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Payment of the amount shown on the APN must be made within 90 days unless representations are made to HMRC. Delaying payment leads to automatic late payment penalties or surcharges becoming due.
A Follower Notice (FN) can be issued when HMRC has successfully challenged the validity of a tax scheme in the tax tribunal or court. Non-compliance with a FN can lead to penalties of up to 50% of the tax outstanding, in addition to the penalties for any later payment of the APN.
Unfortunately there is no right of appeal against a FN or APN, but the appeal against the underlying tax in dispute can continue, although this does not remove HMRC’s ability to levy FN/APN penalties. The only potential remedy against the notices is by Judicial Review, stating that the FN or APN was incorrectly issued. However, this has so far been largely unsuccessful although many such cases are progressing through the courts.
HMRC has taken an increasingly aggressive stance with respect to taxpayers who have participated in tax schemes. APNs allow HMRC to demand upfront payment of tax where a taxpayer has participated in such a scheme even before the scheme itself has been tested at the tribunal or the courts. This means that there can be a significant delay in the taxpayer receiving repayment of the funds if it is found that the scheme works.
APNs can be issued to a taxpayer who is claiming an advantage from a tax arrangement if: