LC, APN - despair ?

[Fred Bloggs]

Back of an envelope estimate

Loan Charge

Based on £700k loans, £300k tax sounds about right. Assuming you had earnings in 2018/19, most of the loans will be taxed at 45%.

Settlement

Assuming £60k loans per year for 12 years. Assuming £20k PAYE salary in those years, on which you paid about £3k tax.

You're probably looking at around an extra £20k/year in tax. For 12 years, that would be £240k.

The unknown is the interest, which is where the protected vs unprotected comes in.

So, you pay all that to Hector and you still owe some trustee outfit the £700k loan? Not a terrific outcome is it? I guess this case must be about as bad as it can get. No wonder folks are feeling desperate.

[BrilloPad]

So, you pay all that to Hector and you still owe some trustee outfit the £700k loan? Not a terrific outcome is it? I guess this case must be about as bad as it can get. No wonder folks are feeling desperate.

Sadly there are many in the same boat. But there are ways forward.

[demby]

"MPs are very good at making HMRC see sense."

Are you joking

[demby]

Back of an envelope estimate

Loan Charge

Based on £700k loans, £300k tax sounds about right. Assuming you had earnings in 2018/19, most of the loans will be taxed at 45%.

Settlement

Assuming £60k loans per year for 12 years. Assuming £20k PAYE salary in those years, on which you paid about £3k tax.

You're probably looking at around an extra £20k/year in tax. For 12 years, that would be £240k.

The unknown is the interest, which is where the protected vs unprotected comes in.

If you have 10% available - say £30,000 - declare bankruptcy - don't forget loans are still loans (according to HMRC) so your total theoretical debt is HMRC £300k + Loans £700K
HMRC can only claim their 30% share of your £30,000 - £10,000 and you debts are gone

[stonehenge]

"MPs are very good at making HMRC see sense."

Are you joking

No, I'm not joking. When representing individual constituents, MPs are very effective at making HMRC behave reasonably.

Parliament holding HMRC to account, in a wider sense, is an entirely different matter. HMRC adopt full-on slippery bastard mode when called up before Commons' and Lords' committees.

[webberg]

Hello.

Your original post has a mix of fact, myth and confusion which is only to be expected. HMRC does not help the situation but issuing very biased and misleading information. The same might be said for AML and PTS and Vanquish because all those parties have connections, legal, people or both, and they may well have potential conflicts arising from past actions.

Your first action should be to find an adviser who has no reason to be biased and ask that adviser to break all of the elements down into understandable parts. We find that understanding what is happening removes a lot of the fear and allows for a more objective assessment.

There are advisers to be found here.

I am one. I think Manley is still accepting clients. I know others are also more occasional visitors here. To be honest any Google search along the lines of "contractor, tax enquiry, AML" is likely to produce a decent enough list of advisers.

Create a list, start calling. We offer a free initial call and I think most others do as well.

Be aware that after that, almost all advisers will charge a fee. The level of that fee will be dependent upon your circumstances and their strategy. You should make sure to ask what the fee is, whether it is fixed or hourly, what costs might arise in the future.

You should also think carefully on what you want to do.

Your options are really settle or fight.

Settlement has the advantage of being a one off financially painful experience that once over allows you to move on again.

Fighting has the advantage (but not the guarantee) of perhaps a lower tax bill for a relatively modest fee outlay and perhaps a delay of a couple of years.

You will also hear about the loan charge. This is basically an interim amount that HMRC think they can claim as both an incentive to settle and a discouragement to fighting. Regardless of this, you will need to pay or stall or postpone the loan charge if you wish to fight on. Any strategy you are offered must therefore include this.

The loan charge is under fierce political attack. If that succeeds, then closed years (those without a valid enquiry from HMRC) will fall out of the equation. Open year (those with a valid enquiry) will remain in charge and will need to be agreed with HMRC at some point.

In your case it sounds as though you have participated in a transaction that claims to avoid the loan charge. You will find that some advisers consider such transactions as unlikely to succeed, whilst others will be of a more positive mindset. Whilst difficult for those with little tax knowledge, you do need to understand why an adviser may be negative or positive as to such schemes and to make a judgement. Going with an adviser just because they are positive about such schemes, without understanding why, could be a recipe for fees being wasted.

In my view therefore you need to do the following:

1. Calm down
2. Collect all the materials you can find, including exchanges with all parties to date
3. If you are missing data (eg enquiry notices) ask HMRC - talk of this raising your profile with them is just that - talk.
4. Do the Google search and start calling
5. Consider and compare the answers you get
6. Given the values in your case, make a shortlist of perhaps 2 or 3 advisers and go and see them
7. Research this website for loan charge

Good luck.

[stonehenge]

Fighting has the advantage (but not the guarantee) of perhaps a lower tax bill for a relatively modest fee outlay and perhaps a delay of a couple of years.

If there are any financial risks, these need to be pointed out.

For example, does fighting the LC risk penalties?
Could more interest be racked up while the fight goes on?

[demby]

No, I'm not joking. When representing individual constituents, MPs are very effective at making HMRC behave reasonably.

Parliament holding HMRC to account, in a wider sense, is an entirely different matter. HMRC adopt full-on slippery bastard mode when called up before Commons' and Lords' committees.

I doubt that would be the case if your MP is Stride, Norman or Hammond - i think we will be adding Javid and B Johnson to this list very soon as well

[BolshieBastard]

Do not keep everything pent up inside. Do not be afraid or ashamed to seek help.

Always remember, if you owe someone a lot of money, it is their problem. Im not familiar with the Loans debacle but, if you 'owe' HMRC hundreds of thousands, consider bankruptcy as the best possible option.

If I 'owed' HMRC that much, Id go bankrupt and give them the finger.

[stonehenge]

Always remember, if you owe someone a lot of money, it is their problem. Im not familiar with the Loans debacle but, if you 'owe' HMRC hundreds of thousands, consider bankruptcy as the best possible option.

If I 'owed' HMRC that much, Id go bankrupt and give them the finger.

The problem with bankruptcy is, if you own a house, you could be forced to sell it. Creditors would have a claim on any equity you have in the property.

There's also the issue that bankruptcy often prevents people from working in certain sectors eg. banking, financial services.