HMRC settlement Deadlines/delays and the LC HMRC settlement Deadlines/delays and the LC - Page 13
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  1. #121

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    Quote Originally Posted by Somsta View Post
    Hi there, quite new to this forum. But I’m wondering if anyone knows of a good accountant or even solicitor who can take care of this settlement paperwork for us? Really appreciate any comments at this stage. I’m too scared to fill in anything in case I get it wrong!
    Any reasonable Tax advisor can help. Id suggest research on this forum and ask people that are unbiased for options

  2. #122

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    Quote Originally Posted by phil@dswtres View Post
    Any reasonable Tax advisor can help. Id suggest research on this forum and ask people that are unbiased for options
    Was anyone here with Edge or Norla? Have you used any accountant for settlement?

  3. #123

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    Quote Originally Posted by Somsta View Post
    Was anyone here with Edge or Norla? Have you used any accountant for settlement?
    Edge is a well known scheme with its own thread.
    Best Forum Adviser & Forum Personality of the Year 2018.

    (No, me neither).

  4. #124

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    Default Initial contact with HMRC

    Hi everyone,
    This is my first post after lurking for a long time and absorbing much of the information and advice given by so many other members.
    I felt it important to share my experience and hope that it may in turn be found helpful by others.
    I have a great deal of empathy for those who have been hit by the loan charge legislation, and feel obliged to repeat what so many have already previously said: no matter how bad things get, it's not worth even considering harming yourself. You are what's important to your family and loved ones, not your material possessions. Whatever hardship this will put your family through is NOTHING compared to what they would experience if they lost you. Given the choice they will always choose to have you. So do not even entertain harming yourself as an option.

    My story:
    In 2016 I was drawn in by a >85% take home offer which seemed to be backed by a renowned QC (Robert Venebles), came with an assurance of always keeping compliant with any changes in legislation and had a legal fund built into the price, which would support me in case I was ever reviewed by HMRC. Same story as everyone else I'm sure. The company was called Eximius Consultants and they are one of many companies who have now closed shop and moved the same model to another name. They are also one of many companies who shifted their EBTs to the Trustee Help Line (THL).
    I used Eximius for 2 months in 2016, so my exposure is mercifully limited. Having read many posts, I can immediately see that I am one of the lucky ones as things could have been so much worse.
    I have a friend to thank for it, as it was him who suggested I check HMRC guidance on contractor loan schemes when I was praising the 'legal' scheme I had happened to stumble upon. As soon as I discovered that HMRC had listed all the selling points of the scheme in one of their spotlights, I stopped using the scheme. I was glad at the time that my exposure hadn't been bigger.

    I was informed about the Loan Charge legislation thankfully by my accountant and I immediately registered my interest for a settlement a week before the deadline.

    I have now run a bunch of calculations on the number I could expect through a settlement offer vs how much more tax I would have to pay if I received the loan charge. In my case the difference is large enough that it's worth tightning the belt for the remaining 10 months of the year and absorbing the loan charge amount.

    I called HMRC's loan charge helpline and they sent me a settlement pack. Here are some more bits of information they provided:
    1. They are inundated with thousands of registrations and are struggling with the volumes.
    2. They treat the requests on a first come first served basis (unless you jump the queue by calling them I suppose).
    3. I asked if the process of registering interest would trigger an investigation into the year. The advisor said that registering interest effectively trumps everything else and HMRC won't initiate any other process until the settlement process concludes. So I can expect to receive no new APNs, no queries, no investigations etc. in the affected year.
    4. Once the loan charge comes into effect, if I haven't settled with HMRC or paid off the loans, I will need to declare the full loan amount in my self assessment. I was unsure on this point, as to how the loan charge would be applied and now I'm clearer. I suppose through the settlement process, HMRC will have a record of the amount in question and will be able to reconcile it with my SA.
    5. If I choose to bear the loan charge, the 2018/19 self assessment need only factor the loan amount. It doesn't need to factor in any taxes which may have been due, any NICs, any interest etc.

    I am still a bit unclear on point 5 and the overall nature of the loan charge.
    Let's take the case of a person decided to bear the loan charge and was taxed in 2018/19 for their 2018/19 income + past loan amounts, which they paid. Would HMRC then still be able to go back to the years those loans were given, calculate the tax which would have been due for those years (basically the same sort of calculation as the settlement offer), and send the person a bill for the tax due + interest on it - the tax paid on the amount in 2018/19?
    I guess what I am asking is whether the settlement offer will always be the best option. Will HMRC always come after the tax payer for the difference in tax?
    Or assuming the loan amount was declared correctly in the 2018/19 SATR, would HMRC consider the loan amount fully taxed and settled? (not considering IHT in this case)

  5. #125

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    So how are HMRC expecting the tens of thousands of people that are no longer in the UK (in lots of cases, left many years ago) to declare their loans? Start submitting tax returns / self assessments again? Yeah, good luck with that.

  6. #126

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    I was informed about the Loan Charge legislation thankfully by my accountant and I immediately registered my interest for a settlement a week before the deadline.
    https://www.telegraph.co.uk/tax/news...arges-quietly/

  7. #127

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    Default Scotslaw

    You need to bear in mind that allowing an ebt loan for 2016 to fall into the loan charge is not the end of the matter, HMRC can still come after you for NI and interest as 2016 tax year is still open for assesment, CLSO2 would settle the year, but assuming you were in a self employed scheme you will be liable for NI.

