A high court decision has confirmed the HMRC’s latest contractor tax avoidance venture in claiming back money for those contractors who have been found guilty of not paying enough tax. The Accelerated Payment Notice – or APN – has been declared a draconian measure by many key figures in the contracting community.
The decision to go ahead with APN has caused controversy, chiefly because when it is used alongside the Direct Recovery of Debts legislation, it enables the taxman to take unpaid tax from a contractor’s bank account without going through the courts.
Another aspect of APN that is troubling workers is that the legislation does not allow those accused of contractor tax avoidance to appeal at any point before the HMRC can extract money from their account. Once the Revenue finds an individual guilty of not paying the sufficient amount of tax, they will take the funds without giving the opportunity to remonstrate. This leaves contractors one of two choices within a rock and a hard place scenario – either pay up now, or pay up in instalments.
However, despite an initial appeal based on the legalities of such actions being rejected, experts in the field are hopeful that this High Court win will be once again challenged by a second appeal.
This second appeal will again tackle the issue that the HMRC’s decision to go ahead with APNs breach natural justice and also represent an abuse of contractor’s rights according to the European Convention on Human Rights to a fair trial and protection of property.
Contractors facing APNs are advised to defer payment for as long as possible while the legalities iron themselves out. In the meantime, they are encouraged to use a watertight financial system for their accounts.
UK Contract Partners has a unique umbrella company model for contractors earning above £15 p/h that still allows you to keep admin to a minimum but maximises your income without any of the dodgy stuff. Through our umbrella company model we allow contractors access to government granted tax breaks many of which you won’t even know about.
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