HMRC Enquiry letters on Loans from EBT and other schemes

[jbryce]

APN, interest, penalties.

So, I have a COP8.
For the sake of argument I decide not to settle.
They send me an APN for the tax. No interest and no penalty.

Am I correct in assuming that they will not get the interest or penalties until my case has been heard in an FTT?

That could be never? So how does all of this free up the court systems?

[NeverTheTwain]

Can HMRC only investigate the portion of the SA which is mentioned in a COP8 letter?

Hi Rob,

Is my understanding correct in that if a COP8 has been raised on a particular part of a Self assessment then only that portion mentioned in the COP8 letter can be revisited?
eg Self assessment for a pertinent year has two employment sections filled in. COP8 was raised mentioning employment 1. Does that mean they are restricted into looking into employment 1 only or can they also look into employment 2? Lets assume the 4/6 year window has now passed and there was full disclosure on the self assessment.

Regards,
NeverTheTwain

[Rob79]

So I have two COP8 but have never had an assessment. Apart from the Settlement Opportunity letter just received they have made no mention of an amount.
Should I expect then APN for the two years in question in the New Year - obviously the amount will be a surprise ? Can they also issue APN for other years (over 6 yrs ago) where no COP8 was raised?

Question 1. - yes expect an APN for the COP8 years. Timing is unpredictable.

Question 2 - no, not unless there is fraud involved.

[Fred Flinstone]

More questions!!!

So I have two COP8 but have never had an assessment. Apart from the Settlement Opportunity letter just received they have made no mention of an amount.
Should I expect then APN for the two years in question in the New Year - obviously the amount will be a surprise ? Can they also issue APN for other years (over 6 yrs ago) where no COP8 was raised?

[DonkeyRhubarb]

Many thanks for your opinions, all of which are gratefully received. Forgive me, but another question....let's say for arguments's sake that a contractor has three COP8's and two subsequent Discovery assessments, all in consecutive years. Would you expect all APN's to be issued for all tax years in one go or do you reckon HMRC will do this tax year by tax year rather than tax payer by tax payer? I.e. will I know what I owe in one hit or will it be spread out?

If all the years relate to the same scheme then I would expect one hit.

[Boobetty]

Many thanks for your opinions, all of which are gratefully received. Forgive me, but another question....let's say for arguments's sake that a contractor has three COP8's and two subsequent Discovery assessments, all in consecutive years. Would you expect all APN's to be issued for all tax years in one go or do you reckon HMRC will do this tax year by tax year rather than tax payer by tax payer? I.e. will I know what I owe in one hit or will it be spread out?

[eazy]

AccountingWeb : APN's Explained

Accelerated payment notices explained
Posted by nickhuber on Tue, 09/09/2014

Accelerated payment notices explained | AccountingWEB

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[DonkeyRhubarb]

That said, where there is tax already under appeal and postponed, that postponement can be altered by the APN code. My reading of part 2.5.7 of the guidance says that the postponement is simply cancelled. Is that an APN issued when an assessment is outstanding? Perhaps.

That is my understanding. Reading the legislation, in this situation, the APN removes the postponement and the tax becomes immediately due.

The legislation also changes the position going forward by removing the possibility to postpone payment. In future HMRC will no longer be able to agree to postpone.

[Rob79]

I have just looked at the guidance for the first time. I can see this within condition A (2.2.3):

"HMRC cannot issue an APN unless an enquiry has been opened into a return, or an appeal has been made against a closure notice, assessment, or determination".

Unless I am mistaken it appears that if you have a DA and have appealed it you'll be on the list for an APN.

Anyway, back to my initial question, even if the FA 2014 has determined that an APN can be issued where a DA has been appealed, surely, surely, if there is demonstrable doubt over the validity of the DA in the first place, then the FA 2014 cannot suddenly take precedence over the protection that has been given to the tax payer by s29(5) since self assessment was introduced 20 years ago.

So in answer to the can of worms comment, yes I very much hope it opens a massive bucket of vipers.

I've re-read the guidance and I can see where this position is derived from. Certainly the law is silent on the issue and one must therefore assume that an APN where a discovery assessment is in play must be possible.

I spoke with HMRC about this a couple of weeks ago and it's clear that internally at least they share the view that to use APN in this situation is a potential problem and something that they have not themselves resolved. For the moment at least they will not be issuing APN's in the cases I deal with, some of which do have assessments.

We'll have to monitor this as I'll give some thought to how such an event might be resisted.

Thanks for your thoughts on this point.

[Boobetty]

I have just looked at the guidance for the first time. I can see this within condition A (2.2.3):

"HMRC cannot issue an APN unless an enquiry has been opened into a return, or an appeal has been made against a closure notice, assessment, or determination".

Unless I am mistaken it appears that if you have a DA and have appealed it you'll be on the list for an APN.

Anyway, back to my initial question, even if the FA 2014 has determined that an APN can be issued where a DA has been appealed, surely, surely, if there is demonstrable doubt over the validity of the DA in the first place, then the FA 2014 cannot suddenly take precedence over the protection that has been given to the tax payer by s29(5) since self assessment was introduced 20 years ago.

So in answer to the can of worms comment, yes I very much hope it opens a massive bucket of vipers.