VAT FRS misunderstanding, Accelerated payment notices, RTI penalties

Last week we shared a cautionary tale about a taxpayer who misunderstood the requirements of the VAT flat rate scheme. We also looked at the facts surrounding Accelerated Payment Notices (APNs) as HMRC appear to be issuing them without due care or attention. Finally we offered further practical tips on dealing with RTI penalties.

Accelerated payment notices 
An accelerated payment notice (APN) allows HMRC to demand payment of disputed tax without concluding a tax enquiry, or waiting for the taxpayer’s case to be decided by the courts. HMRC have recently been issuing APNs to taxpayers who used DOTAS registered tax schemes years ago, and who believed they had paid the right amount of tax. 

Many tax arrangements were registered under the disclosure of tax avoidance schemes (DOTAS) rules to minimise the risk of penalties for accidentally not disclosing. A DOTAS registered tax scheme is not necessarily “abusive”, and the tax scheme may well “work” in that the law allows the tax to be saved. 

HMRC has drawn up a list of DOTAS numbers for schemes whose users may receive an APN. This list is revised at intervals, so if your clients have declared a DOTAS number on a previous tax return, you need to keep an eye on that list.    

When an APN is issued the taxpayer has just 90 days to pay the tax demanded. He can’t appeal against the APN, he can only object on the basis that one of the following conditions has not been met:
  • HMRC has issued a GAAR notice or a Follower Notice to the taxpayer; or·    
  • the taxpayer has used a tax scheme notifiable under DOTAS.
Unfortunately the HMRC department that issues the APNs doesn’t appear to refer to the taxpayer’s personal tax position first, so the APN may not take into account any losses available for off-set or tax already paid.    

If your client receives an APN you need to check the tax calculation carefully and quickly make a written representation to HMRC if you believe it to be wrong. Our tax investigation experts can advise you about other implications of the APN.

This is an
extract from our tax tips newsletter dated 2 July 2015. The newsletter
itself contained links to related source material for this story and the
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