HMRC Accelerated Payment Notices: The Complete Guide

If you have been involved in a tax avoidance scheme notified under DOTAS or if HMRC has issued a counteraction notice under the GAAR, you may receive a demand to pay the disputed tax immediately – before your appeal is resolved. This is an Accelerated Payment Notice. You have 90 days and limited grounds to resist it.

What is an Accelerated Payment Notice?

An Accelerated Payment Notice (APN) is a demand from HMRC requiring a taxpayer to pay disputed tax upfront, before the underlying dispute about whether the tax is owed at all has been resolved. In other words, HMRC collects the money first and fights the legal battle later.

The result is a fundamental reversal of the normal position in tax disputes. Ordinarily, taxpayers can dispute an HMRC assessment and withhold payment while the appeal is pending. APNs remove that right. The tax becomes due within 90 days of the notice, regardless of whether any appeal has been lodged.

HMRC issued APNs to over 84,000 taxpayers between 2014 and 2020, recovering over £4 billion in advance payments. Many of those taxpayers subsequently succeeded in their underlying appeals and were refunded, often with interest. But they had to fund the payment in the meantime.

Legal basis: Finance Act 2014

APNs were introduced by the Finance Act 2014 (sections 219 to 229) and came into force in July 2014. They were a deliberate policy response to the widespread use of tax avoidance schemes in the 2000s, many of which had generated long-running disputes that tied up billions of pounds in disputed tax for years.

The legislation authorises HMRC to issue an APN where three conditions are met:

1. A tax enquiry is open, or an appeal is pending, in relation to the taxpayer’s affairs
2. The taxpayer has used an avoidance arrangement that either: (a) has been notified under the Disclosure of Tax Avoidance Schemes (DOTAS) rules; (b) is subject to a GAAR counteraction notice; or (c) is the same or substantially similar to arrangements ruled against in a tribunal or court decision
3. HMRC has given the taxpayer the required notice period

When can HMRC issue an APN?

APNs are targeted at participants in avoidance arrangements falling into three categories:

DOTAS-notified schemes

DOTAS (the Disclosure of Tax Avoidance Schemes regime, Finance Act 2004) requires promoters of certain types of tax avoidance arrangements to notify HMRC and obtain a Scheme Reference Number (SRN). Participants in DOTAS-notified schemes are required to include the SRN on their tax returns. Where they have done so, HMRC has the power to issue an APN in relation to the disputed tax advantage.

If you used a DOTAS scheme and included an SRN on your return, you are in the category most commonly targeted by APNs.

GAAR counteraction notices

The General Anti-Abuse Rule (Finance Act 2013) gives HMRC the power to counteract tax arrangements that it considers abusive. Where HMRC has issued a GAAR counteraction notice, it can also issue an APN to accelerate payment of the disputed amount.

Follower Notices (section 204 condition)

Where HMRC has already issued a Follower Notice (see below) and the taxpayer has not complied with it, HMRC may issue an APN alongside or following the Follower Notice.

The 90-day window: what you must do

From the date of an APN, you have 90 days to either:

• Pay the amount stated in the notice; or
• Submit written representations to HMRC arguing that the notice should be withdrawn or reduced

You can do both: submit representations and make a partial payment if you have the funds. HMRC must consider representations before confirming the notice.

Unlike most HMRC decisions, there is no right to appeal to the First-tier Tribunal against an APN. The only formal challenge routes are representations to HMRC and judicial review in the High Court (see below).

Making representations

Written representations are the primary mechanism for challenging an APN. HMRC must consider them, but the grounds on which HMRC can accept representations are narrow. HMRC may withdraw or reduce an APN where:

• The statutory conditions for issuing the APN were not met (for example, no DOTAS SRN was in fact included on the relevant return)
• The amount stated in the APN is incorrect (a calculation error)
• The arrangements used are materially different from those to which the DOTAS notification relates
• The enquiry or appeal has already been resolved (the APN becomes invalid if the underlying dispute is concluded)

HMRC will not withdraw an APN simply because you disagree with the underlying tax position or believe the avoidance scheme should succeed. That argument must be made in the appeal against the underlying assessment, not in representations against the APN itself.

Representations should be detailed and specific, with supporting evidence where available. Generic objections carry little weight. Our team has experience of drafting representations that identify the strongest technical grounds available and present them in the most persuasive way.

Penalties for non-payment

If the APN is not paid (or representations not submitted) within 90 days, automatic penalties apply:

• 5% of the unpaid amount if not paid within 30 days of the APN payment deadline
• A further 5% if unpaid 5 months after the initial penalty date
• A further 5% if unpaid 11 months after the initial penalty date

HMRC can also take enforcement action: debt recovery through its debt management teams, County Court judgment, charging orders over property and in serious cases, bankruptcy or winding-up proceedings.

Interest accrues on unpaid amounts from the due date, at the prevailing late payment rate.

