Out-Law News | 10 Feb 2015 | 12:37 pm | 1 min. read
Over 100 participants in film partnership arrangements set up by Ingenious Media, an investment company, have been granted permission for a judicial review of the new policy from HM Revenue and Customs (HMRC), which came into force in July 2014, Collins said. Jason Collins said that the claim would be likely to be heard by the High Court in the early summer. The APNs would be suspended until the High Court gave its judgment, he said.
According to the Financial Times, Ingenious Media's film schemes have around 1,300 past and present investors. The tax tribunal is currently considering whether these schemes were run for profit, or whether they were used by individual investors as a means of avoiding tax.
APNs were introduced in July 2014 and allow HMRC to demand the payment of disputed tax associated with an avoidance scheme up front. APNs can be issued where schemes demonstrate certain 'avoidance hallmarks'; such as the scheme being subject to disclosure requirements under the Disclosure of Tax Avoidance Schemes (DOTAS) rules or where a general anti-abuse rule (GAAR) counteraction notice has been issued. Previously, HMRC had to win a tribunal case before it could demand disputed tax in these cases. Accelerated payments will be repaid with interest in the event that the scheme is ultimately proved to work.
According to HMRC, it has issued APNs worth over £1 billion since the new regime came into force. Once a notice is issued, a taxpayer has 90 days to pay the tax unless they successfully make representations to HMRC that the notice should not have been issued. However, representations can only be made on the grounds that the conditions for the notice were not fulfilled – for example that the scheme was not a DOTAS scheme or that the amount of the accelerated payment claimed is incorrect. There is no right of appeal against an APN. ..
Collins said that in the absence of a right of appeal against an APN, judicial review is effectively the only remedy potentially available to the recipient of an APN. Judicial review is a process through which individuals, businesses and other affected parties with "sufficient standing" can challenge the lawfulness of decisions or actions of public bodies, such as HMRC.Jason Collins said that there were several grounds for arguing that the APNs in these cases were unlawful, including the fact that taxpayers that are issued with one have no right to appeal, which is not compatible with human rights legislation. He said the APNs could also be challenged on the basis that the legislation is retrospective because it applies to DOTAS schemes which were entered into before the APN rules came into force.