Under the APN regime, HMRC can demand tax that it believes is owed without having to first establish that there is a tax liability before an independent tax tribunal or court. Taxpayers have only 90 days to pay the amount demanded in their APN with no right of appeal.
According to research from City law firm RPC, the Revenue has now withdrawn 8,600 of the approximately 81,000 notices that it has issued overall. This shows HMRC need to exercise far greater care when exercising this power, said Adam Craggs, partner at RPC.
There is a suspicion that HMRC may have commoditised the process for administrative convenience with little thought for the devastating impact receipt of an APN can have on a taxpayer, he added.
In response, an HMRC spokesperson said, APNs are a proportionate response to tax avoidance to ensure that tax sits with the exchequer while in dispute. They can be withdrawn for a variety of reasons, and in many cases where APNs have been withdrawn, they have been reissued. HMRC has successfully defended all its APN judicial review challenges.
Last year, HMRC was criticised by MPs for being too aggressive with the APN policy held up as an example.