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HMRC withdraws APNs before judicial review

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HMRC has decided to withdraw hundreds of accelerated payment notices (APNs) issued to taxpayers involved in employee benefit trust arrangements, rather than await the outcome of a judicial review application lodged by City law firm RPC. One of the grounds for challenging the notices was that these particular arrangements were not notifiable schemes under the DOTAS rules.

Adam Craggs, partner and head of tax disputes at RPC, described HMRC’s policy on accelerated payment notices as ‘shoot first and ask questions later’. Taxpayers who receive an accelerated payment notice, he added, ‘should not assume that HMRC has followed the correct internal processes and exercised its powers lawfully’.

Earlier this year, HMRC was forced to withdraw some 2,000 APNs issued in 2015 to taxpayers involved in an Isle of Man scheme marketed by Montpelier.

Commenting on the news, Chris Davidson, tax director at KPMG, said: ‘Since the introduction of APNs in 2014, HMRC has had a tricky time in applying the rules. Challenges were expected when the legislation was introduced, but there have now been two major avoidance investigations in which HMRC has been forced to accept that the statutory requirements for APNs were not met.’ He continued: ‘It would appear that HMRC has been taking an unsustainably broad view of the APN legislation, an approach which clearly needs reviewing in light of these latest rulings.’