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nabeelfarid
22nd July 2015, 11:28
Hi guys,

I have now received both offer letters CLSO and APN and both offering more or less the same figure. Any recommendation which one to accept?

Regards,
Noble

Dylan
22nd July 2015, 12:20
They are completely different propositions and only you can decide which is most appropriate to your circumstances.

As an aside it must be a tiny amount for them to be similar as APN doesn't include interest?

webberg
22nd July 2015, 13:38
Hi guys,

I have now received both offer letters CLSO and APN and both offering more or less the same figure. Any recommendation which one to accept?

Regards,
Noble

AAARGGGGHHHHHHHHHH:tantrum::tantrum:

You cannot "accept" an APN. You pay it or not. It DOES NOT SETTLE your tax position. It is a payment on account of a final liability that you still have to agree. Paying the APN DOES NOT constitute agreement.

Agreeing your position is a choice of:

CLSO - uncertain and a lot of tax (my opinion is that this is not good)
Litigation - long and expensive and uncertain (needs large numbers really)
Negotiation - long and uncertain but less expensive (large numbers are better)

nabeelfarid
22nd July 2015, 14:58
AAARGGGGHHHHHHHHHH:tantrum::tantrum:

You cannot "accept" an APN. You pay it or not. It DOES NOT SETTLE your tax position. It is a payment on account of a final liability that you still have to agree. Paying the APN DOES NOT constitute agreement.

Agreeing your position is a choice of:

CLSO - uncertain and a lot of tax (my opinion is that this is not good)
Litigation - long and expensive and uncertain (needs large numbers really)
Negotiation - long and uncertain but less expensive (large numbers are better)


Hi Graham,

Thanks for the quick response.

I am not sure exactly what you mean by Negotiation here. Do you mean negotiate with HMRC in terms of how to pay like installments or something like that? And what should be the deadline for negotiation considering the deadline for both APN AND CLSO is end of september

My concern is the deadline for both is end of September and if I don't accept either CLSO or pay APN and consider Litigation or Negotiation, then the 5% penalties will start kicking in?

In my case the amount is around 4K as I used the scheme for a limited time during the year. So I wonder what you mean by large numbers?

Nabeel

nabeelfarid
22nd July 2015, 15:01
They are completely different propositions and only you can decide which is most appropriate to your circumstances.

As an aside it must be a tiny amount for them to be similar as APN doesn't include interest?

Yes the difference is marginal but I am not sure which one to go for. What should I be considering to choose between the two so I can just put an end to this :)

DotasScandal
22nd July 2015, 15:55
In my case the amount is around 4K as I used the scheme for a limited time during the year. So I wonder what you mean by large numbers?


Large numbers of PEOPLE (to have any kind of negotiating power)

webberg
22nd July 2015, 16:16
Hi Graham,

Thanks for the quick response.

I am not sure exactly what you mean by Negotiation here. Do you mean negotiate with HMRC in terms of how to pay like installments or something like that? And what should be the deadline for negotiation considering the deadline for both APN AND CLSO is end of september

My concern is the deadline for both is end of September and if I don't accept either CLSO or pay APN and consider Litigation or Negotiation, then the 5% penalties will start kicking in?

In my case the amount is around 4K as I used the scheme for a limited time during the year. So I wonder what you mean by large numbers?

Nabeel

If you decide not to accept the CLSO you need to pay the APN or risk a penalty.

You can make a representation against the APN. I have posted previously how to do this. Alternatively you can go to an adviser (yes that includes me, but there are others) and they will do this for you. They will charge a fee.

That representation is unlikely to result in the APN being withdrawn permanently. If may be delayed, perhaps reduced but will still need to be paid.

You can ask HMRC for time to pay (or your adviser can if you wish).

If you pay the APN and wait for the litigation result, forget a September deadline. Perhaps 5 to 7 years. It's up to you whether you contribute to a fighting fund for this. If there is a litigation result that is relevant to the scheme you used, it will be applied by HMRC. That might be more than the CLSO or less.

