HMRC’s controversial Accelerated Payment Notices (APNs) have once again hit the headlines, with critics questioning the taxman’s competence to wield such power.
Law firm Berwin Leighton Paisner said that the Revenue has issued “scores” of incorrect penalties for much larger sums than expected. The study warned that the error could be extremely costly for taxpayers, given that the amounts in question often run into hundreds of thousands of pounds.
Introduced last August, the legislation allows the taxman to take funds from individuals’ bank accounts ‘up front’ – before a case reaches a tribunal. The system has led to accusations of HMRC acting like “a law unto itself” and is also the subject of a legal challenge.
Although HMRC has corrected its calculations where mistakes have been pointed out, tax professionals have slammed the errors as “disturbing”. Taxpayers have therefore been warned to examine their penalty notices extremely carefully.
Neal Todd, partner at Berwin Leighton Paisner, said that HMRC got it “spectacularly wrong on several occasions”. He said: “For some clients where the amounts in question are so large, you sense genuine worry in their voices.”
Other tax firms have waded into the argument, with UHY Hacker Young saying the blunder was “inevitable”, given the sheer volume of APNs the Revenue has issued. Meanwhile, accountancy company BDO accused HMRC of being “overwhelmed” by the work involved.
In addition, BDO claimed that problems could easily arise as the APNs are handled by a separate team that does not have access to taxpayers’ full records. The firm called it a “massive exercise” to collect all the tax involved.
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