Services
Audit & Assurance
External, internal and joint venture audit services
Business Advisory
Management accounts, strategic planning, profit improvement, ESG
Corporate Finance
M&A advisory, selling a business, fundraising, valuations, due diligence
ESG
Baseline assessments, materiality assessments, carbon footprint and sustainability reporting
Hotel Accounting
Accounting function, automation, daily reconciliations and dashboards, accounts payable
Payroll & Employment
Payroll, global mobility, employee benefits, employment taxes
Private Clients & High Net Worth Individuals
Tax planning & compliance, tax residence and domicile, trust planning
Restructuring & Recovery
Business rescue, liquidations, administrations, insolvency, debt recovery
Tax
Corporate tax, customs duty, VAT, R&D, tax investigations, international tax
Virtual Finance
Bespoke service providing real-time information about your business performance
More from AAB
AAB PEOPLE
Full-service people consultancy – human resources, learning and development
AAB WEALTH
Financial planning, cash flow modelling, retirement planning
AAB Consulting
Business consultancy helping organisations with the challenge of change
Sectors
Business Services
Professional services, medical, recruitment and media
Construction & Property
Property developers, construction companies, housebuilders, landlords
Energy
Renewables, clean energy, energy producers, energy transition, exploration and production
Family Business
Specialist support for businesses owned/managed by families
Food & Drink
Food & drink producers, processors, importers, wholesalers and retailers
Industrial
Engineering, manufacturing, aerospace, automotive, shipping, distribution
Leisure, Retail and Hospitality
Fashion, entertainment, activity centres, hoteliers
Not For Profit
Charities, social housing, higher and further education institutions
Public Sector
Government, non-departmental public bodies, health boards, ALEOS
Technology
Software companies, tech start-ups, cybersecurity firms, and AI innovators.
About
AABout Us
Our story
Our Team
Meet the specialists
Careers
Join the AAB team
Diversity & Inclusion
Building a business where everyone feels they belong
Growing Sustainably - ESG
ESG – Our commitment to building a sustainable business
News
Latest news from across AAB Group
AABIE
AAB charitable initiative
Latest deal boosts AAB Wealth assets under advice beyond £1 billion
Insights
Blogs
Stay informed with cutting-edge news for business growth. Our experts offer industry insights and invaluable advice on accountancy and business strategies.
Case studies
Explore insightful case studies tailored to specific industries, offering invaluable lessons and strategies for success.
Webinars & Events
Engage with dynamic webinars and events tailored to your interests, offering valuable insights and networking opportunities.
ESG Diligence: The Key To Sustainable M&A Transactions
AAB / Blog / Being up front about the new tax challenges
BLOG26th Feb 2015
As Accelerated Payment Notices start putting the brakes on tax avoidance schemes, here we look at the complex implications for accountants, as well as clients.
One of the key planks of the Revenue’s attempts to crack down on tax avoidance is the new regime of Accelerated Payment Notices (APNs). In a nutshell, if a particular DOTAS scheme is under enquiry, HMRC can issue an APN to an individual or company requiring them to pay the tax up front that would have been owed if the DOTAS weren’t in operation. There’s a penalty of 5% if the payment isn’t made within 90 days. The figure then rises to a hefty 10%. If you receive such a notice and cannot pay it’s vital that you speak to HMRC, as they will seek to enforce the debt and collect the payment.
The good news is that if your scheme is ultimately found to be legal by the courts, HMRC must repay the money paid to them and no penalties apply. The process can, however, take a long time. Critically, the system also throws up some difficult issues for professional advisers working with corporate clients. How exactly do we provide for the APNs in the accounts?
Although the new arrangements clearly differ from the previous tax enquiry issues accountants have tackled, the broad principles will be the same. There is a dispute between two parties that could give rise to a potential liability for the company.
There are three criteria set out in current accounting standard FRS 12 which have to be met before recognising a provision at the balance sheet date:
Once the APN has been issued, then it is a reasonable view that as this is an enforceable debt, it will need to be reflected as a liability in the accounts. If recognised as a liability – or if you have made a payment – then there’s a deduction which needs to be accounted for. There are two possible places for this to hit the accounts; it can be shown as a tax charge or as an asset. However, the conditions for recognising a contingent asset are strict – there has to be a reasonable degree of certainty – and therefore once the APN has been received, there is a higher threshold to avoid it impacting on the tax charge. If there is not a reasonable degree of certainty, then the standards do allow disclosure in the accounts of a ‘probable contingent asset’.
With disputes of this type, there is always going to be a fine balancing act. It is actually increasingly difficult to know with any degree of certainty the outcome of a specific case. This is particularly true in an environment where it might be argued the emphasis is now on sending signals about tax avoidance rather than deciding each case on its individual merits.
On receiving an APN, you will need to then consider how this is reflected in the accounts and the signal this may send about your perceived view of the strength of your case. On the other hand, there are clearly dangers to being too bullish and failing to accept that there is any obligation (not least dealing with HMRC officers seeking to collect the tax due under the APN). Your accountants are there to hold your hand through the process, but remember a lot of this is new territory and there won’t necessarily be a black and white answer.