If you pay the APN and decide to negotiate, again there is no deadline. You can start the process when you like either as an individual or as part of a group. You don't NEED a professional adviser but I recommend you do get one as this is a complicated area. Tax adviser time varies from perhaps £100 to £1,000 an hour - depends on many factors. How many hours to get a settlement position? I don't know. I'd guess at 3 for an initial "get up to speed", 15 for say 5 HMRC meetings, 2 to check any final number. Minimum 20 hours.

Being in a group shares the 3 and 15 above.

I'd RECOMMEND, indeed INSIST that you spend a few hours this week going over the posts and threads here and immerse yourself in it. Some of the questions here are good ones, some of the advice is decent. (Some questions and advice is not so be selective).

bluemonkey71
22nd July 2015, 17:57
4k is a no brainer

nabeelfarid
22nd July 2015, 19:02
4k is a no brainer

In what sense?

EBTContractor
23rd July 2015, 00:34
In what sense?

Pay the APN. 4k is petty cash.

SomeDude
23rd July 2015, 08:26
Pay the APN. 4k is petty cash.

In that case why not go for the CLSO, and have this over with and out of your mind? In theory that should conclude hmrc interest in given year, sure - money is lost, but what are the chances to get the APN money back anyway, and the process can be dragged for years?

Dylan
23rd July 2015, 09:24
Blimey, for 4k I would just pay CLSO!

nabeelfarid
23rd July 2015, 10:15
Pay the APN. 4k is petty cash.

But why APN and not CLSO ? :)

nabeelfarid
23rd July 2015, 10:17
In that case why not go for the CLSO, and have this over with and out of your mind? In theory that should conclude hmrc interest in given year, sure - money is lost, but what are the chances to get the APN money back anyway, and the process can be dragged for years?

Are you saying CLSO can't be dragged for years by HMRC ?

Dylan
23rd July 2015, 10:36
Are you saying CLSO can't be dragged for years by HMRC ?

Well depending on the scheme you used there may be elements to be decided in the future (EG IHT) but the bulk of it will be done and dusted, CLSO means the main tax element is settled and done.

If it were a bigger amount then paying APN and seeing how it plays out would be more appealling but to be honest for 4k I would just settle and not have to deal with it anymore.

webberg
23rd July 2015, 12:33
Well depending on the scheme you used there may be elements to be decided in the future (EG IHT) but the bulk of it will be done and dusted, CLSO means the main tax element is settled and done.

If it were a bigger amount then paying APN and seeing how it plays out would be more appealling but to be honest for 4k I would just settle and not have to deal with it anymore.

There are a number of views on the CLSO.

Mine is entirely negative. It does not deal with all current potential taxes that may have been incurred to date. It fails entirely to deal with possible future taxes. It gives no protection against change of law or penalty (I know people say it does but I can't see it in the words and if it's there, please point it out to me).

It is based on HMRC's unsubstantiated opinion and has no judicial backing.

All in all too uncertain and not nearly close enough to the Contractual Disclosure Facility terms to pray those in aid eventually.

There is the view that settling some of the issues is preferable to none. My view (others are available) is that if you settle some taxes and HMRC come along later and say - by the way you now owe IHT - what happens if you say "no" or "can't afford that"? Is the entire settlement undone? Who knows? You'd hope not but there's no certainty.

How long could HMRC wait before coming back for a second bite? Again, nobody knows.

My view is that settlement as presently offered is a poor deal. Better to pay the APN and try to settle another way which is litigation or negotiation.

Dylan
23rd July 2015, 12:47
Completely with you on larger amounts and certainly I wouldn't settle for the amount they would no doubt deem I would owe, but honestly for 4k I would just pay it, not as if potential IHT on 4k is going to amount to much.

I guess each person has their own threshold but I would chalk 4k down to experience and just get on with my life. Even if they come back in the future it will be for utterly trivial amounts IMO.

