Accelerated Payment Notices and the HMRC Loan Charge

Many people who joined a tax avoidance scheme did so years ago, often because an employer, an agency or an adviser recommended it. Three sets of rules can bring such a scheme back into view long afterwards: the accelerated payment notice, which asks for the disputed tax before the dispute is decided; the follower notice, which points to a court decision in another case; and the loan charge, which taxed loans paid through disguised remuneration schemes.

This guide explains what each one is, what the law allows you to do about it, and the loan charge settlement scheme that followed the Loan Charge Review in 2025. It describes the rules. It does not take a view on whether any scheme worked, which is a question for each case.

What is an accelerated payment notice?

An accelerated payment notice (APN) is a notice under Part 4 of the Finance Act 2014 requiring a person to pay tax that is still in dispute. The enquiry or appeal carries on; the money is paid while it does. The payment counts as a payment on account of the tax finally agreed or decided.

APNs can cover income tax, capital gains tax, corporation tax, inheritance tax, stamp duty land tax, the annual tax on enveloped dwellings and the apprenticeship levy, and HMRC’s guidance says they can also cover National Insurance. HMRC usually writes a few weeks before a notice is issued to say that one is coming.

Someone who used a scheme over several years, or one that involved more than one tax, can receive several notices. HMRC’s guidance also points out that the amount on a notice may not be the final figure: it covers the tax advantage from the scheme, not interest or penalties, and the amount finally due can be higher or lower.

When HMRC can issue an accelerated payment notice

The law sets three conditions, and all of them must be met.

There is an open dispute. HMRC has an enquiry in progress into a return or claim, or the person has an appeal that has not yet been decided.
The return, claim or appeal relies on a scheme. It is made on the basis that a tax advantage arises from particular arrangements.
One of these applies:
- HMRC has given a follower notice about the same arrangements (see below)
- the arrangements are DOTAS arrangements, broadly ones given a scheme reference number
- HMRC has given a notice under the general anti-abuse rule (GAAR) about the arrangements, following an opinion of the GAAR Advisory Panel

The link to DOTAS scheme reference numbers

Under the Disclosure of Tax Avoidance Schemes rules (DOTAS, in Part 7 of the Finance Act 2004), promoters must tell HMRC about certain schemes. HMRC can then allocate a scheme reference number, which the promoter passes to the people who use the scheme and which they in turn report to HMRC.

The law says that allocating a reference number is not an indication by HMRC that the scheme could work. It also means that, for the third condition above, a scheme with a reference number meets the test whatever the merits of the scheme. Whether the scheme works is decided in the enquiry or the appeal, not through the notice.

How long you have to pay

Payment is due within 90 days of the day the notice is given. If you send representations (below), it is due by the later of the end of those 90 days and 30 days after HMRC tells you its decision on them.

Where the notice relates to an appeal, any postponement of the disputed tax while the appeal runs comes to an end, and the tax is due on the same timetable. HMRC’s guidance says the amount can be paid in parts, so long as all of it is paid by the due date.

Paying does not settle the enquiry or the appeal, and it does not take away the right to dispute the tax itself. If the final amount turns out to be lower, HMRC’s guidance says the overpayment is repaid with any interest due.

Can you appeal an accelerated payment notice?

There is no right of appeal against the notice itself, as HMRC’s factsheet on accelerated payments confirms. What the law provides instead is the right to make representations:

they must be in writing
they must be sent within 90 days of the day the notice is given
they can argue only that one of the three conditions was not met, or that the amount on the notice is wrong

HMRC must consider them and then confirm the notice, with or without changes, or withdraw it. HMRC’s factsheet counts the 90 days from when the notice is received, but the legislation counts from when it is given, so it is safer to work from the date on the notice.

Representations are not the place to argue that the scheme works. That argument belongs to the enquiry or the appeal about the tax, which continues separately.

What happens if an accelerated payment is not paid

For a notice given during an enquiry, the law sets a penalty of 5% of any amount unpaid at the end of the payment period, a further 5% of anything still unpaid five months later, and another 5% at eleven months. Where the notice relates to an appeal, other late payment penalty rules can apply instead. A reasonable excuse can prevent the penalty, and the rules on agreements to pay late, which can hold penalties off while a payment plan is kept to, apply to it as well.

