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freddiedotas
29th September 2014, 17:04
My first post here so bear with me.

I got a letter today from hmrc saying that although they had already reviewed my scheme and agreed it was outside dotas they have not agreed that arrangements are not taxbale

I think this is a good thing because they would find it difficult to charge interest or penalties but they can still demand tax.

Where does this leave me with APNs and FNs?

jbryce
29th September 2014, 19:10
My first post here so bear with me.

I got a letter today from hmrc saying that although they had already reviewed my scheme and agreed it was outside dotas they have not agreed that arrangements are not taxbale

I think this is a good thing because they would find it difficult to charge interest or penalties but they can still demand tax.

Where does this leave me with APNs and FNs?

If its not in DOTAS hey will need to have counteracted the scheme as part of the GAAR to issue an APN or a FN.
Whoever is supplying your scheme should be able to help you.
Please note that Hector monitors these threads.

Oh - and get out of the scheme. It's not worth it.

Mug27
30th September 2014, 08:07
Can't emphasise what JBryce said enough - GET OUT NOW and play it straight.

I used one of these schemes in complete ignorance of what was going on especially in light of Disguised Remuneration etc. Luckily I then did the research and got out. I'm now trying to sort out where I am and trying to set things right so it doesn't hang over me for years. At the end of it all I'll be financially worse off then if I was PAYE and I've now got worries I never had so it was a completely stupid thing to do. But at least I didn't do it for years and spunk the money I earnt and am now facing bankruptcy. Now that's really stupid. You know what the old ones are true and if it sounds too good to be true it really is. Taxes and death - you can't avoid either so you may as well just face them.

eazy
30th September 2014, 10:10
My understanding is that if Tax due was not paid at the right time, HMRC will charge interest and can charge penalties as well depending on the circumstances.

Rob79
30th September 2014, 14:59
If its not in DOTAS hey will need to have counteracted the scheme as part of the GAAR to issue an APN or a FN.
Whoever is supplying your scheme should be able to help you.
Please note that Hector monitors these threads.

Oh - and get out of the scheme. It's not worth it.

Not quite correct (being pedantic).

If the scheme has no DOTAS number, HMRC can still issue a FN and then an APN without resorting to GAAR.

jbryce
30th September 2014, 15:07
Not quite correct (being pedantic).

If the scheme has no DOTAS number, HMRC can still issue a FN and then an APN without resorting to GAAR.

How can they do that? They would have to succeed in challenging the scheme first, surely. They can't randomly decide to issue FNs and APNs willy-nilly just for the hell of it....
....or can they.....

Rob79
30th September 2014, 16:01
How can they do that? They would have to succeed in challenging the scheme first, surely. They can't randomly decide to issue FNs and APNs willy-nilly just for the hell of it....
....or can they.....

A Follower Notice can be issued where an individual or company is claiming a tax advantage arising from arrangements that have been defeated in another (finally settled) case.

Once a FN is issued it requires that the individual amends his claim. Failure to amend will lead to an APN being issued.

For example, in my world there is a tax case called Tower MCashback. Reducing 80 odd pages to one sentence, it was decided that the partnership which acquired software and licensed it on, was not trading. Most attacks on film and IP schemes follow similar lines. HMRC are of the view that Tower can apply to any film scheme. (Obviously I would disagree and that battlefield is being prepared now).

So no, they don't have to challenge the scheme. It's enough that another case is similar and has lost with no appeal made.

jbryce
30th September 2014, 20:46
A Follower Notice can be issued where an individual or company is claiming a tax advantage arising from arrangements that have been defeated in another (finally settled) case.

Once a FN is issued it requires that the individual amends his claim. Failure to amend will lead to an APN being issued.

For example, in my world there is a tax case called Tower MCashback. Reducing 80 odd pages to one sentence, it was decided that the partnership which acquired software and licensed it on, was not trading. Most attacks on film and IP schemes follow similar lines. HMRC are of the view that Tower can apply to any film scheme. (Obviously I would disagree and that battlefield is being prepared now).

So no, they don't have to challenge the scheme. It's enough that another case is similar and has lost with no appeal made.

That all sounds a bit cr@p. So HMRC decide if a case is similar to another and then issue an FN on the strength of their own opinion? That's bonkers, at least with DOTAS we all know where we stand.

Rob79
1st October 2014, 08:05
That all sounds a bit cr@p. So HMRC decide if a case is similar to another and then issue an FN on the strength of their own opinion? That's bonkers, at least with DOTAS we all know where we stand.

Them's the rules.

The way in which DOTAS is being used is certainly NOT what was the original intention.

The original plan was to alert HMRC to schemes that had certain characteristics and allow them to take action more quickly.

That was fine except that HMRC got flooded with schemes and had not enough people to deal with them and if necessary draw up legislation. Instead DOTAS became a warehouse of potential targets for action which although perhaps not retrospective, was at least long delayed and suffered as a result.

One of the (many) frustrating consequences is that the long silence from HMRC between issuing a COP8 etc and actually taking any action has lulled a lot of people into thinking that they've been forgotten or that their position is agreed.

So the effect of potentially unfair rules has been made worse by lack of HMRC resource, but in Court all is blamed on the taxpayer.

You couldn't make it up.

Boobetty
1st October 2014, 08:21
I couldn't agree more, but would add that HMRC have plenty of resources (i.e. a vast head count) but they are all largely administrators with little or no tax knowledge. If you get an HMRC person on the phone who knows their proverbial from their elbow you are doing well in my experience.

I once executed a will and I called HMRC's trusts and estates department for clarification on a small issue (a rate or a threshold, something stupidly basic) and was told by the person on the phone to consult a third party specialist. That did make me laugh....didn't our contractor loan schemes also consult third party specialists?

pimpernell
2nd October 2014, 08:09
Them's the rules.

