Can you still accept settlement offer after the 30days notice period?

[QUODM]

Can you expand on this?

HMRC claim that sending a COP8 pamphlet is opening an enquiry. We disagree.

Can you expand on this? I've checked and a cpl of my early enquiries were a 1 page letter saying
"... I intend to check this under Section 9A of the TMA 1970 ... ... and is being conducted under their Code of Practice 8 ... what I will be checking ..."

I've had 3 of these for 3 different years
2 say "I will be checking ... interest free loan .... I may find I need to extend my check ..." (letters dated Jan 2011 for years 2009/2010)
1 started the same but then asked for loan details. I think AML capitulated here and gave them all the info (to try and pass this onto me) and I got an actual "notice of assessment" for this one (currently suspended).

Are these the cop8 pamphlets you mention? I presume the first 2 are but the 3rd is more 'open'. Is that what you mean?
I'd be interested in why you think these are not 'opening an enquiry' ?

[kryten22uk]

You can't get the loan written off when paying the loan charge. If it's the same cost to you, you would be better to do it in a manner that allows the loan to be written when you wish.

Sorry, why is it that you can't get a loan written off if you pay a Loan Charge?

[Whysoserious]

Sorry, why is it that you can't get a loan written off if you pay a Loan Charge?

Paying the loan charge is not settling with HMRC. Only after settling can the trustees write off the loan and close the trust. With settling you are agreeing the loan is actually disguised remuneration.

By paying the loan charge you are keeping the pretence that it is a loan and not income. The trustee has an obligation to keep it as a loan.

That's my understanding of it.

There may be an option of settling with HRMC after paying the loan charge and paying the difference between the loan charge value and settlement value.

Again i'm only using my experience of having gone through the whole painful experience.

[webberg]

Paying the loan charge is not settling with HMRC. Only after settling can the trustees write off the loan and close the trust. With settling you are agreeing the loan is actually disguised remuneration.

By paying the loan charge you are keeping the pretence that it is a loan and not income. The trustee has an obligation to keep it as a loan.

That's my understanding of it.

There may be an option of settling with HRMC after paying the loan charge and paying the difference between the loan charge value and settlement value.

Again i'm only using my experience of having gone through the whole painful experience.

I would respectfully disagree with the above.

There is no connection between HMRC and the lender.

You can settle and not have a loan written off.

You can have a loan written off and not settle.

Be aware that the latter will create a tax charge courtesy of section 554(1)(ab) ITEPA 2003.

[Whysoserious]

I would respectfully disagree with the above.

There is no connection between HMRC and the lender.
- Yes I agree

You can settle and not have a loan written off.
- Yes I agree, but it would be foolish to do so

You can have a loan written off and not settle.
- Yes I agree, if the trustee believes it's in your best interest to do so (their legal requirement as trustee).

Be aware that the latter will create a tax charge courtesy of section 554(1)(ab) ITEPA 2003.

Therefore paying the loan charge, then asking the lender/trustee to write off the loan will create a tax charge on par with settling.

Do you have faith in HMRC that they won't collect the full loan charge amount, and then on loan write off, collect the full tax amount as well? In theory paying almost double the amount of tax due.
Therefore no one who pays the loan charge would settle with HMRC. The loan will remain in existence until death and be open to further cash grabs whenever HMRC needs a cash windfall. Loan charge 2021 because those pesky contractors still haven't repaid the loan or settled and Brexit has bankrupted the country.

Again this is my own understanding, i'm not an accountant or lawyer. Just someone who has thankfully, but painfully been through the settlement process.

[webberg]

Therefore paying the loan charge, then asking the lender/trustee to write off the loan will create a tax charge on par with settling.

Do you have faith in HMRC that they won't collect the full loan charge amount, and then on loan write off, collect the full tax amount as well? In theory paying almost double the amount of tax due.
Therefore no one who pays the loan charge would settle with HMRC. The loan will remain in existence until death and be open to further cash grabs whenever HMRC needs a cash windfall. Loan charge 2021 because those pesky contractors still haven't repaid the loan or settled and Brexit has bankrupted the country.

Again this is my own understanding, i'm not an accountant or lawyer. Just someone who has thankfully, but painfully been through the settlement process.

We were discussing this in the office yesterday.

If you write the loans off, that is a tax event. The tax due falls under Part 7A ITEPA and should "frank" i.e. cover the tax due on the loan charge.

The loan charge still arises of course because a write off is not a repayment in money.

So, if you do write off and have no loan charge the enquiries for earlier years remain open (I'm ignoring for now closed year complications).

So if eventually a liability is agreed for those earlier open years, would the Part 7A charge on the write off, frank that earlier liability?

At this stage I don't know or rather the research I have done is inconclusive and I need to do some more.

I do know that agents acting for a range of trusts are presently suggesting that a loan write off is a good idea (and to do that you need an expensive piece of paper that is required by nobody) and they do say that a tax charge arises. They do not say whether that tax charge will be instead of or additional to a further liability under the loan charge or settlement of earlier years' enquiries.

Given that I cannot answer that question yet either, I'll be fair and say that perhaps, like me, they are testing possible answers with HMRC.

What I'm not doing however is asking people to pay me a lot of money in order to put people into an uncertain place.