Another Loan Charge thread. who's best for my situation? Am i actually caught? Another Loan Charge thread. who's best for my situation? Am i actually caught? - Page 2
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  1. #11

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    Quote Originally Posted by CDJ View Post
    Here4Beer,

    Have you received the scheme promoters representations re LC19 and the scheme's legality and what they will promise should it go awry in writing? If not, then ask for it immediately.. what you will generally find though is a lot of talk, a lot of promises and placations, but very very little paper trail (the scheme I used promised they would pay my tax bills if it went wrong on numerous occasions, but it is nowhere in anything that could be used evidencially).. when they ***** you over (its not an if), you may well then be able to bring a civil case.

    Personally, if your scheme uses some sort of Trust that then initiates a loan to you.. I would say you are pretty much 99.9% caught by LC2019.. either way professional advice is a must.. if you somehow escape LC2019, your arrangement will certainly be challenged down the line..

    Lastly - any reason why you are continuing with the scheme? you should be able to stop using it and skip to a MyCo Ltd or Umbrella within a week.. just a question of getting a new contract drawn up by your agent (a quick email and phone call to your agent should fix it)

    C
    It's nigh on impossible to get things in writing. Always a reason why it's not made its way to my inbox/door mat. I'm told verbally I don't need to say anything to HMRC as it doesn't apply. My confidence fell off the cliff at this point, so, to answer your last point - i instantly threw in the towel. Under 2 years doing it, first SA using this scheme is due in Jan 2019......

    There's never a good time for a massive fine, and with my current circumstances it's really poor timing. So i thought about leaving it off the SA, and then applying to HMRC literally 1 day afterwards? At least then I can set up a payment plan, offset maybe against SIPP? Hopefully that kills off the background loan coming back to haunt me? I have no idea. This is why I need help, don't want to make things worse.

  2. #12

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    Quote Originally Posted by here4beer View Post
    It's nigh on impossible to get things in writing.
    As luck would have it, the GAAR advisery panel explain how this might work yesterday: https://assets.publishing.service.go...ans__Mr_N_.pdf

    Of course it is possible that yours worked in a very different way.

  3. #13

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    Quote Originally Posted by here4beer View Post
    It's nigh on impossible to get things in writing. Always a reason why it's not made its way to my inbox/door mat. I'm told verbally I don't need to say anything to HMRC as it doesn't apply. My confidence fell off the cliff at this point, so, to answer your last point - i instantly threw in the towel. Under 2 years doing it, first SA using this scheme is due in Jan 2019......

    There's never a good time for a massive fine, and with my current circumstances it's really poor timing. So i thought about leaving it off the SA, and then applying to HMRC literally 1 day afterwards? At least then I can set up a payment plan, offset maybe against SIPP? Hopefully that kills off the background loan coming back to haunt me? I have no idea. This is why I need help, don't want to make things worse.
    Its not a surprise.. scheme promoters are very good at talking to the script, but even better at being able to wash their hands of the situ when it inevitably blows up..

    Definitely get professional advice.. as you are reporting the arrangement for the first time in this reporting cycle, you would be unlikely to get a penalty.. you can declare the "loan" as other income and pay tax as per normal (and maybe get a Time to Pay arrangement).. the bigger pain maybe in trying to unwind the arrangement itself..

  4. #14

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    I started using an EBT (Principal Contractors (now closed down) and SP Management) via my Ltd company back in September 2014 and have been paid loans for each financial year since then until I recently stopped using them and switched to a conventional Ltd company/accountant set up.

    I have never received a single letter from HMRC regarding any enquiries or anything to do with any of my tax returns, other than telling me when they are due! however was told by Knox House Trust that my loans were subject to this loan charge if not settled/dealt with before April 2019. As part of potential settlement with HMRC, would I have to pay interest for late payment? Are HMRC still able to open enquiries into those past years?

    I am self employed so I assume as part of settlement I would pay income tax, NI class 2 and NI class 4 as I have been paying this on each SA previously, albeit very little. Also potential inheritance tax if the loans are written off.

    Can someone give their advice on the 2 points above? Much appreciated

  5. #15

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    Quote Originally Posted by dangermaus View Post
    I started using an EBT (Principal Contractors (now closed down) and SP Management) via my Ltd company back in September 2014 and have been paid loans for each financial year since then until I recently stopped using them and switched to a conventional Ltd company/accountant set up.

    I have never received a single letter from HMRC regarding any enquiries or anything to do with any of my tax returns, other than telling me when they are due! however was told by Knox House Trust that my loans were subject to this loan charge if not settled/dealt with before April 2019. As part of potential settlement with HMRC, would I have to pay interest for late payment? Are HMRC still able to open enquiries into those past years?

