Over £2 billion in advance payments were collected by HMRC whilst they investigated disputed tax avoidance schemes. The ability to issue Accelerated Payment Notices was granted in 2014 and the Taxman used it to full effect. 41,000 APNs have been issued thus far and are continuing to be issued at a rate of 3,000 per month. At the current rate of issue HMRC believes it will net over £5 billion by 2020.
The APN makes the user of a tax avoidance scheme pay the full amount of tax, normally reduced within the avoidance scheme, upfront. In the meantime HMRC will investigate the scheme and refund if it is deemed legal. Prior to the APN system, the scheme users would need to be taken through a lengthy court process to claw back avoided tax. 80 percent of these court cases would be ruled in the favour of the Treasury.
The upfront payment has made entering into complicated avoidance schemes less attractive to potential users, with HMRC banking on this to reduce the number of schemes already in existence or in development.