DotasScandal
23rd July 2015, 13:08
Completely with you on larger amounts and certainly I wouldn't settle for the amount they would no doubt deem I would owe, but honestly for 4k I would just pay it, not as if potential IHT on 4k is going to amount to much.
I guess each person has their own threshold but I would chalk 4k down to experience and just get on with my life. Even if they come back in the future it will be for utterly trivial amounts IMO.

I hold the diametrically opposed view.
Since the amount is relatively small (and therefore any penalties are going to be relatively small), why not resist it and make things difficult for HMRC, instead of rolling over?

Quite surprised how some people are happy to take the butthurt and "get on with their lives" as if nothing had happened. You guys never stand up for anything? :confused:

Then again, maybe I'm just too fond of principles.

Dylan
23rd July 2015, 13:43
I'm quite happily fighting my corner for a significantly higher amount, and would wager I am further along the causing hassle to HMRC route than you are, but personally for the sake of such a small amount I'd just move on. Having principles is all well and good but why would you make your own life difficult or more stressful for such a tiny sum? If someone said to me they would give me 4k for what I perceive to be a fair amount of hassle I would decline, I value my own time far higher than that.

Your view is different and that is fine but me having a pragmatic view on my effort / stress v money is very different to "not standing up for anything". It is less than a decent pushbike ffs, hardly life changing sums of money, would you resist out of principle for £5 too? If so then good on you, but I'd just pay the fiver and not have to worry about it again.

DotasScandal
23rd July 2015, 13:57
Yes, I would resist out of principle for £5 too. If some thug (I'm not talking someone who is genuinely in need) walks up to you and simply demands £5 "or else", are you cool with it? My view is that as far stress and damage are concerned, these have already been done by this whole bullying. "Paying up" will not give me any of that lost time and peace of mind back.
Then again, I appreciate everyone is different, and for some who are able to suppress feelings of having been wronged, it might be liberating. For me, only justice and reparation can.
I am not judging, just sharing my perspective.

bluemonkey71
23rd July 2015, 14:12
I'm quite happily fighting my corner for a significantly higher amount, and would wager I am further along the causing hassle to HMRC route than you are, but personally for the sake of such a small amount I'd just move on. Having principles is all well and good but why would you make your own life difficult or more stressful for such a tiny sum? If someone said to me they would give me 4k for what I perceive to be a fair amount of hassle I would decline, I value my own time far higher than that.

Your view is different and that is fine but me having a pragmatic view on my effort / stress v money is very different to "not standing up for anything". It is less than a decent pushbike ffs, hardly life changing sums of money, would you resist out of principle for £5 too? If so then good on you, but I'd just pay the fiver and not have to worry about it again.

Agreed. Everyone will get bent over in the end. Might aswell pay up and move on. Standing up to principles is fine but when you are left with a wrecked marriage or bankruptcy because of that then its more appealing to take the butthurt now.

LandRover
23rd July 2015, 14:29
Yes, I would resist out of principle for £5 too. If some thug (I'm not talking someone who is genuinely in need) walks up to you and simply demands £5 "or else", are you cool with it? My view is that as far stress and damage are concerned, these have already been done by this whole bullying. "Paying up" will not give me any of that lost time and peace of mind back.
Then again, I appreciate everyone is different, and for some who are able to suppress feelings of having been wronged, it might be liberating. For me, only justice and reparation can.
I am not judging, just sharing my perspective.

I agree...to be derided and vilified for doing nothing wrong, lets not forget it's HMRC who moved the goalposts, I would stand my ground on principle.

MrsB1974
29th July 2015, 08:45
So... what would you guys do in this situation:

Settlement calc = £9k (incl £2k interest)

APN = £3k (I can't work out how it's so much lower than the settlement calc)

Surely a no brainer for the APN?

chr16v
29th July 2015, 10:36
So... what would you guys do in this situation:

Settlement calc = £9k (incl £2k interest)

APN = £3k (I can't work out how it's so much lower than the settlement calc)

Surely a no brainer for the APN?

