Reply to: APN representation grounds

[webberg]

2. looks like the 'Notice of assessment' is a 'Discovery Assessment’.However it mentions a generic section 29 TMA 1970 without information whether it was 29(1)- Insufficient information or 29(4) -Careless/deliberate. It seems HMRC do not have evidence to prove what gaps in the SA they are planning to discover. I have requested HMRC to clarify the sub-section 29 TMA in the Notice of Assessment and the evidence ..Awaiting their response but am not sure if HMRC will provide me all the details .

Regarding SA disclosure I did manually fill the SA100, SA101,102 based on advise by the scheme provider .Cant recollect which sections the loan went in. Have raised a SAR request .

Whether it's 29(1) or 29(4) makes little difference except the time allowed to raise the assessment.

HMRC is not obliged at this stage to disclose their "evidence". It could be that they "discovered" that you used a particular scheme and that would be enough to raise the DA.

I have not come across any promoter who would have advised you to include loans as income on a SATR. Usually you would have been told that the loans created a "benefit" but not a liability on the gross value and therefore there was "no need" to disclose anything. Again HMRC could have "discovered" that your return was lacking that data.

[Redbrick]

1. yes

2. I would guess that the "notice of assessment" you have is a discovery assessment.

"Fully disclosed SA"?

Did you include all the loans you received AS INCOME?

If not, HMRC will not regard the SA as being fully disclosed and WILL raise a discovery assessment.

A P11D is not a part of your statutory obligation to HMRC. The P11D is part of the EMPLOYER'S obligation - not yours. Sending the P11D to HMRC yourself counts for very little.

Further, the P11D treats loans as giving rise to a BIK whereas HMRC believe that the "loans" are income. Hence they issue discovery assessments.

You should contact HMRC and ask them what they think they have issued.

Without seeing all the documents you mention (often with significant confusion over names), there is nothing else I can do.

2. looks like the 'Notice of assessment' is a 'Discovery Assessment’.However it mentions a generic section 29 TMA 1970 without information whether it was 29(1)- Insufficient information or 29(4) -Careless/deliberate. It seems HMRC do not have evidence to prove what gaps in the SA they are planning to discover. I have requested HMRC to clarify the sub-section 29 TMA in the Notice of Assessment and the evidence ..Awaiting their response but am not sure if HMRC will provide me all the details .

Regarding SA disclosure I did manually fill the SA100, SA101,102 based on advise by the scheme provider .Cant recollect which sections the loan went in. Have raised a SAR request .

[webberg]

Thanks webberg.
1. I recall from your earlier thread that point c. 'The arrangements are DOTAS arrangements’ alone is not sufficient to raise an APN .One needs to have tax enquiry(a) or a Discovery Assessment(b) as a prerequisite for APN issuance. Does it still stand true?

2. On the second part , I am sorry for the confusion for 'Notice of Assessment’ as this was the only document which I received before the APN issuance and no Tax enquiry or Discovery was send to me ..Most likely due to a fully disclosed SA and P11D for the 2 years.

1. yes

2. I would guess that the "notice of assessment" you have is a discovery assessment.

"Fully disclosed SA"?

Did you include all the loans you received AS INCOME?

If not, HMRC will not regard the SA as being fully disclosed and WILL raise a discovery assessment.

A P11D is not a part of your statutory obligation to HMRC. The P11D is part of the EMPLOYER'S obligation - not yours. Sending the P11D to HMRC yourself counts for very little.

Further, the P11D treats loans as giving rise to a BIK whereas HMRC believe that the "loans" are income. Hence they issue discovery assessments.

You should contact HMRC and ask them what they think they have issued.

Without seeing all the documents you mention (often with significant confusion over names), there is nothing else I can do.

[Redbrick]

Yes I would agree, but with respect, I fear you are conflating a number of related but separate issues.

There are certain conditions that need to be met in order for an APN to be issued.

In brief:

a. A tax enquiry is in progress
b. An appeal has been made that is not yet determined
c. The arrangements are DOTAS arrangements

If you have met a or b above, the year is "open". HMRC will refer to such a year as "protected".

There are also some variations where a GAAR notice or a Follower Notice has been issued. I'll assume that these are not relevant here.

Tax enquiry means that HMRC has opened an enquiry, usually by virtue of section 9a TMA 1970. If that is the case, you will have a letter saying that.

An appeal made but not yet determined is usually a discovery assessment (s 29 TMA 1970) which was issued by HMRC and appealed by you.

DOTAS means that it has been disclosed or in some instances, has not been but should have been.

If you have the above, then you can have an Accelerated Payment Notice served on you. That will identify the advantage you claim and which HMRC thinks should be denied. It will ask you to pay the amount demanded.

You can make a representation against that notice within 90 days of its issue. If so, payment is not required until 30 days after HMRC has responded.

