Nothing has the power to ruin a morning like seeing the manila envelope of the taxman on your doormat. Recent years have seen the Government crack down on what it considers to be ‘tax avoidance schemes’ – investment vehicles which are designed to produce tax advantages which are not intended by the law.
Under the Disclosure of Tax Avoidance Schemes (DOTAS) regime, membership of such schemes may now result in a additional tax liability.
The most common type of tax avoidance scheme you may have come across is the ‘film Scheme’ or ‘film scheme partnership’. These allow investors to join a partnership which then borrows money to invest in film, and allows the partners to claim tax relief against on any losses suffered by the partnership.
Accelerated Payment Notices (APNs)
Where there is a disputed tax liability, such as a liability arising out of membership of a tax avoidance vehicle, legislation introduced by The Finance Act 2014 allows HMRC to issue Accelerated Payment Notices (‘APNs’), which require the tax liability in dispute to be paid up front, prior to resolution of the dispute, and with no right of appeal to you.
From the date of receipt of an APN you will have 90 days to pay the disputed tax, unless objections are raised to HMRC within that 90-day period.
I am a member of a Film Scheme – will I receive an APN?
The Government has, amid some controversy, classified film schemes as tax avoidance vehicles. As set out above, and in very broad terms, these schemes allow investors to join a partnership which then borrows money to invest in film, buying film rights before leasing them to a studio to actually make the film, and allowing the partners to claim tax relief against any losses suffered by the partnership.
All members of these partnerships which have participated in leasing transactions are likely to receive APNs.
How much tax am I likely have to pay?
The amount demanded by an APN will depend on the size of the tax benefits obtained by an investor from his or her participation in the partnership’s leasing transactions, and this in turn is likely to depend on the size of an individual’s investment. It is broadly calculated on an annual basis from participation in a film scheme, and can be estimated from information contained in the scheme’s 15-year net profit schedules.
It is possible that APNs may be issued against the scheme/partnerships for each year the film scheme continues to run.
I have received an APN and I am unable to pay the amount demanded – what can I do?
Don’t ignore it! While burying your head in the sand is sometimes an understandable reaction, failing to deal with an APN would be a mistake. If the payment demanded in the APN is not made, HMRC can rely on the APN as grounds to bring a bankruptcy petition against you.
If you are made bankrupt, a Trustee in Bankruptcy will be appointed to manage your insolvent estate for the benefit of those you owe money to, including HMRC. Your insolvent estate, which can include any assets you have, including any equity in your home or other properties you own, will vest in your Trustee who can take and sell them to recover the money you owe.
In short, the Trustee in Bankruptcy owns your share of your property or properties when you are made bankrupt.
If you have already been issued an APN, I am available to advise you on how to deal with them, or can arrange for advice on how to deal with a statutory demands or a bankruptcy petition if you have previously been issued with an APN.
Whatever the reason, the pressure of being in debt can be stifling. It can sometimes make you feel that you do not have control and help is needed. I specialise in debt and insolvency, so please don’t hesitate to contact me for impartial and confidential advice to enable you to manage and reduce your debts and overall get your finances back under control.