Paying the APN does not settle your tax affairs. If the APN is for less than the settlement offer , they are highly likely to demand the difference when you "accept their position" and settle. (which is not actioned when you pay the APN)

MrsB1974
29th July 2015, 10:55
Is there *any* way to truly be done with it though? I remember reading a lot of posts saying that even with CLSO Hector might still come chasing for NIC, IHT, etc in the future?

DotasScandal
29th July 2015, 11:02
Is there *any* way to truly be done with it though? I remember reading a lot of posts saying that even with CLSO Hector might still come chasing for NIC, IHT, etc in the future?

No, not at this time. That's why this "settlement" is a scam.

OG74
29th July 2015, 11:27
Paying the APN does not settle your tax affairs. If the APN is for less than the settlement offer , they are highly likely to demand the difference when you "accept their position" and settle. (which is not actioned when you pay the APN)

Yes, they might, on the other hand it is likely to be parked until it goes to court which HMRC have no incentive to do. So I think it's a nobrainer to just pay the APN.

flyinghaggis
29th July 2015, 16:33
So... what would you guys do in this situation:

Settlement calc = £9k (incl £2k interest)

APN = £3k (I can't work out how it's so much lower than the settlement calc)

Surely a no brainer for the APN?

APN definately. If you're worried about interest being applied to the difference then maybe consider a CTD.

webberg
29th July 2015, 17:28
APN definately. If you're worried about interest being applied to the difference then maybe consider a CTD.

AAARGGGHHH

Paying an APN DOES NOT settle the matter.

The APN is just a payment on account. The final bill might be higher or lower.

You'll only know the final bill if

a. You settle via CLSO taking a chance on uncertain outcomes
b. you reach a negotiated final settlement with HMRC
c. Your scheme (or a very similar one) is heard in Court and a judge gives a final decision.

The above options have been debated as to relative merit, cost and timing, ad nauseum on these threads.

I repeat though.

If you pay the APN "because it's lower", chances are you'll get another and/or you'll get a final bill some time in the future to include interest etc.

flyinghaggis
29th July 2015, 21:23
AAARGGGHHH

Paying an APN DOES NOT settle the matter.

The APN is just a payment on account. The final bill might be higher or lower.



I'm sorry, where do I say that it settles the matter? I was merely pointing out that in a case where the APN is less that what the final amount is likely to be that a CTD for the difference is worth looking at to stop interest accruing.

webberg
30th July 2015, 10:04
I'm sorry, where do I say that it settles the matter? I was merely pointing out that in a case where the APN is less that what the final amount is likely to be that a CTD for the difference is worth looking at to stop interest accruing.

My apologies as I was really directing my frustration at an earlier post, not yours.

I agree totally with your position.

MrsB1974
30th July 2015, 10:26
Thank you Graham et al for your replies.

Rest assured, I do understand that the APN doesn't finalise things (and that nor does the CLSO) however what I've read on the forum all points to i) paying the APN and ii) joining a fighting group (eg, BG). Who knows, judge might find in your favour and you might get some ££ back. Last year when I posted that an independent advisor had recommended I settle, everyone who replied shot that 'advice' down. But now it seems some are in favour of settling? Or am I misunderstanding?

In my case looking at the numbers, surely the £6k difference is better off in my pocket (ie, invested or at the very least earning interest in the bank (suffice to say I'm not in the UK)) for the time being - rather than giving it to Hector now by "settling"?!

P.S. I try to keep up with relevant threads on the forum but with two young children to look after it's impossible to read them all.

Thanks again for your time

webberg
30th July 2015, 11:11
Thank you Graham et al for your replies.

