Southwest-based accountants Milsted Langdon is urging businesses not to be complacent if they receive accelerated payment notices (APNs), after new figures reveal that the government has collected more than £1 billion through their use.

HM Revenue & Customs (HMRC) recently announced that it has collected more than £1 billion using APNs since it was granted the new powers in 2014/15.

Under the accelerated payment rules, HMRC is able to make taxpayers pay disputed tax in advance, rather than waiting for the outcome of a tax tribunal ruling.

Once an APN is received, taxpayers have 90 days to pay the outstanding tax, whether they feel it is due or not, or face a five per cent penalty for not paying it in full by the deadline. Further five per cent penalties are levied if the tax is still due after six and 12 months. If the taxpayer wins the case, the money is reimbursed to them with interest.

During the first year, HMRC issued more than 10,000 notices to businesses or individuals who had used a disclosable scheme under the Disclosure of Tax Avoidance Schemes (DOTAS) rules.

Simon Denton, Partner at Milsted Langdon, said: “Receiving an APN should not be taken lightly, as it can have a serious effect on the liquidity and reputation of you and your business.

“The fact that HMRC has collected more than £1 billion shows that they are serious when it comes to potential tax avoidance. However, it is worth noting that HMRC’s own claim is that they win 80 per cent of the cases. On that basis, £200 million will be repayable and the general view amongst advisers is that HMRC has to date only taken on the cases with the highest chance of success, so the belief is that considerably more could ultimately be repayable.”

Earlier this year, it was revealed in HMRC’s annual report on tax avoidance that of the £596m received from APNs during 2014/15, some £28m was refunded after legal challenges.

“While many of those targeted by these new powers may have legitimately avoided paying tax, there will be some individuals and businesses who have been unfairly targeted and this is evident in the number of refunds already issued by HMRC,” added Simon. “Seeking professional advice sooner rather than later is crucial.”

If you have received an accelerated payment notice or would like advice on any other tax issue, please contact us.