A late accelerated payment does not itself carry interest, but late payment interest keeps running on the underlying tax until it is paid. Paying the accelerated payment stops interest on the amount paid from the date of payment.

The accelerated payment can be collected in the same way as the tax it relates to. Our guide to HMRC debt collection and enforcement explains what that can involve. If paying by the deadline is not possible, HMRC’s guidance is to contact it as soon as possible, before the deadline passes; see Time to Pay arrangements.

Follower notices

A follower notice is HMRC saying that a final court or tribunal decision in someone else’s case settles the point in yours. HMRC can give one where:

there is an open enquiry or an undecided appeal
the return, claim or appeal relies on a tax advantage from particular arrangements
HMRC considers that a final judicial ruling is relevant: one whose principles or reasoning, applied to your arrangements, would deny the advantage

A ruling is final if it comes from the Supreme Court, or if no further appeal is possible or the time for one has passed. The notice must be given within 12 months of the later of the ruling and the return, claim or appeal.

The person then has 90 days to take corrective action: amend the return or claim to give up the advantage or, where there is an appeal, take the steps needed to agree in writing with HMRC to give it up, and then tell HMRC. Within the same 90 days, written representations can argue that a condition was not met, that the ruling is not relevant to the arrangements, or that the notice was given too late. HMRC’s guidance says there is no right of appeal to the tribunal against the follower notice itself.

If corrective action is not taken in time, a penalty of 30% of the value of the denied advantage applies. (It was 50% until the Finance Act 2021.) HMRC can reduce it for co-operation, but not below 10%. A further 20% can apply where the appeal goes to the tribunal and is struck out as having no reasonable prospect of success, or the tribunal declares that it was brought or conducted unreasonably.

The penalty itself can be appealed within 30 days, including on the ground that it was reasonable in all the circumstances not to take corrective action. A follower notice often arrives alongside an accelerated payment notice.

What is disguised remuneration?

Disguised remuneration describes arrangements in which people were paid through loans, often from an offshore trust or another third party, instead of salary or self-employed income. The loans were not expected to be repaid, and HMRC’s guidance notes that promoters may have said the payments were not taxable.

HMRC’s position, set out in its guidance, is that these are still payments of income, on which income tax and National Insurance may be due. Rules on employment income provided through third parties, in Part 7A of the Income Tax (Earnings and Pensions) Act 2003, are aimed at these arrangements, and many users received enquiries, accelerated payment notices or both.

What is the HMRC loan charge?

The loan charge is in Schedules 11 (employees) and 12 (the self-employed) to the Finance (No. 2) Act 2017. It treats disguised remuneration loans made on or after 9 December 2010 and still outstanding at 5 April 2019 as income of the 2018-19 tax year, all in that one year.

HMRC’s guidance lists further conditions, including that the loan came from a third party and that the tax had not been settled with HMRC by 30 September 2020. Where an employer should have operated PAYE, HMRC looks to the employer first.

The 2019 review and the changes made in 2020

An independent review led by Lord Morse was commissioned in September 2019, and in December 2019 the government accepted most of its recommendations. The Finance Act 2020 then:

took loans made before 9 December 2010 out of the loan charge
reduced the charge for loans taxable in 2015-16 or earlier where a tax return had made a reasonable disclosure of the loan and HMRC had not taken steps to collect the tax
allowed an election, made before 1 October 2020 unless HMRC allowed it later, to spread the charge over three tax years instead of one
provided for repaying some sums paid under earlier settlements with HMRC

The Loan Charge Review 2025

At Budget 2024 the government committed to a new independent review of the loan charge. It was launched in January 2025, led by Ray McCann, a former president of the Chartered Institute of Taxation, to look at what was preventing people from reaching a resolution with HMRC and how they could be helped to settle.