The way in which DOTAS is being used is certainly NOT what was the original intention.

The original plan was to alert HMRC to schemes that had certain characteristics and allow them to take action more quickly.

That was fine except that HMRC got flooded with schemes and had not enough people to deal with them and if necessary draw up legislation. Instead DOTAS became a warehouse of potential targets for action which although perhaps not retrospective, was at least long delayed and suffered as a result.

One of the (many) frustrating consequences is that the long silence from HMRC between issuing a COP8 etc and actually taking any action has lulled a lot of people into thinking that they've been forgotten or that their position is agreed.

So the effect of potentially unfair rules has been made worse by lack of HMRC resource, but in Court all is blamed on the taxpayer.

You couldn't make it up.

Rob,

Have I read somewhere that APNs etc will all be issued within 24 months? Does that mean that HMRC all have gone through their back catalogue of COP8s etc, by then; and that there is some sort of window that will shut? Or is the legislation in perpetuity - i.e. they can take as long as they like?

And of course there wil continue to be FTTs UTTs etc - I understand that. But its the lack of visibility that's annoying.

Rob79
2nd October 2014, 08:18
Rob,

Have I read somewhere that APNs etc will all be issued within 24 months? Does that mean that HMRC all have gone through their back catalogue of COP8s etc, by then; and that there is some sort of window that will shut? Or is the legislation in perpetuity - i.e. they can take as long as they like?

And of course there wil continue to be FTTs UTTs etc - I understand that. But its the lack of visibility that's annoying.

The APN program is being executed over 20 months from July this year.

This is not a window but simply a function of the number of "disputes" over the available resource.

We've seen the Ingenious Media film schemes known as IFP 1 and 2 targeted with those members getting APN's last week. That scheme goes to Court on 7th November this year and the settlement opportunity will close on 31st October. I have views about the timing here. It's also worth pointing out that Ingenious Media insist that these are genuine investment schemes.

We know that a film scheme called Eclipse is likely to be high on the priority list and I suspect that another scheme called Liberty will not be far behind.

The rules are here to stay I'm afraid. Do not hold out any hope of your scheme missing a statutory window.

DonkeyRhubarb
2nd October 2014, 11:41
Hi Rob

Are you expecting that all DOTAS schemes will get APNs?

Do you think it's a given that, if your SRN is on the published list, you will eventually receive APNs?

I can't help being a bit cynical and thinking that HMRC will be cherry picking from that list.

Cheers
DR

regron
2nd October 2014, 12:18
I can't help being a bit cynical and thinking that HMRC will be cherry picking from that list.

Cheers
DR

That is exactly what I am thinking and to be more honest, hoping they are doing. Surely they have to tread carefully when looking at issuing APN's to schemes that are yet to be determined in the courts. Especially when Bankruptcy etc... is very much the end game with a lot of people !!!!

Rob79
2nd October 2014, 12:33
Hi Rob

Are you expecting that all DOTAS schemes will get APNs?

Do you think it's a given that, if your SRN is on the published list, you will eventually receive APNs?

I can't help being a bit cynical and thinking that HMRC will be cherry picking from that list.

Cheers
DR

Some of the schemes with an SRN and which appear on the list have either been agreed (with or without adjustment) or have been dealt with in other ways. Those will not get an APN.

Some declared schemes have been disclosed "just in case". I think once reviewed, they will not get an APN.

How many will get APN's? Very difficult to say but I suspect 70%.

Cherry picking? Yes HMRC has already done that in order to create (in my opinion) unfair pressure on some taxpayers to take a settlement offer.

Given that the contractor loan settlement offer expires in January 2015 it would not surprise me to see an APN arriving (sans gift wrap) for many around Christmas.

DonkeyRhubarb
2nd October 2014, 13:27
Thanks Rob.

I guess HMRC will be looking for the most efficient means of meeting their targets.

Call me cynical but I bet the Government are only interested in the money.

Some schemes will be better than others in terms of "£return on effort". That's what I meant by cherry picking.

Rob79
2nd October 2014, 15:00
Thanks Rob.

I guess HMRC will be looking for the most efficient means of meeting their targets.

Call me cynical but I bet the Government are only interested in the money.

Some schemes will be better than others in terms of "£return on effort". That's what I meant by cherry picking.

Hard to disagree with that.

Rob79
2nd October 2014, 15:04
That is exactly what I am thinking and to be more honest, hoping they are doing. Surely they have to tread carefully when looking at issuing APN's to schemes that are yet to be determined in the courts. Especially when Bankruptcy etc... is very much the end game with a lot of people !!!!

I will repeat a warning here.

The APN regime is designed to collect tax from cases about to enter litigation or where the litigation is ongoing and not yet final.

The fact that something is not yet determined is EXACTLY the time to issue an APN in order to encourage taxpayers to cooperate. (At least that's the Government's view as HMRC has convinced them that delay in settling is ALWAYS the fault of the taxpayer.).

Bankruptcy etc - again no clear policy (asked again this afternoon and got no response) and the feeling I get from the guys handling the stuff I deal with is that they just don't care because they give no thought to the demographic of their victims.

DonkeyRhubarb
2nd October 2014, 19:24
Bankruptcy etc - again no clear policy (asked again this afternoon and got no response) and the feeling I get from the guys handling the stuff I deal with is that they just don't care because they give no thought to the demographic of their victims.

At the end of the day HMRC are merely implementing a law that Parliament passed.

It's not their concern if the law results in thousands of bankruptcies.

The issue of bankruptcy was raised during the debate in Parliament but MPs still passed it knowing this could be the outcome. The Minister (Gauke) said he could give no assurances that people would not be bankrupted.