Accelerated Payment Notices — House of Commons, 2022-03-18
Topic: Macroeconomics
Helen Olivia Bicknell Whately (Conservative, Centre-right): I absolutely hear my hon. Friend’s point. Let me come to some of the checks and balances, and I take his wider point about HMRC’s powers in that regard To take a step back, I recognise, in the specific case we are discussing, how deeply worrying such a dispute can be for the individuals involved. That is one reason why fairness is HMRC’s guiding principle when dealing with such matters and why it is right that although, on the one hand, HMRC has the capability to robustly tackle tax avoidance, that is balanced with checks to make sure that it does not over-reach its powers. We recognise that tools such as APNs must be carefully targeted. That is why they can be used only in tax avoidance cases and in limited prescribed circumstances, and they have important safeguards. There must be an active dispute between HMRC and a taxpayer either in the form of an open tax inquiry or a live tax appeal. That dispute must be about tax being either underpaid or overclaimed as a result of avoidance. And APNs cannot be issued unless one of the following applies. First, the individual issued with an APN has used an avoidance scheme that has already been defeated in court and they have consequently been given a follower notice—a legal request from HMRC to the individual to settle their avoidance dispute. Secondly, the information on the scheme must have been provided to HMRC under the disclosure of tax avoidance schemes—the DOTAS regime. Thirdly, HMRC must have taken action to challenge the taxpayers’ use of the avoidance scheme under the general anti-abuse rule—the GAAR. In addition to those conditions, APNs can be issued only with the approval of an oversight board of senior policy, technical and legal members of HMRC My hon. Friend correctly highlighted that there is no right of appeal against an APN. However, under the legislation, HMRC must examine any representations against a notice, and nothing is due from the taxpayer until HMRC has finished those considerations. I should point out that an APN does not in any way inhibit a taxpayer’s right to continue their dispute with HMRC or to appeal against its conclusions, and taxpayers who believe that their dispute is not being suitably progressed can apply to the tax tribunal to resolve it. I make it clear that if a dispute against HMRC is settled, any disputed sums paid under an APN will be repaid with interest, providing the taxpayer with redress where applicable In short, accelerated payments are a fitting response to the problem of individuals who purposefully spin out tax disputes and unfairly benefit from the funds in question. That has been backed up by the courts, which have examined cases where taxpayers have tried to challenge HMRC’s use of accelerated payments and have found APNs to be proportionate, reasonable and fair. Mr Justice Green said in one case that "the provisions in the Finance Act 2014 are perfectly fair and adequate. There is no need for the Court even to consider the need for supplementation through the implication of additional duties." HMRC continues to ensure that APNs are used appropriately. For example, the implementation of APNs was included in a review of HMRC’s powers and safeguards. Following that review, the published guidance on APNs was updated. I stress that APNs do not increase someone’s tax liability. Instead, they simply require an individual to pay the tax they would have owed had they not joined an avoidance scheme.