Accelerated Payment Notices (APNs) and Follower Notices (FNs) are HMRC powers used against tax avoidance arrangements. A follower notice tells you that a scheme like yours has already lost in court and asks you to settle; an accelerated payment notice requires you to pay the disputed tax up front, within 90 days, before the dispute is resolved. There is no right of appeal to a tribunal against either notice; you can only make written representations, and the penalties for ignoring them are significant.
Both powers were introduced to remove the cash-flow advantage of sitting in a long dispute. They shift the money to HMRC while the argument continues, reversing the old position where the tax stayed with the taxpayer until the case was decided.
What is a follower notice?
A follower notice is issued when HMRC believes a judicial ruling in another taxpayer’s case effectively decides yours. HMRC must have an open enquiry or appeal, the arrangement must be one that seeks a tax advantage, and there must be a relevant final ruling HMRC considers applies. You have 90 days to make representations. If you do not take corrective action, the penalty for failing to do so is 30% of the tax in dispute, and can rise to 50%.
What is an accelerated payment notice?
An APN requires you to pay the disputed tax to HMRC within 90 days. HMRC can issue one where there is an open enquiry or appeal and the arrangement gives a claimed tax advantage, and where one of three triggers applies: a follower notice has been given, the scheme was disclosed under DOTAS, or a GAAR counteraction notice has been issued. Payment is required even though the underlying dispute is not settled.
Can I appeal an APN or follower notice?
There is no right of appeal to the tax tribunal against the notice itself. What you have is a 90-day window to make written representations to HMRC, arguing that the statutory conditions are not met or that the amount is wrong. HMRC considers the representations and can confirm, amend or withdraw the notice, but if it stands, the payment or corrective action is still due.
What are the penalties for not paying?
For an APN, failing to pay on time attracts a penalty of 5% of the unpaid amount, with further 5% penalties at five months and eleven months after the due date. For a follower notice, the penalty for not taking corrective action is 30% of the denied advantage, rising to 50% in some cases. These sit on top of the tax itself.
Where fee protection fits
APNs and follower notices usually arrive attached to a wider HMRC enquiry, and dealing with them properly means professional advice on whether the conditions are met and how to respond. Tax investigation insurance covers the accountant’s fees for that work. If your practice wants to protect its clients, see our accountants’ scheme, or get a quote.