Rest assured, I do understand that the APN doesn't finalise things (and that nor does the CLSO) however what I've read on the forum all points to i) paying the APN and ii) joining a fighting group (eg, BG). Who knows, judge might find in your favour and you might get some ££ back. Last year when I posted that an independent advisor had recommended I settle, everyone who replied shot that 'advice' down. But now it seems some are in favour of settling? Or am I misunderstanding?

In my case looking at the numbers, surely the £6k difference is better off in my pocket (ie, invested or at the very least earning interest in the bank (suffice to say I'm not in the UK)) for the time being - rather than giving it to Hector now by "settling"?!

P.S. I try to keep up with relevant threads on the forum but with two young children to look after it's impossible to read them all.

Thanks again for your time

I'd agree that paying the APN either in one sum or instalments should be done if possible.

My personal opinion (others are available) is that this weapon is not going to be deflected by legal challenge or if it is, it will be temporary and make no difference to those already in issue.

I'd agree with an earlier poster that acquiring a CTD for the expected difference is sensible. These stop interest accruing at 3% pa. To earn that amount, post tax, means making 3.75% pa. If you can earn that, great. If not, consider a CTD.

Professional opinion in the settle/litigate/negotiate camps remains uncertain.

There is anecdotal evidence that some who were advocating resistance (unspecified) are now saying "settle". I could speculate as to why this change of heart has occurred but that would be unfair. Only those involved know the answer.

To the best of my knowledge those who had litigation in mind are still of that view. They may be fighting APN at the moment, but long term plans to bring a case to Court appear to be moving forwards.

The negotiate camp is newer and is based on principles arising out of the wider tax avoidance picture where even the existence of a judicial decision does not prevent negotiation with HMRC.

Which is best?

It's very subjective. I cannot hope to capture the views expressed here over the past few years. Suffice to say it comes down to personal choice.

Iliketax
30th July 2015, 11:26
Last year when I posted that an independent advisor had recommended I settle, everyone who replied shot that 'advice' down. But now it seems some are in favour of settling? Or am I misunderstanding?

The deadline for the EBT settlement opportunity is tomorrow (different settlement opportunity to the contractors one). My understanding is that a large number of people have settled and there is likely to be a deluge of agreements signed tomorrow. Those that I am aware of have taken a business decision to settle. And I emphasis business decision. There are many who have decided not to settle, again based on a business decision using their facts and circumstances. But I am not aware of any in either group that have decided to settle, or not, based on emotion when the business decision said the opposite. My evidence on this is not limited to the EBT settlement opportunity but also to other ones that have been offered to businesses.

As an outsider looking in, the contractors settlement opportunity seems to have a very different response in that there is a large amount of emotion tied up in the decision to settle. At one level, I can understand that. But from a business perspective, that does look strange, especially compared with the EBT settlement opportunity. I can understand that the IHT uncertainty makes the business decision harder than it might otherwise be. But that can be factored into any decision.

Just to be clear, I am not saying that the rational business decision in any particular case is to settle or not. But I think some people have cognitive biases (in the technical sense of the term) that can influence their own decision. Also, some people would appear to have additional motives in suggesting that settling is bad (e.g. in drumming up future work or because they believe that the more people who 'fight' HMRC, the more chance of getting the government or HMRC to change its approach). And for others it is a point of principle.

The key thing from my perspective is that whatever you choose to do should be right for your circumstances rather than based on what other people on a self-selecting internet forum say.

And now its the turn of others to shoot me down...

jbryce
30th July 2015, 13:58
I'd agree that paying the APN either in one sum or instalments should be done if possible.
.....

Paying the APN is a no-brainer - it needs to be done as for the SO? I guess the point is - is there any chance that HMRC will find themselves in a position where a more pragmatic approach to settlement can be taken?

webberg
30th July 2015, 16:22
Just to be clear, I am not saying that the rational business decision in any particular case is to settle or not. But I think some people have cognitive biases (in the technical sense of the term) that can influence their own decision. Also, some people would appear to have additional motives in suggesting that settling is bad (e.g. in drumming up future work or because they believe that the more people who 'fight' HMRC, the more chance of getting the government or HMRC to change its approach). And for others it is a point of principle.