You cannot appeal an APN. All you can do is make the representation. If you have grounds to say that one or more of the conditions have not been met, then the APN will be withdrawn. If you do not, then the APN remains due and payable.

So, by saying "APN representation (notice of assessment)" you are confusing two separate matters.

An APN representation is made against the APN itself.

A notice of assessment is what you get (usually) at the end of an enquiry or, where HMRC has been too late to open an enquiry, as a discovery assessment.

Thanks webberg.
1. I recall from your earlier thread that point c. 'The arrangements are DOTAS arrangements’ alone is not sufficient to raise an APN .One needs to have tax enquiry(a) or a Discovery Assessment(b) as a prerequisite for APN issuance. Does it still stand true?

2. On the second part , I am sorry for the confusion for 'Notice of Assessment’ as this was the only document which I received before the APN issuance and no Tax enquiry or Discovery was send to me ..Most likely due to a fully disclosed SA and P11D for the 2 years.

[webberg]

Thanks for the below.
The APN representation (Notice of assessment) in question is regarding the prerequisites of APN issuance covered in your ‘Open Year’ thread where either a Tax enquiry or Discovery Assessment needs to be send before sending an APN. This fact may still remain regardless of the outcome of the Judicial Review. Would you agree?


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Yes I would agree, but with respect, I fear you are conflating a number of related but separate issues.

There are certain conditions that need to be met in order for an APN to be issued.

In brief:

a. A tax enquiry is in progress
b. An appeal has been made that is not yet determined
c. The arrangements are DOTAS arrangements

If you have met a or b above, the year is "open". HMRC will refer to such a year as "protected".

There are also some variations where a GAAR notice or a Follower Notice has been issued. I'll assume that these are not relevant here.

Tax enquiry means that HMRC has opened an enquiry, usually by virtue of section 9a TMA 1970. If that is the case, you will have a letter saying that.

An appeal made but not yet determined is usually a discovery assessment (s 29 TMA 1970) which was issued by HMRC and appealed by you.

DOTAS means that it has been disclosed or in some instances, has not been but should have been.

If you have the above, then you can have an Accelerated Payment Notice served on you. That will identify the advantage you claim and which HMRC thinks should be denied. It will ask you to pay the amount demanded.

You can make a representation against that notice within 90 days of its issue. If so, payment is not required until 30 days after HMRC has responded.

You cannot appeal an APN. All you can do is make the representation. If you have grounds to say that one or more of the conditions have not been met, then the APN will be withdrawn. If you do not, then the APN remains due and payable.

So, by saying "APN representation (notice of assessment)" you are confusing two separate matters.

An APN representation is made against the APN itself.

A notice of assessment is what you get (usually) at the end of an enquiry or, where HMRC has been too late to open an enquiry, as a discovery assessment.

[Redbrick]

You mean an APN and the answer is strictly, no.

In practice HMRC has responded and sometimes asks Debt Management to hold off a while, but not every time.

The APN Judicial Review action was not withdrawn, it was defeated.

As part of that Lady Justice Arden laid down some rules as to how HMRC should deal with representations about an APN and observed that in the cases she had seen, HMRC fell short of that position.

We have put this to HMRC in respect of certain clients and not surprisingly HMRC deny that their action is inadequate.

We have therefore considered whether a new JR is likely to achieve anything. We have concluded that it would not.

APN is Gov't policy. The law is now 5 years old. Those who have has APNs have either paid them or are in the process of paying them.

Those who have not paid them are all members of defeated JR actions or "followers". We very much doubt that a further interim relief order would be made or that enough non payers exist to fund an action.

I'm afraid from what you say, you meet the criteria and therefore your best (perhaps only) option is to arrange to pay.

Thanks for the below.
The APN representation (Notice of assessment) in question is regarding the prerequisites of APN issuance covered in your ‘Open Year’ thread where either a Tax enquiry or Discovery Assessment needs to be send before sending an APN. This fact may still remain regardless of the outcome of the Judicial Review. Would you agree?

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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.
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[webberg]

Can one raise a representation against the Notice of Assessment after the 90 day window ? Will HMRC still consider ?

You mean an APN and the answer is strictly, no.

In practice HMRC has responded and sometimes asks Debt Management to hold off a while, but not every time.

The APN Judicial Review action was not withdrawn, it was defeated.

As part of that Lady Justice Arden laid down some rules as to how HMRC should deal with representations about an APN and observed that in the cases she had seen, HMRC fell short of that position.

We have put this to HMRC in respect of certain clients and not surprisingly HMRC deny that their action is inadequate.

We have therefore considered whether a new JR is likely to achieve anything. We have concluded that it would not.

APN is Gov't policy. The law is now 5 years old. Those who have has APNs have either paid them or are in the process of paying them.