  8. #128

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    Quote Originally Posted by Albert49 View Post
    You need to bear in mind that allowing an ebt loan for 2016 to fall into the loan charge is not the end of the matter, HMRC can still come after you for NI and interest as 2016 tax year is still open for assesment, CLSO2 would settle the year, but assuming you were in a self employed scheme you will be liable for NI.
    That’s where I am a bit unclear. Either they treat the income as 2016 income and then charge me tax, NIC for it (settlement option)
    OR
    They treat the income as 2018/19 income and charge me whatever is due based on my self assessment, including the income added through the loan. This includes NIC for 2918/19.

    How could they possibly treat the income as arising in 2018/19, tax me for that and at the same time tax me as if it arose in 2016/17?
    The most I can think of is IHT in case the loan is written off. And that will arise when the loan is written off.

    Now if I refused the settlement offer AND didn’t declare the loan amount in my 2018/19 self assessment, THEN they could come after me for 2016/17 taxes, NIC and interest (and penalties).

    Isn’t that the correct expectation or am I missing something?

  9. #129

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    Quote Originally Posted by Scotslaw View Post
    Isn’t that the correct expectation or am I missing something?
    No. And yes, you are.

    Let's assume the loan is £1,000 and you are a 40% taxpayer in all years and HMRC are right that you really owe the tax for 2016/17.

    Scenario 1 - You settle

    You pay HMRC £400 tax on £1,000 plus (say) £30 of interest for 2016/17 (or you agree time to pay with HMRC).

    April 2019 loan charge comes along and your income is £nil (the £1,000 loan less £1,000 already taxed).

    Scenario 2 - You DON'T settle

    You have taxable income of £1,000 in 2016/17 and you owe £400 tax plus (say) £30 of interest.

    You have taxable income of £1,000 in 2018/19 under the April 2019 loan charge and you owe £400 tax.

    You pay £400 of tax for the April 2019 loan charge. So you no longer owe anything for 2018/19.

    Double tax relief is given for 2016/17 for £400. So you still owe £30 for 2016/17.


    If you want to find out more about the two ways of getting tax relief then look here:

    - For gross amount (Scenario 1): https://www.gov.uk/hmrc-internal-man...anual/eim46005
    - For tax amount (Scenario 2): https://www.gov.uk/hmrc-internal-man...anual/eim46025

    Some people on here will say don't trust HMRC's guidance. Fine by me, but it gives you a way of understanding what HMRC think and you can then talk to your tax adviser about s554Z5 and s554Z11B and s554Z11C with some knowledge.

    Now with Scenario 2, some people say HMRC won't bother doing anything about the extra interest (or tax in some cases) due. I don't understand how their processes will allow that.
    Last edited by Iliketax; 8th June 2018 at 10:17. Reason: Add a word

  10. #130

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    Quote Originally Posted by Iliketax View Post
    No. And yes, you are.

    Let's assume the loan is £1,000 and you are a 40% taxpayer in all years and HMRC are right that you really owe the tax for 2016/17.

    Scenario 1 - You settle

    You pay HMRC £400 tax on £1,000 plus (say) £30 of interest for 2016/17 (or you agree time to pay with HMRC).

    April 2019 loan charge comes along and your income is £nil (the £1,000 loan less £1,000 already taxed).

    Scenario 2 - You settle

    You have taxable income of £1,000 in 2016/17 and you owe £400 tax plus (say) £30 of interest.

    You have taxable income of £1,000 in 2018/19 under the April 2019 loan charge and you owe £400 tax.

    You pay £400 of tax for the April 2019 loan charge. So you no longer owe anything for 2018/19.

    Double tax relief is given for 2016/17 for £400. So you still owe £30 for 2016/17.


    If you want to find out more about the two ways of getting tax relief then look here:

    - For gross amount (Scenario 1): https://www.gov.uk/hmrc-internal-man...anual/eim46005
    - For tax amount (Scenario 2): https://www.gov.uk/hmrc-internal-man...anual/eim46025

    Some people on here will say don't trust HMRC's guidance. Fine by me, but it gives you a way of understanding what HMRC think and you can then talk to your tax adviser about s554Z5 and s554Z11B and s554Z11C with some knowledge.

    Now with Scenario 2, some people say HMRC won't bother doing anything about the extra interest (or tax in some cases) due. I don't understand how their processes will allow that.
    Thanks iliketax

    Scenario 1: I settle:
    As you have pointed out, it gets rid completely of the need to declare any previous loan income as a part of the loan charge by fulfilling the 'payment condition' of s554z5

    Scenario 2: I DON'T settle:
    The main reason I would do this would be if my tax liability was reduced in doing this... so I would absorb the loan amount in lower tax brackets.
    In your example, let's say that the £1000 is taxable, but falls in the 0% tax bracket (personal allowance), so tax due is £0.
    Now the £1000 has been declared in taxable income and taxed at the applicable rate.
    s554Z5 it seems wouldn't apply here, because according to HMRC, the tax charge was due in the previous tax year and is now past due and because I haven't paid the tax due or agreed payment.
    s554z11b and c will both mean that the tax which was due in 2016/17 will be due in full plus any interest & penalties.

    This implies that the settlement option will ALWAYS be the best option. Why are people then considering bearing the loan charge as a viable option at all? It seems as if the least tax we will ever have to pay will be through the settlement offer.

    Has the loan charge legislation come into effect already? If so, we have already incurred a tax liability in past years on loan-based income. Or will it only come into effect in April 2019? In which case it would meet the 'liability condition' of s554z5, and scenario 2 becomes a viable option.

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