The Revenue has revealed it has collected £1bn in payments from users of tax avoidance schemes as a result of accelerated payment notices (APNs).
The introduction of APN rules was among the most talked about and controversial measures in the 2014 Budget. The biggest concern was the retrospective effect of the rules and the lack of a clear appeal process; however the rules were included in Finance Act 2014 with little amendment.
While the record £1bn figure sounds impressive Heather Self, a tax expert at law firm Pinsent Masons, said the tax under dispute was not genuine revenue.
“APNs are a payment on account, and the cash will be repaid if the taxpayer ultimately wins the underlying technical dispute,” Self said.
She added: “HMRC says that it currently wins 80% of the tax cases it takes, but its past record is not necessarily an indicator of future success.
“And even on those figures, this means that HMRC will eventually have to repay some £200m of the £1bn collected so far.”
HMRC's tax take announcement comes as Pinsent Masons filed an appeal against the High Court's dismissal of a judicial review of the policy, brought by members of LLPs set up by Ingenious Media to invest in films.
The individuals claimed the notices were not issued lawfully because the Revenue had adopted an industrial process for issuing the notices rather than exercising the discretion called for by the legislation.
Last month HMRC defended a challenge against the validity of APNs in the High Court, meaning taxpayers who have received an APN must now pay the tax demanded, even though they may still be taking their own tax cases through the courts.
APNs and partner payment notices (PPNs) can be issued where schemes demonstrate certain “avoidance hallmarks”, such as the scheme being subject to disclosure requirements under the Disclosure of Tax Avoidance Schemes (DOTAS) rules.
Since August 2014 HMRC has issued more than 25,000 APNs to users of schemes.
David Gauke, financial secretary to the Treasury, said APNs have been a real game changer.
“It is no longer possible for these individuals to avoid tax and sit on the money while their affairs are investigated. This first £1bn received in accelerated payments shows that we are turning the tables on those looking to avoid paying their fair share.”