What is an HMRC Accelerated Payment Notice (APN)?

Tax avoidance and its consequences continue to be hot topics for businesses, contractors, and self-employed professionals in the UK.

Since we extensively covered the differences between tax avoidance and evasion, HMRC continues to tighten its proverbial grip on tax avoidance schemes.

Accelerated Payment Notices (APNs) remain a primary enforcement weapon used by HMRC in their continued crackdown on tax avoidance opportunities. This guide breaks down what APNs mean, why they’re issued, and how they differ from other notices, so you can act with clarity and confidence while remaining compliant with HMRC.

What is an Accelerated Payment Notice?

An Accelerated Payment Notice (APN) is a formal demand from HMRC requiring you to pay disputed tax or National Insurance (NI) on your account, upfront and in full, before your tax affairs have been resolved.

Introduced under the Finance Act 2014, APNs specifically target users of certain tax avoidance schemes. They exist to tip the scales in favour of HMRC by “accelerating” tax payments that would only have otherwise become due after lengthy and resource-heavy legal disputes in court or a tribunal.

In effect, HMRC uses APNs to collect overdue tax sooner and deter ongoing or future participation in schemes they believe sidestep UK tax law.

When Are APNs Issued?

HMRC can send an APN if you are:

• Involved in a tax scheme that has been disclosed under the Disclosure of Tax Avoidance Schemes (DOTAS) rules;
• Given a “follower notice” (more on this below);
• Subject to a General Anti-Abuse Rule (GAAR) counteraction notice;
• Under an open tax enquiry or appeal involving arrangements that seek to obtain a tax advantage.​

The process will begin upon receipt of an initial letter from HMRC notifying you that an APN is on its way. The official notice usually arrives some weeks later, detailing the amount HMRC expects upfront and in full, along with guidance on how to pay.

Types of Tax Schemes Targeted by APNs

APNs focus on a broad range of arrangements that seek to reduce liabilities, particularly marketed schemes. Examples include (but are not limited to):

• Disguised remuneration schemes (e.g., loans, offshore employee trusts);
• Partnerships and contractor arrangements with complex profit allocations;
• Schemes previously registered under DOTAS, including split-pay or hybrid PAYE structures.​

HMRC’s quarterly published list of “named” schemes makes it easy for businesses and contractors to check whether an arrangement is under scrutiny. However, contrary to popular belief, being named on this list doesn’t always mean a scheme is illegal, but it does signal potential compliance risks and potential APN action in the future.

Key Features of APNs

• Immediate liability: The amount demanded must be paid within 90 days of receipt of an APN notice. You may make written representations (if you believe the sum or conditions are incorrect), but appeals against APN issuance do not exist. Once confirmed, payment is mandatory.​
• No right of appeal: Unlike many other tax assessments or notices, you cannot formally appeal an APN. You can challenge the technical calculations or representations, but the legal right to dispute the underlying basis is limited.​
• Penalties for late payment: If payment isn’t made on time, HMRC automatically adds penalties or surcharges to the sum due.

The APN Issuance Process

1. HMRC identifies scheme users and contacts those believed to be participating.
2. An initial letter is sent as advance notice.
3. The APN is issued, specifying the disputed amount and payment deadline.
4. The taxpayer may respond in writing with representations if the APN amount appears to be wrong.
5. Payment must be settled within 90 days (or 30 days after representations are reviewed).
6. Once the dispute or appeal is resolved, HMRC will either retain or refund the tax paid, depending on the outcome.​

Differences Between APNs and Other HMRC Notices 

It’s important to distinguish between APNs and other formal HMRC notices such as follower notices or standard tax notices.

Follower Notices are typically issued after HMRC wins a case against a particular avoidance scheme. The recipient must amend their tax return in line with the ruling or face penalties (often up to 50% of the disputed sum).

APNs often accompany follower notices, demanding payment on account for the same liability.​

Other notices usually follow an investigation or tribunal decision, and can be formally appealed if the taxpayer disputes it. These do not require payment upfront, unlike APNs.

What to Do If You’ve Received an APN

If you’ve been dealt an APN, prompt and careful action must be taken:

• Review the details with your accountant or financial advisor. Dispute the tax amount only if there is a clear, factual mistake.
• Prepare cash flow and reserves to pay the sum demanded within 90 days or risk incurring automatic penalties.
• Consider settlement negotiations if offered (HMRC sometimes provides a window for early settlement).
• If multiple schemes were used, expect both multiple APNs and separate notices for each tax year and arrangement.​

Is There Any Way to Challenge an APN?

As stated above, a formal APN appeal is not possible. However, taxpayers may make written representations to HMRC on technical grounds (such as the calculation of the tax owed or their categorisation in relation to the scheme).

If HMRC upholds the APN notice after considering your written representations, the remaining recourse is to pay promptly and clarify your position if the underlying scheme is later found valid. Judicial review is potentially possible, but this is quite rare and expensive, and a route which HMRC would prefer to avoid.

APNs and Tax Planning Lessons to Learn

APNs exist purely as a vehicle for HMRC to shut down perceived tax avoidance schemes rapidly, recouping valuable lost revenue. Since their inception, tens of thousands of APNs have been issued, often catching taxpayers unaware.

As a valuable rule of thumb, remember:

• Always seek professional tax and financial advice before joining any supposed scheme or arrangement promising ‘too good to be true’ tax positions and efficiency for yourself and your business. Always follow protocol.
• Remind yourself of HMRC’s regularly updated lists and warnings to ensure that any scheme(s) you may have entered is not deemed to be a potential red flag.
• Remember the clear distinctions between responsible, legal and HMRC-compliant tax planning and learn how to spot potential avoidance schemes.

How Hamlyns Can Help

The prospect of an APN is daunting, but with the right tax investigation support and advice, you can respond confidently. Whether providing technical representation, assessing liabilities, or negotiating settlements, Hamlyns’ tax professionals are here to guide businesses, entrepreneurs, and individuals through every aspect of compliance and risk mitigation. Contact Hamlyns today for a free, no-obligation discussion about your tax affairs and we will be more than happy to help you get them in order.