    I am self employed so I assume as part of settlement I would pay income tax, NI class 2 and NI class 4 as I have been paying this on each SA previously, albeit very little. Also potential inheritance tax if the loans are written off.

    Can someone give their advice on the 2 points above? Much appreciated
    HMRC need to raise a COP8 enquiry within one year (ie for tax year 2013-14, SA Due Jan 2015, HMRC have till Jan 2016 to raise COP8), but have 4 years to raise a Discovery assessment (even longer if they suspect fraud/evasion) - so in the example above, SA Due Jan 2015, discovery window open till 2019)..

    next q.. if you settle the tax due in the year it was earned, you will pay interest (approx 3%pa simple interest).. if you pay the Loan Charge, then you pay tax on the loan total in this tax year (noting that you will likely lose your tax free threshold and be in the top tax bracket).. so there's some maths involved as to what works out cheaper.. note that the LC doesn't negate any enquiry, so they may pursue you for interest/NIs etc (using the LC money paid as a payment on account).. as you've used a PSC to do this, I suspect the risk of an IR35 investigation would also be quite high... in short.. get advice..

  6. #16

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    Quote Originally Posted by CDJ View Post
    Its not a surprise.. scheme promoters are very good at talking to the script, but even better at being able to wash their hands of the situ when it inevitably blows up..

    Definitely get professional advice.. as you are reporting the arrangement for the first time in this reporting cycle, you would be unlikely to get a penalty.. you can declare the "loan" as other income and pay tax as per normal (and maybe get a Time to Pay arrangement).. the bigger pain maybe in trying to unwind the arrangement itself..
    You're correct, this is only my first Self Assessment with it on. This is why my situation is a bit different to past tax years, i think?

    I really pulled out all the stops with work last year, a lot of sacrifices were made to try and set my growing family up for the future. So the amount is artificially high. And this is my reward, it's crushing to say the least...

    I'm hoping to have everything clean and tidy, with the loan agreed to vanish some how, and all tax levelled with HMRC. Not sure if just popping it on my SA clears up the dog dirt 'loan'. I've not even spoke to my accountant yet, as they were recommended by the scheme promoter. I could try that, but after some external pro input to make this happen.

  7. #17

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    So... is this correct?

    In my case the '2016-2017 trustee loan' is added to my SA due end of Jan 2019? I pay PAYE tax, and that's done.
    Then for 2017-2018 SA, i add the remainder of the loan in this year. SA due end of Jan 2020. I pay PAYE tax, and that's done.
    (Is there any chance of using my SIPP allowance to swallow some tax?)

    Can i then 'pay an admin fee' to the Trustee, and request they void/clear the loan, as it's now classed as taxable income by HMRC, so I won't pay it back?

    That's it, home and dry, settled. Minus all the money I have to somehow find?

    (I still want a the Tax Advisor to hold my hand. Last time i had a 'great idea' i ended up in this awful mess.)

  8. #18

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    Quote Originally Posted by here4beer View Post
    So... is this correct?

    In my case the '2016-2017 trustee loan' is added to my SA due end of Jan 2019? I pay PAYE tax, and that's done.
    Then for 2017-2018 SA, i add the remainder of the loan in this year. SA due end of Jan 2020. I pay PAYE tax, and that's done.
    (Is there any chance of using my SIPP allowance to swallow some tax?)

    Can i then 'pay an admin fee' to the Trustee, and request they void/clear the loan, as it's now classed as taxable income by HMRC, so I won't pay it back?

    That's it, home and dry, settled. Minus all the money I have to somehow find?

    (I still want a the Tax Advisor to hold my hand. Last time i had a 'great idea' i ended up in this awful mess.)
    Inheritance tax is a possibility but need specialist advice, it is subject to a lot of ifs and buts.

  9. #19

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    Quote Originally Posted by dammit chloe View Post
    Inheritance tax is a possibility but need specialist advice, it is subject to a lot of ifs and buts.
    Inheritance tax? Nobody has died. If I die it dies with me anyway, as it's unsecured. I guess im misunderstanding you there.

    Is that advice the tax advisor will include? I don't understand that bit.

  10. #20

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    Quote Originally Posted by here4beer View Post
    Inheritance tax? Nobody has died. If I die it dies with me anyway, as it's unsecured. I guess im misunderstanding you there.

    Is that advice the tax advisor will include? I don't understand that bit.
    It's not traditional inheritance tax. It's a form that applies when loans are written off I think. I can't really explain it, it's convoluted. I believe it also depends on the type of trust. They are different HMRC depts and they are both wanting to maximise revenue.

    It's why the settlement spreadsheet asks if you are planning to have your loans written off. Say yes it gets passed to the IHT dept.

    This is all what I have heard, so do not take it as fact.

    It's where you need a tax advisor, and preferably one that is familiar with these types of things ie phil or graham.

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