Accelerated Payment Factsheet

[DonkeyRhubarb]

Once HMRC have got their mitts on the tax through APNs I doubt they'll be rushing to finalise cases so they can collect the interest.

If HMRC were slow progressing cases before APNs, I think we can expect them to come to a virtual standstill afterwards. Taxpayers will have to drag them into court.

[Boobetty]

Yes indeed. I was simplifying things by assuming the APN was equal to the eventual amount payable.

Excellent, that is comforting. I should imagine that once the APN's are out, there will be a run on the courts for those who think they have a reasonable chance of winning. That will clog things up nicely and should mean that the ability of HMRC in collecting interest any time soon will be severely restricted.

In any case, once the APN money starts rolling in they'll be too busy patting themselves on the back and wondering where to position the goalposts for the next initiative.

[Rob79]

I think Boobetty's scenario was this.

Receives APN for £100,000. Pays it. Accrued interest up to that point was £20k.

Some years later case gets decided in HMRC's favour. Tax stands at £100k, so covered by APN.

HMRC now demand the outstanding £20k interest.

What happens if you can't pay? If you enter a time to pay arrangement is the £20k frozen, so you could pay it off £1k/month for 20 months?

I think that's correct with the caveat that time to pay has to be decided at the time.

[DonkeyRhubarb]

I think Boobetty's scenario was this.

Receives APN for £100,000. Pays it. Accrued interest up to that point was £20k.

Some years later case gets decided in HMRC's favour. Tax stands at £100k, so covered by APN.

HMRC now demand the outstanding £20k interest.

What happens if you can't pay? If you enter a time to pay arrangement is the £20k frozen, so you could pay it off £1k/month for 20 months?

[Rob79]

APNs definitely do not include interest.

I can't answer your other question as to what happens when the interest becomes due and you can't pay it immediately.

Agreed that APN's do not include interest and will not accrue interest if unpaid (but have a penalty of a maximum 15%).

On the other point, my view can be demonstrated in an example.

Let's say you get an APN for 2008/09 the payment date for which is 31st January 2010. (I have simplified this and it's possible that HMRC might want interest from 31/1/09 and 31/7/09 on equal instalments of tax, but I think that view should be resisted).

The APN is issued for £10,000 on 31/1/15 and paid 30/4/15.

In 2016 a court decision is made final and late that year a final calculation of liability for 2008/09 is agreed for either £4,000 or £15,000.

In the first case, the liability of £4,000 attracts interest from 31/1/10 to 30/4/15. Let's say £750. (I've not calculated that precisely but I can put up a calculator if required).

In theory, HMRC should repay you £6,000 plus interest of 0.5% pa from 30/4/15 to date of repayment. They can then send you a separate demand for the £750 interest.

In practice I think you will get a repayment of £10,000 less £4,000, less £750, plus 0.5% as above.

In the second case, you owe HMRC a further £5,000. That will be due pretty much 30 days from issue of the assessment.

Interest will be due on £10,000 from 31/1/10 to 30/4/15 PLUS £5,000 from 31/1/10 to date of payment.

This will arrive in a separate demand.

Make sense?

[DonkeyRhubarb]

APNs definitely do not include interest.

I can't answer your other question as to what happens when the interest becomes due and you can't pay it immediately.

[Boobetty]

Will APN's include interest to date?

I've been working on the assumption that APNs won't include interest but I think I got this assumption from forums, most likely this one. However, I don't recall reading this anywhere official (eg. HMRC website or similar).

Can someone point me in the right direction?

Let's assume I am right in my assumption, and that a contractor duly pays off his APN's. Then later, if a tribunal is defeated or something else happens and the interest becomes due, he then enters into a 'time to pay' arrangement on that interest. Am I right in thinking that no further interest should accrue? HMRC don't charge interest on interest, do they?

[Rob79]

I presume HMRC may send this out prior to issuing APNs.

http://www.hmrc.gov.uk/compliance/cc-fs24.pdf

This is a general helpsheet on the HMRC website. They may well send it out but if so we've not yet seen one.

They do send a letter about 2 weeks prior to issue. The first of those landed late last week so the actual APN itself is probably late next week.

The letter doesn't really say much and certainly has no detail.

As soon as I get an APN in the flesh I'll see if I can use my legendary IT skills (ask my 14 year old how good they are) and post an example.

[DonkeyRhubarb]

I presume HMRC may send this out prior to issuing APNs.

http://www.hmrc.gov.uk/compliance/cc-fs24.pdf