Directors know that making payments and receiving demands are just a part of running a business, but getting an Accelerated Payment Notice (APN) from HMRC is of a different magnitude altogether.

Introduced primarily to tackle tax avoidance, an APN fundamentally changes the rules of engagement. 

It removes the traditional “dispute then pay” dynamic, replacing it with a strict “pay now, dispute later” regime. If you’ve received one, it means that HMRC is demanding that you pay the disputed tax upfront while the underlying tax issue is still being investigated.

And the most daunting aspect? Directors generally have just 90 days to pay the amount in full and crucially, there’s no formal right of appeal against the APN itself to a tax tribunal.

So for many businesses, having to find a lump sum to satisfy an APN can present a terminal cash-flow crisis. 

If this would be the same for you and it would be a struggle to raise the funds in a hurry, negotiating a Time To Pay (TTP) arrangement could be the most effective lifeline. 

  • It prevents catastrophic cash-flow failure

The primary danger of an APN is the immediate liquidity burden it places entirely on your company. Paying the APN in full complies with your statutory obligations but it can strain your cash flow to the breaking point, potentially jeopardising day-to-day operations.

A Time To Pay (TTP) arrangement allows you to spread the cost of the APN over a reasonable period of months, which will significantly ease the cash flow pressure while still satisfying HMRC’s demands.

  • It halts aggressive enforcement action

If you fail to address an APN within the 90-day deadline, HMRC will not hesitate to take severe enforcement action. This can include taking control of your company’s goods, recovering money directly from your bank accounts or issuing a winding-up petition to force the business into compulsory liquidation.

Ignoring the notice leads to hefty, escalating penalties – starting at 5% of the unpaid balance at 30 days late, rising to 15% after 11 months. 

Successfully negotiating a TTP arrangement prevents these aggressive enforcement actions and stops the situation from spiraling out of your control. It’s also worth noting that interest will continue to accrue on the unpaid balance while the TTP is active.

  • It protects you from personal liability risks

While an APN doesn’t automatically make you personally liable for your company’s tax debts, ignoring them can drastically increase personal risk.

Under the Insolvency Act 1986, directors must act responsibly to avoid “wrongful trading”. 

If your company cannot afford to pay the APN and it continues trading as usual, you’re increasing the risk of insolvency. If the business eventually goes into liquidation, your conduct as a director will be heavily scrutinised. 

Ignoring the APN could lead to personal consequences such as wrongful trading claims, misfeasance or in the most egregious cases, director disqualification for up to 15 years. 

By proactively engaging with HMRC to secure a TTP, you’re actively demonstrating responsible directorship, prioritising creditor interests and mitigating your personal exposure and risk.

How to secure a Time To Pay Agreement

A TTP arrangement is a highly effective tool but securing one for an APN can be incredibly difficult. HMRC are generally less lenient with APN debts than with standard tax arrears as they view APN debts as arising from tax avoidance. 

To secure a TTP, you must be prepared to provide detailed financial disclosure to HMRC and present a highly compelling case proving that your business is fundamentally viable but temporarily cash-poor.

If you’ve received an APN or feel that one might be imminent then you should take immediate action. 

APNs are built on complex anti-avoidance legislation, by the time you receive one, standard accountancy advice may not be enough. It’s highly recommended that you speak to an insolvency practitioner and/or a specialist tax dispute advisor. 

They’ll be able to help you compile the necessary evidence, assess your true cash-flow viability and present a robust case to HMRC on your behalf to give you the best chance of securing the breathing space your business needs.