And now its the turn of others to shoot me down...

There is a lot of truth in the above.

The sort of business that used an EBT for cash extraction (or circulation) was probably very well aware that the scheme was designed for a particular purpose and should have been aware of the risks. HMRC moved against this type of corporate scheme and won some cases. The business decision was therefore a lot clearer.

The position for many contractors (not all) is subtly different. Many were not aware of the risks and consequences. You can argue that they should have been, but ultimately they were not. Many subsequently feel that they have been betrayed by providers and importantly that HMRC should (and could) have taken action sooner to prevent the situation arising.

Being one of those obliquely mentioned as having additional motives (with the implication of commercial gain?), again your view is a potentially valid criticism. The only true answer will be known when the dust settles and we see if my approach or that of the litigation groups or that of ostrich group prevails. I do however feel obliged to respond.

HMRC finds itself in an interesting position here. They have no clear case win of general application, have potentially thousands of individual litigation cases, have a settlement opportunity that has probably not attracted a high percentage of takers due to uncertainty and cost, has a number of litigations in process, including one backed by an opinion from a respected FTT judge. There may also be a subtle shift in policy going on as HMG turns its attentions upon big business, with the inevitable bleeding of HMRC resources to that line.

So my view is that the situation for contractors is not quite as objective as the EBT position, or indeed the situation on film and IP schemes. As such I consider that there is a realistic prospect of a different outcome here.

As for those pursuing litigation or other strategies, I cannot answer.

DotasScandal
30th July 2015, 16:34
And now its the turn of others to shoot me down...

I'm checking in not to shoot you down, but just to point out that for many individuals (https://www.dotas-scandal.org/testimonies/), settlement is not an option as the sums demanded are simply unpayable. No cognitive bias or "business decision" to be made here, just unescapable mathematical facts. What are these people to do?

StrengthInNumbers
30th July 2015, 23:44
Mine is based on simple risk. HMRC has not won a case yet and my promoter is taking the case to FTT. By paying and APN and not settling I get a free shot at getting money back. Why not have it?
At this HMRC has best 50% chance of winning with cases in courts until now not doing HMRC any favours. This is not going as HMRC planned.
On a side note people don't realise that how government is taking away our basic rights. In time this will not end well for HMRC or government.

bstar1
5th August 2015, 11:35
If I pay the APN does this mean Interest stops getting added from the point of paying APN.

DonkeyRhubarb
5th August 2015, 11:59
If I pay the APN does this mean Interest stops getting added from the point of paying APN.

Yes.

DonkeyRhubarb
5th August 2015, 12:04
Also, some people would appear to have additional motives...

Talking about motives, what's yours for spending so much time here?

Iliketax
5th August 2015, 13:01
Talking about motives, what's yours for spending so much time here?

Mumsnet is down.

Planning for a doctorate in taxation. Not quite sure where I want to focus yet but probably the economics, behaviours, biases and culture around tax avoidance and evasion. You certainly get more of that stuff on here than on mumsnet.

Just to be clear: while I work in tax, I don't work in the contractor area, have no intention of trying to get fees from contractors and don't work for HMRC.

Dylan
5th August 2015, 13:22
Mumsnet is down.

Planning for a doctorate in taxation. Not quite sure where I want to focus yet but probably the economics, behaviours, biases and culture around tax avoidance and evasion. You certainly get more of that stuff on here than on mumsnet.

Just to be clear: while I work in tax, I don't work in the contractor area, have no intention of trying to get fees from contractors and don't work for HMRC.

By the time you've finished writing it tax planning, avoidance and evasion will all be considered the same thing :laugh

DonkeyRhubarb
5th August 2015, 13:48
doctorate in taxation

Saying you "don't work for HMRC" was redundant. :rollin: