and whether that involved any commissions.
The key here is that you have to decide whether the provider and preferred party, if any, has a better chance of reaching an APN deferment and enquiry settlement, than another adviser.
On the one hand, the provider has the best information on the scheme and knows the history. They have access to the original tax opinions and perhaps resources to sustain what is going to be a long fight.
On the other, they may not be tax specialists, may not have resources and will leave you stranded half way through, may be conflicted as they have a business elsewhere to run, may not offer entirely unbiased and objective advice.
If you have doubts, check Google for tax enquiry specialists.
What do I do next?
If you get an APN or a warning letter about an APN, send a copy to your provider and/or adviser.
If you don't have an adviser, find one who will look at the APN.
If you belong to a group, tell them you have it. If you don't belong to a group - join one.
If you decide you want to pay the demand over time, contact HMRC as soon as possible to discuss terms. Your adviser can do this.
If you decide you can't/won't pay, seek to delay payment date as long as possible by making your representation around day 85 of the notice period (registered post) and/or join a JR challenge.
If you think some form of creditor arrangement is inevitable, contact a specialist as soon as possible.
Disclaimer
The above is offered gratis and as such you cannot rely upon it and no responsibility is accepted for any such reliance. I would strongly recommend that you seek suitable professional tax advice if you receive a notice. Be aware that if you seek advice from the scheme provider, you must factor in their motives.
As mentioned, I've had a number of PM's on the above. I have replied to all but unfortunately I have to draw a line at some point to focus on earning fees for my business. I will therefore be referring all new enquiries here in the first instance. If further help is required, I'd be happy to quote a fee.
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