HMRC to repay 2, 000 contractors after admitting Advance Payment Notices should not have been issued

Almost 2, 000 banking and IT freelancers who were forced to pay disputed tax upfront after receiving Advance Payment Notices (APNs) from the tax man last April are to have the disputed funds returned to them.

HMRC has agreed that the notices were sent out erroneously because the offshore tax arrangements that the individuals concerned had used were not subject to Disclosure of Tax Avoidance Schemes (DOTAS) legislation and apologised to those affected.

However, Adam Craggs, head of tax disputes at law firm RPC, warned that the reversal had come too late for those who had been forced to sell assets to meet the tax authority’s demands.

taxpayers should not be forced to sell or remortgage their family home in order to pay an APN when the underlying dispute remains unresolved and it may ultimately be decided that nothing is owed, he said.

The Telegraph reported in September 2015 that many of the contractors who had received the notices were being given just 90 days to pay amounts equal to the value of their annual salary.

The dispute over the legality of the Montpelier IR 35 Manx Partnership a tax avoidance scheme which those due to be refunded took part in is ongoing.

An HMRC spokesperson said: APNs are only issued in tightly defined circumstances, set out in legislation, the spokesperson said.