Why Time to Pay is better than “pay now, argue later”.

Directors receive payment demands all the time, it comes with the territory, but few will provoke as much anxiety and unease as receiving an Accelerated Payment Notice (APN) from HMRC. 

If you receive one, then it signals a significant shift in how the tax authorities view your past financial arrangements. HMRC is increasingly aggressive in tackling what they consider to be tax avoidance and an APN is one of their most powerful tools to reclaim revenue quickly. 

What is an Accelerated Payment Notice?

An Accelerated Payment Notice (APN) is a formal requirement to pay an amount of tax or National Insurance Contributions (NICs) upfront, even if the underlying tax liability is still being disputed.

Historically, companies involved in tax disputes with HMRC could hold onto disputed funds until a court or tribunal made a final decision. The APN regime fundamentally reverses this dynamic. The purpose is to remove the cash-flow advantage enjoyed by users of tax avoidance schemes, ensuring that any disputed tax goes to the Exchequer rather than the taxpayer while the investigation is ongoing. 

Remember – receiving an APN doesn’t mean that you are guilty of evasion. 

Many directors joined schemes such as Employee Benefit Trusts (EBTs)  in good faith and for sound reasons after taking advice from accountants and other tax specialists. Now HMRC are unravelling these schemes that sometimes go back up to ten years. 

Why have you received an APN?

HMRC issues APNs to taxpayers who have been involved in avoidance schemes disclosed under the Disclosure of Tax Avoidance Schemes (DOTAS) rules or counteracted under the General Anti-Abuse Rule (GAAR).

You could also receive one if you’ve been issued with a “Follower Notice.”

This happens when HMRC has already successfully defeated a similar scheme to yours in court. A Follower Notice effectively says that because another taxpayer has lost a similar case, you should settle your dispute too.

You may not just receive one APN notice. They’re issued on a scheme-by-scheme and year-by-year basis. If the company utilised a scheme for three years involving both tax and National Insurance then theoretically you could receive multiple notices demanding payment for each distinct liability.

90-Day Deadline and the “No Appeal” Rule

The most challenging aspect of an APN is the timeline. Generally there are 90 days from the date of the notice to pay the amount in full. 

Crucially, there is no formal right of appeal against the APN itself. 

While you can appeal the underlying tax liability through the tribunal system, that appeal doesn’t stop the clock on the APN. The money must be paid now and the case argued later. 

If you win the underlying tax appeal then HMRC will repay the amount with interest but the initial liquidity burden falls entirely on the company.

What should you do if you receive an APN?

The worst course of action is to ignore the notice. Failure to pay by the deadline can lead to substantial surcharges and penalties (typically starting at 5% of the unpaid balance) and immediate enforcement action. 

But there are some options available to you:

  • Validate the APN Immediately

While you can’t appeal the APN, you have the right to make representations to HMRC if you believe there has been a genuine clerical error or that the conditions for issuing the notice haven’t been met. If the amount quoted is incorrect then you must submit these representations in writing before the payment deadline. HMRC will review them and respond but this does not indefinitely pause the process. 

  • Get Specialist Professional Advice

Because APNs are part of complex, anti-avoidance legislation, standard accountancy advice may not suffice. You should speak to specialist tax dispute advisors or an insolvency practitioner immediately. They will help you determine if the APN is valid and guide you on whether to settle or continue the underlying dispute.

  • Assess Liquidity and Negotiate

If the business cannot pay the lump sum within 90 days then you must engage with HMRC immediately. Don’t wait for the deadline to pass. It may be possible to request a Time To Pay arrangement to spread the cost over a few months. However, HMRC are less lenient with APN debts than with standard arrears, viewing them as arising from avoidance. You will need to present a strong case why the business is viable but temporarily cash-poor but an insolvency practitioner would be able to help you compile evidence and present the case. Alternatively, you may choose to settle the outstanding tax affairs entirely. This stops interest from accruing and might be necessary if the scheme that was used has legally collapsed.

  • Consider Insolvency Options

For some businesses, an APN would present a terminal cash-flow crisis. 

If the demand is for a significant sum that the company cannot pay or finance, then formal insolvency procedures should be considered. Directors could look at options such as a Company Voluntary Arrangement (CVA) or administration to pause any ongoing legal actions and restructure the business. Alternatively, voluntary liquidation might be the best option depending on the individual circumstances of the business and its future prospects.

Receiving an APN is a call to action

With the threat of penalties, surcharges and direct enforcement, directors have to prioritise their response above almost all other financial issues. 

By acting quickly, validating the notice and getting professional advice and support immediately, they can navigate the 90-day window and protect the future of their business.