The review’s report and the government’s response were published on 26 November 2025, with Budget 2025. The government accepted all but one of the recommendations, and went further than the review on some:

a new settlement opportunity for people and employers with unpaid loan charge liabilities
writing off part of the liability at the point of settlement, where the review had proposed suspending it for some years
tax worked out year by year, as if the income had been taxed when it was received, rather than all in 2018-19
a deduction for promoter fees, no late payment interest, no penalties as standard, and no inheritance tax arising from the trusts used
a further £5,000 off each person’s liability, which was the government’s addition
a £70,000 cap on the amount written off, also the government’s addition
promoters excluded from the scheme

The one recommendation not accepted was that payment plans should last no more than ten years, with anything still unpaid at that point written off.

The settlement scheme was then legislated. Sections 25 to 27 of the Finance Act 2026 (Royal Assent 18 March 2026) require HMRC to offer settlement, and the detail is in the Employment and Trading Income etc. (Loan Charge Settlement Scheme) Regulations 2026, in force from 5 August 2026. HMRC published its guidance on how it is running the scheme on 7 September 2026 and says it has started sending offers, prioritising people who contact it to say they want to settle.

The loan charge legislation itself remains in place. The government’s response says that cases which are not settled will be progressed under it.

The loan charge settlement scheme: who it covers

HMRC must offer a settlement to anyone it believes owes loan charge amounts, meaning amounts arising from loans within the loan charge that have not yet been paid. The exceptions are people HMRC reasonably suspects are, or have been, promoters or introducers of avoidance schemes, or directors of one.

Amounts already paid are outside it: the government’s response describes the scheme as open to those who have not yet settled and paid. Payments made towards a liability are credited against the settlement amount.
Contract settlements made before 1 June 2021 are excluded.
Other disguised remuneration not caught by the loan charge does not get the reductions, but it may have to be settled at the same time where HMRC had already assessed it or opened an enquiry by 26 November 2025.
Employers are offered the same terms. Where the employer was UK-based and still existed on 5 April 2019, HMRC tries to collect from the employer first, while the individual’s offer stays open.
Other avoidance schemes outside the loan charge are not covered. The government’s response says HMRC will resolve those under the existing law and case law, with flexible payment terms where people need time.

How much will the loan charge cost to settle?

Under the scheme, the amount comes from a calculation set out in the Finance Act 2026 and explained in HMRC’s guidance:

Income by year. The income received through the arrangements is attributed to the tax years in which it was received.
Tax and National Insurance by year. HMRC works out the income tax and National Insurance as if that income had been taxed in those years, using a simplified calculation. Late payment interest is left out.
A deduction for promoter fees. Each year’s figure is reduced by 10% of the first £50,000 of that year’s scheme income and 5% of the next £100,000, but not below nil.
The £5,000 deduction. The years are added together and £5,000 is deducted, again not below nil.
The £70,000 cap. If the result is more than £70,000 below the person’s loan charge gross liability, which includes interest, the settlement amount is instead that liability minus £70,000.

As an illustration with invented figures, suppose someone received £40,000 a year through a loan scheme for three years, and the tax and National Insurance worked out for each year came to £9,000. The promoter-fee deduction is £4,000 a year (10% of £40,000), leaving £5,000 a year, or £15,000 in total. Taking off £5,000 leaves £10,000. The real figure depends on HMRC’s calculation of the actual years and amounts.

HMRC’s guidance says penalties will be charged only in exceptional cases, where it has evidence of deliberate inaccuracy with attempted concealment, and that penalties already paid are not credited. Inheritance tax charges that have already arisen solely from the trust used in the arrangements can be written off. Amounts paid under an accelerated payment notice count towards the settlement, and HMRC says any excess over the settlement amount is refunded; other payments above the settlement amount are not.

Deadlines for accepting a settlement offer

Every offer is open for at least 90 days, and HMRC can allow longer.
If an enquiry is still open, or an appeal has not been sent to the tribunal, HMRC’s guidance says the offer can be accepted until the liability becomes final or the appeal is notified to the tribunal, whichever is earlier.
Only the 90 days apply where the liability is already final but unpaid, where an appeal is already before the tribunal and that litigation will settle the liability, or where a contract settlement has already been agreed.
A further offer, made after an earlier one expired or was rejected, is open for 30 days.