Those who have not paid them are all members of defeated JR actions or "followers". We very much doubt that a further interim relief order would be made or that enough non payers exist to fund an action.

I'm afraid from what you say, you meet the criteria and therefore your best (perhaps only) option is to arrange to pay.

[DealorNoDeal]

Can one raise a representation against the Notice of Assessment after the 90 day window ? Will HMRC still consider ?

Do you mean APN?

[Redbrick]

Notice of assessment is another name for discovery assessment. It may refer to section 29 Taxes Management Act 1970 which are the discovery powers.

Compliance check is usually an enquiry. It may refer to section 9a TMA 1970 which are the powers to enquire.

Can one raise a representation against the Notice of Assessment after the 90 day window ? Will HMRC still consider ?

[DealorNoDeal]

Thanks webberg.
I received the APN in April 2015 for the years 2009-2010 and 2010-2011. APN enforcement was not applicable due to the Judicial review injunction until Feb 2019. However , I am being actively chased to settle the APN following JR withdrawal.

Revisiting the letters now , I can see that no discovery assessment or Open enquiry letter was send before the APN.
I was issued the following:-
a. Notice of Assessment stating the payment amount.
b. Compliance series
c. Formal APN letters for the above 2 years.

Following your thread I have now written to HMRC for a evidence on the Discovery and the Open enquiry letter .

Notice of assessment is another name for discovery assessment. It may refer to section 29 Taxes Management Act 1970 which are the discovery powers.

Compliance check is usually an enquiry. It may refer to section 9a TMA 1970 which are the powers to enquire.

[Redbrick]

APN issue criteria

You must have both an open enquiry or discovery assessment AND the scheme to have been disclosed under DOTAS.

As an aside, when did you get the APN?

(The advice is two years old and things have moved on).

Thanks webberg.
I received the APN in April 2015 for the years 2009-2010 and 2010-2011. APN enforcement was not applicable due to the Judicial review injunction until Feb 2019. However , I am being actively chased to settle the APN following JR withdrawal.

Revisiting the letters now , I can see that no discovery assessment or Open enquiry letter was send before the APN.
I was issued the following:-
a. Notice of Assessment stating the payment amount.
b. Compliance series
c. Formal APN letters for the above 2 years.

Following your thread I have now written to HMRC for a evidence on the Discovery and the Open enquiry letter .

[webberg]

Hi,
I needed some guidance from the above thread.
My APN notice states that the criteria for APN issuance is based on the fact that arrangement are DOTAS arrangement under Section 219(4) (b) of the Finance Act 2014.

It does not mention any Discovery assessment requirement or Open years as stated above.

I did not receive any Discovery assessment or any Open enquiry notice and hence needed some guidance as to whether ‘Open Year’ criteria(Discovery assessment) for APN issuance is still valid even if HMRC clearly states that arrangement are in scope of DOTAS arrangements.

You must have both an open enquiry or discovery assessment AND the scheme to have been disclosed under DOTAS.

As an aside, when did you get the APN?

(The advice is two years old and things have moved on).

[Redbrick]

APN issue criteria

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.

Hi,
I needed some guidance from the above thread.
My APN notice states that the criteria for APN issuance is based on the fact that arrangement are DOTAS arrangement under Section 219(4) (b) of the Finance Act 2014.

It does not mention any Discovery assessment requirement or Open years as stated above.

I did not receive any Discovery assessment or any Open enquiry notice and hence needed some guidance as to whether ‘Open Year’ criteria(Discovery assessment) for APN issuance is still valid even if HMRC clearly states that arrangement are in scope of DOTAS arrangements.

[piebaps]

Only a partial replay dmuk - sorry

MARD is a European Directive. Put Mutual Assistance Recovery Directive into good old google and the third hit is an article from Tax Journal, this is quite informative.

Essentially a report is due to go to the EU Commission in January 2018 setting out the details of amounts recovered. Until then we have no way of knowing whether its working and if so which countries are doing best. Of course outside MARD, there may be bilateral treaties between the UK and non-EU countries so depending on whereabouts you are in the world, you could still be caught.

HMRC's Tax Treaties page lists all their arrangements, so you probably need to do a bit more digging.

[dmuk]

Thanks again. Very helpful.

Another few points I have been thinking about. I know these sound pretty desperate but thought I would ask.

1) Leverage success of associations?

For example you utilised X EBT. A fight fund or association reached an agreement or deferral or similar. You are not a member of the association. Can you leverage this at all?

2) Non resident?

I know the Mutual Assistance Recovery Directive (MARD) exists but I don't know if this has been used effectively or widely?

If you leave the UK indefinitely or for an extended period of time - would this be successful in deferring or avoiding the liability?

Is being a non-resident enough? What happens if you have minor/significant assets in the UK but are non-resident?