Introduced in 2014, the ‘Accelerated Payments Regime’ has been challenged now numerous times. This is unsurprising. Taxpayers who engaged in schemes some years ago are finding themselves with a significant tax bill which must be paid within a very short time frame. With no formal appeal, taxpayers are left with little option but to try for Judicial Review.
So far, the challenges in the High Court by taxpayers seeking to have the APNs issued to them set aside, have all failed. This is also unsurprising when it is recalled that the first case concerning APNs was rejected by Simler J (Rowe v HMRC) in a comprehensive and robust judgment. The judgment of Green J in Walapu v HMRC thereafter was of a similar order, thereby effectively closing off the possibility for a successful challenge at the High Court level (or at least creating a significant hurdle for High Court judges to overcome if they choose to depart from these cases. None so far have chosen to do so). Both Rowe and Walapu will be heard before the Court of Appeal however in the coming months (Rowe is set for December whilst Walapu is set for April of next year). As such, watch this space.
An immediate development of note however is that which arose in the case of Vital Nut v HMRC. As I’ve written elsewhere, APNs are a dramatic legislative intervention and as such, given the effect on taxpayer’s rights, the conditions under which they may be issued will be guarded jealously by the courts. Public Law norms will likewise act so as to constrain the actions of HMRC and prevent them from using the power to issue APNs in a manner in which the courts deem to be ‘unfair’. This is precisely what arose in the case of Vital Nut. Charles J in the High Court was not satisfied that an APN could be issued anytime that a scheme had been notified under DOTAS. Rather, an APN could only be issued where HMRC had been satisfied that the scheme notified under DOTAS would also be ineffective (see Paragraphs 17 to 40 of the judgment in particular):
“[T]he Notice Requirement for the issue of a valid APN cannot be satisfied unless, to the best of his information and belief, the designated officer is of the view that he is not satisfied that as a matter of law and fact the claimed tax advantage is lawfully available and so should be allowed and so, in that sense, the designated officer has determined that the claimed tax advantage is disputed.” [Para 35]
As the litigation in respect of APNs continues to develop, it is likely that there will be additional requirements that will be read into the legislative scheme. It has been reported elsewhere, in this regard, that taxpayers have successfully challenged APNs before HMRC on the basis that whilst the relevant schemes had been notified under DOTAS, they were not “notifiable”, thereby again strictly interpreting the words of the legislation.
Given the power that the APN regime places in the hands of HMRC, it is entirely correct that the courts should continue to act as suspicious umpires of HMRC’s use of this statutory scheme. For now, all eyes should be on Rowe.