Contractors hit with APNs should ensure they take the correct approach
Accelerated Payment Notices have been much in the news recently, not least because HM Revenue and Customs have been given the green light to continue issuing them following a recent court case. The original notices were expected to be issued mostly to high earners who were suspected of avoiding tax to the tune of thousands or even millions of pounds. However, recent reports suggest that HRMC have begun to target those whose income would probably not be considered excessive, yet whose APNs have given a 90 day deadline for repaying thousands of pounds.
Many are finding that they simply do not have the ready cash available to make the payments required, and for those people the temptation to ‘rob Peter to pay Paul’ could be overwhelming, especially given the tight deadlines imposed by HMRC. However tempting it may be to use money that has been earmarked for other business obligations, experts advise caution when it comes to considering this option as the law requires businesses to be able to meet any debts they have when repayment is demanded.
Failing to pay sums demanded on APNs could result in a default being recorded and the company being rendered technically insolvent, which is why those who believe that they may struggle to pay an APN being advised to seek professional help immediately. Using a specialist accountant is the best way to ensure that all the options are considered and contractors are advised to consult someone who has specific experience of dealing with limited company contractors.
For many, the option of striking a deal with HMRC should be considered, as those who are pro-active about their position may be able to reach an agreement whereby they can pay their APN off over a longer period. In short, there are options for those who are concerned about an APN, but these need to be investigated sooner rather than later and rash decisions should be avoided at all costs.
If you want to know more about contractor tax or gain a better understanding of the advantages and disadvantages of a limited company then our handy guides could help you to make an informed decision. We also have a take-home pay calculator which will give you a realistic idea of how much you could be earning as a contractor and help you ascertain if you’ve been offered an opportunity that is ‘too good to be true’.
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