An offer can carry conditions, such as withdrawing tribunal proceedings, settling other liabilities at the same time, or giving up claims for repayment. The acceptance form has to be signed and returned even where nothing is left to pay, because the signed settlement is what ends the other liabilities.

The government said HMRC will contact everyone within scope by the end of the 2027-28 tax year, and encouraged people who want to settle to contact their HMRC caseworker rather than wait for a letter. HMRC’s guidance says that contacting it does not commit anyone to settling. For anyone who does not settle, it says the full loan charge, any other disguised remuneration liabilities and late payment interest remain payable under its normal processes.

Paying: Time to Pay for loan charge and avoidance debts

The government’s response says that where someone needs up to five years to pay a settlement, HMRC will agree it without asking for further information. Where more time is needed, HMRC will work out an arrangement based on what the person can reasonably afford, with no fixed maximum length. Interest applies to amounts paid by instalments in the usual way.

For someone with no realistic means of paying, HMRC has an existing process for considering an offer of less than the full amount. It depends on full and open information about income, spending, assets and debts.

For an accelerated payment notice or an avoidance debt outside the scheme, the usual Time to Pay approach applies: contact HMRC before the payment date with a proposal backed by real figures. Our guide to Time to Pay arrangements covers what HMRC asks. If health or personal circumstances make dealing with HMRC difficult, HMRC’s guidance says to tell it, and GOV.UK describes the extra support available.

Where to find HMRC’s current guidance

These are the pages to read on GOV.UK. HMRC published new loan charge pages in 2026, so check the date on anything older.

“The loan charge”: what the charge covers and the two routes to settle, the 2026 settlement scheme and the earlier 2020 settlement terms, with HMRC’s contact details for these cases
“How HMRC will implement the loan charge settlement scheme”: the calculation, deadlines, employers, penalties and what happens if no settlement is agreed
The government response to the Loan Charge Review 2025, published with the review’s report
Factsheet CC/FS24, “Tax avoidance schemes: accelerated payments”, and “Ten things about accelerated payment notices”

When to get help

The time limits here are short and mostly fixed by law: 90 days for representations, 90 days to pay, 90 days for corrective action, and an offer period that may close when an appeal moves to the tribunal. Whether to make representations, take corrective action or accept a settlement offer is the taxpayer’s decision, and the figures in HMRC’s calculation are worth checking before that decision is made.

We are accountants, not solicitors. We can read the notice or offer, check the dates and the calculation, prepare representations, and deal with HMRC on the figures and on payment terms. If an HMRC letter about a scheme has arrived, see tax investigations or identify your HMRC letter, and send us a message with the date on it. For a dispute about the tax itself, our guide to appealing an HMRC decision explains the review and tribunal route.

Sources

Finance Act 2014, Part 4: sections 204 to 210, 208A and 214 (follower notices, penalties and appeals against them) and sections 219 to 226 (accelerated payment notices, representations, payment, postponement and penalties); section 200 (relevant taxes)
Finance Act 2004, Part 7, sections 311 and 313 (DOTAS reference numbers)
Finance (No. 2) Act 2017, Schedules 11 and 12 (the loan charge)
Finance Act 2020, sections 15 to 20 (changes after the 2019 review)
Finance Act 2021, Schedule 28 (follower notice penalties)
Finance Act 2026, sections 25 to 27 (loan charge settlement scheme)
The Employment and Trading Income etc. (Loan Charge Settlement Scheme) Regulations 2026 (SI 2026/821), regulations 8, 9 and 12
HM Treasury, “Government response to the Loan Charge Review 2025” (November 2025)
HMRC, “The loan charge” and “How HMRC will implement the loan charge settlement scheme” (GOV.UK, 2026)
HMRC, “Tax avoidance schemes: accelerated payments” (CC/FS24), “Ten things about accelerated payment notices” and “Follower notices and accelerated payments” (GOV.UK)

This guide is general information, not advice on any particular case.

Accelerated payment notices and the loan charge