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It is reported that HM Revenue & Customs has been forced to retract 2,000 accelerated payment notices (APNs) it sent to users of Isle of Man tax planning schemes.

APNs demand immediate payment of tax allegedly owed to HMRC before any tribunal or court has ruled on the dispute. They were created by s227 of the Finance Act 2014 and began to be issued later that year. Recipients have no right of appeal.

The APNs in question were sent in March 2015, mainly to computer industry contractors who used the IR 35 Manx Partnership, marketed by Montpelier.

The scheme was notified to HMRC at the time it was marketed in 2004, although it later emerged that it did not have to be, under the DOTAS (Disclosure of Tax Avoidance Schemes) rules in force at the time.

In its withdrawal notice to the affected taxpayers, HMRC admitted that the fact that the scheme was not notifiable under DOTAS meant that it did not meet the statutory criteria for issue of an APN in 2015. It added: 'We are sorry for the inconvenience caused'.

However, many of the recipients have already paid up. They will now try to force HMRC to repay them without waiting until the dispute is resolved at tribunal. The Finance Act 2014 contains a section requiring HMRC to do so, but does not specify a time scale for the refund to be made.

Other APNs are being disputed by their recipients on the grounds that they breach the right to a fair hearing and the general prohibition on retrospective legislation. Some of these challenges have already been rejected at judicial review, but more are in the pipeline.

The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.

Published on our website on Jan.13, 2016