Judicial review of APNs

Because there is no right of appeal to the Tax Tribunal, judicial review in the High Court (or Court of Session in Scotland) is the only court-based challenge to an APN. Judicial review considers whether HMRC acted lawfully in issuing the notice; it does not consider the merits of the underlying tax dispute.

Grounds for judicial review of APNs that have been argued (with varying success) include:

• HMRC failed to follow the correct statutory procedure
• The notice was issued after an unreasonable delay amounting to an abuse of process
• HMRC’s conclusion that the conditions for issuing the APN were met was irrational
• The APN infringes the taxpayer’s Convention rights under the Human Rights Act 1998 (particularly Article 1, Protocol 1: the right to peaceful enjoyment of possessions)

The courts have, on the whole, upheld the APN regime. In R (Rowe and others) v HMRC [2017] EWCA Civ 2105, the Court of Appeal confirmed that APNs do not infringe A1P1 because the payment is provisional and fully refundable if the appeal succeeds. However, individual APN challenges have succeeded on procedural grounds.

Judicial review is expensive and the prospects must be carefully assessed before proceeding. It is most viable where there is a clear procedural error or where the statutory conditions for issuing the APN appear not to have been met.

Burden of proof in associated penalty proceedings

Where HMRC also issues penalty assessments alongside an APN (which is common in VAT and excise duty avoidance cases), a separate and important question arises: who bears the burden of proving the underlying conduct alleged in the penalty?

The Court of Appeal addressed this directly in HMRC v Sintra Global Inc [2025] EWCA Civ 1661, in the context of Schedule 41 FA 2008 (failure to notify) and Schedule 24 FA 2007 (inaccuracy) penalties in an inward diversion fraud case. The Court confirmed that where a taxpayer challenges a penalty on the ground that the underlying tax liability is wrong, HMRC bears the burden of proving the relevant conduct. This is of practical importance in avoidance cases where an APN and a conduct-based penalty have both been issued: the APN can be enforced without proof of the underlying tax position, but the penalty requires HMRC to prove its case.

Follower Notices: the related power

A Follower Notice (Finance Act 2014, sections 204 to 218) is a separate but related instrument. HMRC issues a Follower Notice where:

• A court or tribunal has made a final ruling in relation to a tax arrangement
• HMRC considers that ruling is relevant to the taxpayer’s arrangements
• The taxpayer’s arrangements are the same as or similar to, those in the decided case

Upon receiving a Follower Notice, the taxpayer must, within 90 days, either:

1. Take “corrective action” (amend their return and pay the disputed tax), or
2. Make representations explaining why the decided case does not apply to their circumstances

If the taxpayer fails to take corrective action and the underlying appeal is subsequently determined against them, HMRC can charge a penalty of up to 50% of the tax (reduced to 20% for full cooperation). This is in addition to the underlying tax and interest.

Representations against a Follower Notice can include substantive arguments about why the decided case is distinguishable from the taxpayer’s arrangements. This is a more substantive review than for an APN and genuine technical distinctions have sometimes succeeded.

The underlying appeal: keeping it live

An APN is independent of the underlying dispute about whether the tax is owed. Paying an APN does not concede the point: it is expressly a payment on account and does not affect the taxpayer’s appeal rights.

It is essential to keep the underlying appeal live while dealing with the APN. If the appeal is not pursued or is conceded, the APN amount becomes permanently due and no refund is possible. The two streams of work must proceed in parallel.

Where the underlying scheme has been the subject of a judicial decision going against taxpayers in similar positions, a frank assessment of the merits should inform whether it remains cost-effective to continue the appeal. In many cases, the correct advice is to make use of HMRC’s settlement opportunities rather than continue litigation.

What if you cannot afford to pay?

APNs have caused genuine financial hardship to many taxpayers, particularly individuals who entered avoidance schemes years ago and no longer have liquid assets to pay the bill. Options include:

• Time to Pay: HMRC has discretion to agree instalment arrangements for APN amounts, though it is not obliged to do so. Applications should be made as early as possible, supported by evidence of income, assets and liabilities.
• Asset sales: Where time to pay is unavailable, it may be necessary to sell assets to fund payment. This is a deeply uncomfortable but sometimes unavoidable reality.
• Borrowing: Some taxpayers have been able to fund APN payments through personal or commercial borrowing. The interest cost should be weighed against the risk of penalties and enforcement action for non-payment.
• Insolvency advice: Where the APN amount, combined with other debts, makes the taxpayer insolvent, early insolvency advice is important. Attempting to manage an unmanageable position without advice invariably worsens the outcome.

The worst strategy is to ignore the APN and hope it goes away. HMRC’s enforcement team is active and persistent.

How we help

Our team handles APN and Follower Notice cases at every stage: reviewing the legal basis for issue, drafting representations, advising on the viability of judicial review, managing the interface with the underlying tax appeal and negotiating time to pay arrangements where payment is unavoidable but immediate payment is not possible.

If you have received an APN or Follower Notice, the 90-day deadline is your most pressing concern. Contact us immediately for urgent, confidential advice on your options.