Ingenious Film scheme investors win right to appeal decision on APNs


HMRC’s controversial accelerated payments notices (APNs) are to come under further judicial scrutiny following the Court of Appeal’s decision to grant film scheme investors – who took up investments with Ingenious Media Film partnerships – the right to appeal a High Court decision

In July High Court judge Mrs Justice Simler DBE dismissed the investors’ judicial review challenge against HMRC issuing them with partner payment notices (PPNs), which demand the tax under dispute in advance of any court action or outcome.

At the time, 154 users of the schemes challenged the accelerated payments rule through a judicial review (Rowe & Ors v Revenue & Customs [2015] EWHC 2293), in which individuals claimed that HMRC’s action in issuing the accelerated payments notices were unreasonable, breached natural justice and represented an abuse of their rights under the European Convention on Human Rights to a fair trial and protection of property.

They also claimed it took away the legitimate expectation they had when they joined the avoidance scheme, that they wouldn’t have to pay tax before the dispute had been resolved.

The current matter, which affects over 80 claimants involved in the appeal, is now expected to be set down for a date towards the end of 2016.

Steven Porter, senior associate at Pinsent Masons, which is acting on behalf of the claimants, said that this was a sensible decision by the Court of Appeal, in that it highlighted the ‘real prospect of success’ and the importance of the issues to be considered.

‘The judgement in July did not, in our view, address some of the serious issues which use of PPNs in relation to these schemes poses. In many cases, HMRC checked and repaid the tax in question over 10 years ago - and is now trying to claw it back using new legislation.

‘Taxpayers are being faced with notices demanding the upfront payment of millions of pounds, prior to any formal decision by the courts or Tribunals. HMRC is moving much more quickly and aggressively than ever before. It is important that the new powers face proper scrutiny.”

Accelerated payment notices (APNs) were introduced in July 2014 and allow HMRC to demand the payment of disputed tax associated with a tax avoidance scheme up front – before a tribunal or court has decided whether or not a scheme is effective and even in circumstances where HMRC has not concluded its own enquiries as to whether they believe any tax is actually due.

PPNs are similar to APNs but are used where a notice is given to a member of a partnership or an LLP.

APNs and 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.

APNs or PPNs can be issued in relation to schemes that were entered into before the APN and PPN legislation came into force.

Before APNs and PPNs were introduced HMRC generally had to win a tribunal case before it could demand disputed tax in these cases – except where repayments of tax were claimed, in which case HMRC already had the power to hold the money in dispute. Accelerated payments will be repaid with interest in the event that the scheme is ultimately proven to work.

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Penny Sukhraj |Content editor, Accountancy - (up to 2016)

Penny Sukhraj, former content editor and writer for Accountancy and Accountancy Live, responsible for commissioning and editing news...

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