• ICAEW
  • KASHFLOW

 

0161 928 3276

 

 

We understand our clients

Follower Notices and Accelerated Payment Notices (APNs)

Newsletter issue - November 2015.

When a court or the tribunal issue a ruling that potentially resolves a large number of cases, many 'followers' (i.e. taxpayers with similar circumstances) agree to settle their affairs with HMRC, but some do not. They argue that small differences in the arrangements mean that the decision does not apply to them. HMRC will issue a follower notice to such taxpayers requesting them to settle the liability they believe is due.

Alongside the 'follower' rules are the accelerated payment rules. HMRC may issue an accelerated payment notice (APN) requesting the recipient to pay the disputed tax and/or NICs. This means that if a person is given a follower notice but decides not to settle up with HMRC, HMRC can still request the tax they believe is due under the accelerated payment rules. The broad effect of these double-edged rules is that the Exchequer gets to hold on to the tax during a dispute period, so removing any cashflow advantage from the taxpayer.

APNs should not be ignored - anyone receiving a notice has 90 days to either pay the amount requested or make appropriate representations. Failure to act by the due date could lead to late payment penalties or surcharges becoming due and potential enforcement action being taken to recover the tax or NICs.

It is also worth noting that an APN will only cover the tax or NICs advantage relating to the specific avoidance scheme covered by that notice. The amount shown may not be the final liability agreed, which may be larger or smaller than the amount of the APN. It will not include any interest, penalties or other tax that may be due in the year. Therefore when the enquiry or appeal is finalised, there may be additional amounts to pay.

HMRC may issue a 'follower notice' if the following four conditions are satisfied:

Condition A: There must be an enquiry in progress into a tax return or claim made by the taxpayer and there must be a 'live' appeal with HMRC or the Tribunal;

Condition B: the return, claim or appeal must be made on the basis that particular tax arrangements lead to tax advantages;

Condition C: HMRC are of the opinion that there is a judicial ruling which is relevant to the chosen arrangements. In addition, any follower notice must be given within 12 months of the later of:

  • the date the claim, return or appeal was received; or
  • the date the relevant judicial ruling was made;

Condition D: no previous follower notice has been given to the same person in the same circumstances.

When a person is served with a follower notice, they have 90 days from the date of the notice within which to make representations in writing to HMRC objecting to the notice on the grounds that:

  • conditions A, B or D above are not met;
  • the judicial ruling specified in the notice is not relevant to the arrangements entered into; or
  • the notice was given outside the 12-month statutory limit.

HMRC must consider the representations taking into account the grounds for objection and must then decide whether to confirm (with or without amendment) or withdraw the notice and notify the taxpayer accordingly. There is no right to appeal against a follower notice, which means that the only way in which to challenge a HMRC decision is by making an application for judicial review.

With regards to APNs, HMRC may issue an APN where one or more of the following conditions are satisfied:

  • a follower notice has been issued;
  • a DOTAS notifiable arrangement has been used; or
  • they are subject to a GAAR counteraction notice.

Further information and guidance on this subject can be found at: www.gov.uk/government/publications/follower-notices-and-accelerated-payments/follower-notices-and-accelerated-payments.

 

To work Smarter in your Business Contact Beauchamp Charles

Contact Us

"Join our newsletter for hints, tips and tax advice"

 

What our clients say

Dakins Property Services

Great Results, Personable, High Integrity

Choice Events Limited

All at Beauchamp Charles are very helpful, approachable and easy to talk to. They keep me informed with key dates; I can feel totally confident that I won't ever miss any deadlines! Whoever I deal with, always deal with matters professionally and efficiently and if they are unavailable they get back to me promptly.

FT leisure Ltd

I have worked with Beauchamp Charles as our management accountants for over 20 years and have never received anything less than exceptional service. Their approach is both professional and personal. Finances and particularly tax strategies are a minefield for small businesses; Beauchamp Charles have in-depth knowledge of these area, which is comforting. They pay very close attention to our business activities and have provided financial strategies that have helped our company develop.

Fredrick Thomas Electrical and Maintenance

We have used Beauchamp Charles since company formation back in 1998. Beauchamp Charles offers us a one to one service as they are small enough to offer this dedicated service and large enough to do the work and offer best advice. They get to know us as individuals and a business, always giving sound advice. Frederick Thomas Electrical are in a stronger place thanks to the service we get from them.

Barnes Walker Landscapes Limited

We are a small business and had employed the same accountancy firm for many years. Two years ago we took the decision to switch to Beauchamp Charles after several othe local businesses recommended them very highly to us. We have not been disappointed with the service they have provided to us over these last two years.