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More Accelerated Payment Notices Imminent

Following the election, and recent press reports, HM Revenue & Customs are now expected to publish a new list of reference numbers for tax avoidance schemes, which may be subject to Accelerated Payment Notices (APNs). This emphasises the further efforts by the Treasury to pursue apparent tax avoiders.

Since APNs were first introduced in July 2014, recent figures quoted by HMRC suggest APNs have been issued to investors claiming tax in excess of £1 billion. With very limited scope for appeal, investors are faced with the option of withdrawing earlier loss relief claims, or paying the tax demanded within 90 days or face a penalty.

The notices have proved to be a controversial measure, with many individuals being faced with extreme tax bills, and some potential bankruptcy, due to the somewhat retrospective nature of the tax claw-back. A high proportion of individuals may have invested in the film industry for valid reasons, and whilst enjoying initial tax relief, understood that this was purely a deferral of tax and consequently expected to pay tax on future profits. Most never imagined they would be faced with very substantial tax demands many years later.


There could be some light however, following the news in March that over 100 participants in film partnership arrangements set up by Ingenious Media have been granted permission for a judicial review of their APNs. The claim is likely to be heard by the High Court during early summer, and it is hoped the APNs will be suspended until the High Court has given its judgment. However HMRC are currently resisting this, and it is understood to be refusing to suspend notices.

In the absence of a right of appeal against an APN, judicial review is effectively the only legal remedy potentially available to the recipient. Judicial review is a process through which individuals, businesses and other affected parties with “sufficient standing” can challenge the lawfulness of decisions or actions of public bodies, such as HMRC. There appear to be several grounds for arguing that the APNs in these cases were unlawful, including the fact that individuals apparently have no right to appeal, inconsistent with human rights legislation. As already alluded to, APNs could also be challenged on the basis that the legislation would appear to be retrospective.

This is indeed a complex area, not helped by the inflexible and arguably unreasonable approach by HMRC, but it is clear we have a long way to go before we see any form of resolution. If you are affected by an APN or would just like to explore your options in advance of receiving one, please do not hesitate to contact Karen Spencer-Smith or your usual Saffron adviser.