HM Revenue & Customs (HMRC) has withdrawn hundreds of accelerated payment notices (APNs) issued to offshore trusts’ users after a legal challenge.
Enforced in July 2014, the APNs scheme allowed the tax authority to demand payments it believed a taxpayer owes even before completion of investigations. Individuals were given 90 days to pay the amount, and had no right of appeal.
The widely criticised scheme roped in over £2bn worth of revenue from suspected tax dodgers, HMRC unveiled in February.
Representing various individuals affected by APNs, London-based law firm RPC lodged a judicial review into the penalties, challenging HMRC on various grounds.
The UK tax authority admitted that it was unlawful to issue fines in this regard.
RPC partner and head of tax disputes Adam Craggs said: "HMRC’s policy of issuing accelerated payment notices seems to be ‘shoot first and ask questions later.
"It is regrettable that the taxpayers concerned were put to the inconvenience and expense of having to commence judicial review proceedings before HMRC acknowledged that the APNs were unlawful.
"As this case demonstrates, any taxpayer in receipt of an accelerated payment notice should not assume that HMRC has followed the correct internal processes and exercised its powers lawfully."