Hmrc And Tax Recovery - Apns And Judicial Reviews

Published January 2018

It comes as no surprise that the Government is focussing strongly on tax recovery.  With the release of the Paradise Papers, many businesses and individuals have been accused of avoiding tax which is deemed to be due and this is fuelling the publics’ perception as to wrongdoing - whether or not the accusations are true.


In July 2014, HMRC was provided with a very potent additional tool in the form of the Accelerated Payment Notice (“APN”).  Businesses and individuals involved in tax avoidance schemes now have to pay any disputed tax upfront if they wish to appeal against a HMRC decision that a scheme does not work.  Clearly this can have a material effect on cash flow to the extent that it could cause a business to be insolvent.

In addition, HMRC is now actively closing loopholes and challenging tax relief schemes and in many cases, winning court actions and judicial reviews such as its challenge of schemes offered by the Ingenious investment group.  HMRC will look to recover money owed by a business or individual and if proven to be a deliberate avoider, can delve back up to 20 years. 

Due to the large amount of public interest and the recent legal successes, last November the Chancellor committed £155m in resource and technology funding for HMRC, in a bid to crack down on tax avoidance and evasion.

HMRC continues to issue APNs and with its tail up, is aggressively pursuing participants of schemes that they believe were put in place simply to avoid paying tax.

How can we help you and your client?

It is against this backdrop that we are being approached by directors and their advisers concerned about the solvency of a business following a court ruling or judicial review or receipt of an APN.

As always, key to business recovery is timing.  If a client or business owner has received an APN or is concerned that the receipt of an APN is imminent, Cranfield can immediately help by taking action to seek funding to settle the APN, through our network of lenders, or conduct an in-depth business review based around the solvency of the business to unlock working capital.

Have you or your client already received a demand?

As stated above, the quantum of the APN received may be such that the solvency of the business is called into question.  If this is the case, Cranfield’s in-depth knowledge of insolvency law will be essential to understand the corporate and personal implications.  We can advise on the options available and assist in negotiations with HMRC or in re-structuring the business if necessary, through formal insolvency proceedings.

Each case is different but a common theme is emerging from HMRC, being that they are talking and acting tough.  If an APN is received or an APN is expected, as always there is no substitute for taking early advice. We will be pleased to sit down and discuss the situation with you, in confidence and without obligation, to find a solution. Call us on 02476 553700 to find out more.

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