APN’s (accelerated payment notices) were introduced in 2014, but are now starting to bite on UK businesses.
Basically, any business utilising a tax avoidance scheme, will now need to pay up first and dispute later. This has far reaching consequences on UK businesses, especially on Cash Flow.
Since the new rules were introduced in 2014, over 60,000 APN’s have been issued , this has forced tax avoidance scheme users to pay up £3bn of disputed tax upfront while their tax affairs are investigated by HMRC.
Under the scheme, which removes the economic advantage of taking part in tax avoidance by forcing them to pay up first and dispute later, a taxpayer with an outstanding tax bill has 90 days once an APN is received to pay up or make representation to HMRC if they consider the notice incorrect.
HMRC comment: “The vast majority of avoidance schemes just don’t work. We’re determined to change the economics of tax avoidance by making it harder for the dishonest minority to cheat the system – collecting disputed tax upfront and tough new sanctions for enablers of tax avoidance will mean people will think twice.”
We have recently seen many businesses approach us for finance that are “trapped” in this situation. Typically, they have taken out a tax scheme, and enjoyed the extraction of cash blissfully thinking that the issue will “go away”.
Now HMRC come along and demand a “deposit” of the amount of tax potentially avoided, if you want to contest the case, obviously all businesses do….. HMRC’s attitude is – If “we win” we keep it, “if you win, you can have it back”.
This has a potentially massive impact on cash flow, especially as HMRC are reluctant to enter into any Time to Pay agreements beyond 12m (if you are lucky).
As a bCommercial Finance Brokerage, we have access to funders more than happy to provide funding against these sort of scenarios.
We have arranged 3 similar refinances this week alone.
Looking for No 4 …………..Contact us