A group a taxpayers used a tax avoidance scheme where they received interest free loans from an Isle of Man company instead of normal salary that would have been subject to income tax and national insurance contributions.  These taxpayers disclosed in their tax returns that they were using a tax avoidance scheme and HMRC issued PAYE coding notices that on the face of it accepted that the scheme work.  Eventually HMRC issued discovery assessments to the taxpayers and then issued accelerated payment notices (APN) for the immediate payment of the outstanding tax that in HMRC’s opinion was due.  This tax would be refunded if the tribunal or courts found that the scheme worked.  These notices were issued after the enactment of the APN regime by Parliament.

Before the enactment of the APN regime, HMRC had sent letters to the taxpayers confirming that the tax that was due in HMRC’s opinion didn’t have to be paid over to them until resolution of their dispute at the tribunals or courts.  The APN regime legislation includes express language that APNs can be issued after payment postponement agreements have made with taxpayers and that the APNs supersede any prior agreement.

On receipt of the APNs the taxpayers had applied for a judicial review of the APNs and the judge found that while it was conspicuously unfair for HMRC to issue the APNs it didn’t amount to an abuse of power.  He also held that HMRC had been conferred the power by Parliament and while there may not have been good administration at HMRC the APNs were still lawful.

The taxpayers appealed to the Court of Appeal (CoA), again asserting that HMRC had abused its powers.  After considering the case the CoA dismissed the taxpayers’ appeal as they could not find any error of law with the first judge’s ruling.  The CoA agreed that while it was conspicuously unfair that the APNs were lawfully issued and that the taxpayers were immediately liable.

The decision can be found at: Dickinson & Ors v Revenue And Customs – Find case law (nationalarchives.gov.uk)

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