Trust Fees for settling loans Trust Fees for settling loans - Page 7
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  1. #61

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    Quote Originally Posted by Iliketax View Post
    No.

    If that is right (which it's not) what are the terms that HMRC have agreed? The fact that HMRC cannot get the cash because the company is insolvent and has now disappeared is different from agreeing terms. For there to be an agreement, you'd need to look at contract law (e.g. consent, consideration, etc).
    That makes sense, thank you for clarifying that.

    Referring to your original reply:

    Quote Originally Posted by Iliketax View Post
    With s554Z11B and s55Z11C, s554Z11C(2) requires that an amount "is paid". So the fact that tax is due (or is due and a reg 80 determination has been raised) is neither here nor there. Once the reg 80 is paid (or the individual pays the tax) then the amount "is paid" and double tax relief is available.
    Isn't S554Z11B saying the exact opposite of this, though?

    Whereas Section 554Z5 deals with paid liabilities or those which have not become due and payable, Section 554Z11B requires that the earlier tax liability has become due and payable and is either wholly or partly unpaid at the time the relevant step is taken. Also the person liable for the tax will have not agreed terms with HMRC for the discharge of the liability.

  2. #62

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    Quote Originally Posted by RickG View Post
    Isn't S554Z11B saying the exact opposite of this, though?
    No.

    Looking at things from a big picture perspective, there are two sections that give double tax relief:

    a. You've already paid tax on what is really the same amount before the second event: s554Z5

    b. You pay tax on or after the second event on what is really the same amount: s554Z11C

    As rules apply depending whether the tax is paid before / after the second event, both cannot apply at the same time. The bit you have highlighted in s554Z11B just tests when the tax is paid in relation to the date of the second event. If does set out all of the condition for double tax relief.

  3. #63

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    Quote Originally Posted by Iliketax View Post
    No.

    Looking at things from a big picture perspective, there are two sections that give double tax relief:

    a. You've already paid tax on what is really the same amount before the second event: s554Z5

    b. You pay tax on or after the second event on what is really the same amount: s554Z11C

    As rules apply depending whether the tax is paid before / after the second event, both cannot apply at the same time. The bit you have highlighted in s554Z11B just tests when the tax is paid in relation to the date of the second event. If does set out all of the condition for double tax relief.
    So under what circumstance would s554Z11B allow double taxation relief where the earlier liability has not been paid?

  4. #64

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    Quote Originally Posted by RickG View Post
    So under what circumstance would s554Z11B allow double taxation relief where the earlier liability has not been paid?
    When you later pay the tax.

  5. #65

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    Quote Originally Posted by Iliketax View Post
    When you later pay the tax.
    Thank you very much for taking the time to look at this and answer my questions.

  6. #66

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    I've just received my quote for closing my trust - £5,340 inc VAT !!

    When I setup this EBT 10 years ago I specifically asked if there would be any further charges from the trustees. Twice I asked the question and twice they said no, as the fees were more than enough to pay the trustees for the lifetime of the loan.

    This is a breakdown of the quote.

    Trustee fee £3,000.00 + VAT
    Solicitors fee £450.00 + VAT
    FATCA fee £1,000.00 + VAT (Not sure why this was added, I have no foreign financial affairs)

    Having settled, HMRC say I have about 6 weeks left to close the trust. I feel like I'm being extorted, how can I challenge this?

  7. #67

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    Quote Originally Posted by Ex Contractor View Post
    I've just received my quote for closing my trust - £5,340 inc VAT !!

    When I setup this EBT 10 years ago I specifically asked if there would be any further charges from the trustees. Twice I asked the question and twice they said no, as the fees were more than enough to pay the trustees for the lifetime of the loan.

    This is a breakdown of the quote.

    Trustee fee £3,000.00 + VAT
    Solicitors fee £450.00 + VAT
    FATCA fee £1,000.00 + VAT (Not sure why this was added, I have no foreign financial affairs)

    Having settled, HMRC say I have about 6 weeks left to close the trust. I feel like I'm being extorted, how can I challenge this?
    HMRC cannot force you to close the trust so why do it?

    If you do not close the trust or have the loan written off, then you pay no IHT in the settlement and HMRC claim that you may owe this is in the future.

    Is that claim correct?

    Nobody knows.

    There will be those here who say it is 100% correct and those who will claim it si 100% incorrect.

    You have to take some advice and measure it against the fee you are being asked to pay.

    I might also observe that a non UK entity charging VAT might be a bit odd?
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  8. #68

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    Thanks for the reply.

    I've settled with HMRC and IHT was included (almost £10k). They said that they would expect the trust to be closed down and the loan written off within 3 months of settling.

    I thought I had to do this to avoid the loan charge. Is that correct?

  9. #69

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    Quote Originally Posted by Ex Contractor View Post
    Thanks for the reply.

    I've settled with HMRC and IHT was included (almost £10k). They said that they would expect the trust to be closed down and the loan written off within 3 months of settling.

    I thought I had to do this to avoid the loan charge. Is that correct?
    If you have an HMRC statement that they expect the trust to be "closed down", you have something that we have never seen. I really don't know how HMRC can ask for something that they cannot enforce.

    It's a nonsense to say you have to do this to avoid the loan charge. If you have settled you have already avoided that charge.
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  10. #70

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    Quote Originally Posted by webberg View Post
    If you have an HMRC statement that they expect the trust to be "closed down", you have something that we have never seen. I really don't know how HMRC can ask for something that they cannot enforce.

    It's a nonsense to say you have to do this to avoid the loan charge. If you have settled you have already avoided that charge.
    I thought as the loan was technically still outstanding that the loan charge would apply.

    I know I've settled, but it would not surprise me if they tried to charge me twice. This is pretty much what they're doing with s223. I didn't quite understand it in my previous posts, but what they want me to do is repay the company £170k (the PAYE part of the EBT) which will trigger a corporation tax bill of £32k OR I can add £170k to my salary for 2019 and suffer PAYE/NI. The first option is the cheapest, but it's another big tax hit.

    ETA: My tax advisors just sent this through.

    It is our recommendation that, following settlement with HMRC, the debts be written off and the trust wound up, to offer finality on the matter – as discretionary trusts, if the debts are not written off these remain as an asset of the trust and the trust will be subject to 10 year anniversary IHT charges. Furthermore, while the trusts remain in existence, they may incur future costs depending on any changes in tax legislation.

    HMRC’s settlement agreements also usually include a clause which requires the trusts to be wound up within a specified time frame.
    Last edited by Ex Contractor; 10th June 2019 at 10:40.

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