Track the Finance Bill 2020-21 here

[webberg]

Anybody looking to make a disclosure in their 2018/19 tax return that is anything less than committing themselves to a tax charge (loan charge), needs to understand:

1. HMRC will consider the disclosure made as inadequate
2. Chances are that they will open an enquiry in 2018/19
3. HMRC will interpret "reasonable" as being "full disclosure of every nuance and value in a scheme"
4. The gap between "reasonable" as intended in the legislation and "reasonable" as interpreted by HMRC will inevitably end in a Tribunal or Court
5. That is unlikely to happen before the end of next year

Further, any disclosure that is less than a full confession and acceptance of liability carries a risk.

The risk is that HMRC may (will) disagree and seek to raise the loan charge.

You therefore need to understand this and to prepare for the consequences.

If you think that some form of words will magic away the problem and that HMRC will read what you have said and give up, you are mistaken.

You need to understand where your magic words are taking you in terms of enquiry etc and when, how and how much it will cost to defend them.

If you are uncomfortable with your magic words, ask your adviser questions - ask to see whatever opinion they have backing them - ask to see the questions asked to get that opinion - compare different approaches.

YOU are completing YOUR tax return. YOU are therefore liable for errors.

This is new ground, untested law. Those advisers in this space suggesting words, strategies, short or long term gains, etc are all to a degree taking an educated guess as to how a Court may interpret the rules.

Do YOUR due diligence because (unless you can have an adviser agree - in writing - to absolve you from consequences) the result is YOURS to deal with.

[DealorNoDeal]

You don't have to answer this.

Are you advising BG members, who have post 2010 loans, to put something on their 2018/19 return which challenges/refutes the LC?

How much of a risk will they be taking by doing this? (ie. does worst case scenario = penalties?)

-------------

I imagine there's a bit of a spectrum here. I don't know much about the Hamilton Rose "solution" but I'm guessing it's at the high risk end.

Claiming that your original returns provided 'reasonable disclosure' may be at the lower risk end if there was quite a lot of information about the loans on the returns.

[webberg]

You don't have to answer this.

Are you advising BG members, who have post 2010 loans, to put something on their 2018/19 return which challenges/refutes the LC?

How much of a risk will they be taking by doing this? (ie. does worst case scenario = penalties?)

-------------

I imagine there's a bit of a spectrum here. I don't know much about the Hamilton Rose "solution" but I'm guessing it's at the high risk end.

Claiming that your original returns provided 'reasonable disclosure' may be at the lower risk end if there was quite a lot of information about the loans on the returns.

Yes we have advised our clients. How much risk? I'm sure if you speak with others in this space they will give you a range from "very high and unacceptable" to "reasonable in the circumstances". You will never find a risk free scenario.

Will non/not full disclosure result in penalties? I'm sure HMRC will say that. I'm sure other advisers will claim that. Do we have arguments to resist that? We do. Will they work? I'll know in about a year.

The Hamilton Rose "solution" - sorry I have no idea as to what it is or where it sits on whatever subjective scale of risk you are using.

[DealorNoDeal]

The Hamilton Rose "solution" - sorry I have no idea as to what it is or where it sits on whatever subjective scale of risk you are using.

Adverts for it pop up on CUK, with a link to a website:

Loan Charge | Hamilton Rose Loan Charge

The advert appears to claim that it reduces the LC to £0, which I assume would put it in the aggressive (high risk) category.

[dammit chloe]

Adverts for it pop up on CUK, with a link to a website:

Loan Charge | Hamilton Rose Loan Charge

The advert appears to claim that it reduces the LC to £0, which I assume would put it in the aggressive (high risk) category.

I believe it is based on some RVQC opinion. On his track record very high risk. It will involve litigation too.

If you were part of the LCAG JR you get the info for free from the % of loans cost but would have to join the monthly subs option to be behind the inevitable legal challenge.

I don't know what the text contains.

Anything from here on is high risk though IMO but might be worth it if the time it affords allows you to "make plans".

[webberg]

Adverts for it pop up on CUK, with a link to a website:

Loan Charge | Hamilton Rose Loan Charge

The advert appears to claim that it reduces the LC to £0, which I assume would put it in the aggressive (high risk) category.

That's not how I would measure risk.

If the loan charge is say £100,000 but whatever "solution" you go for reduces it to say £50,000, does that make it more "aggressive"?

If you reduced it by £1, does that make is less aggressive?

No.

The HMRC position will have very little to do with value, more to do with offending whatever skewed and illogical analysis they think lies behind the words of the statute.

Again I have not gone through to the Hamilton Rose links and as such have no view as to their solution.

[DealorNoDeal]

Anything from here on is high risk though IMO but might be worth it if the time it affords allows you to "make plans".

You mean like booking a flight to Panama?

Seriously, though, I totally agree with you. HMRC are going to be all over anyone who, as they will see it, is trying to wriggle out of the charge.

[DavidD]

I believe it is based on some RVQC opinion. On his track record very high risk. It will involve litigation too.

X2 -- If you touch this based on RVQC's opinion or participation you will be very, very sorry IMHO.

[DealorNoDeal]

X2 -- If you touch this based on RVQC's opinion or participation you will be very, very sorry IMHO.

Yes, I'd be surprised if that ends well.

Anyone who attempts to "dodge" the charge, especially as part of an orchestrated approach*, could find themselves on the receiving end of the GAAR (60% penalty).

* eg. lots of people putting the same wording on their 2018/19 return

[webberg]

Yes, I'd be surprised if that ends well.

Anyone who attempts to "dodge" the charge, especially as part of an orchestrated approach*, could find themselves on the receiving end of the GAAR (60% penalty).

* eg. lots of people putting the same wording on their 2018/19 return

That's not how GAAR works and whilst I suspect that HMRC would dearly love to use it to deliver high penalties, they cannot at the moment.

I get the point you are making, but throwing around threats of huge penalties which have no application is as likely to cause anxiety and stress as act as a caution for those contemplating their situation.

In order for GAAR to apply, HMRC must take an example of the "offending" structure or claim to the GAAR Panel. That panel will measure the structure/claim against the "double reasonableness" test and (inevitably) produce an HMRC friendly report.

(As far as I can see the Panel is not required to publish reports on structures/claims that are seen as reasonable - only those that are not.)

The opinion is published. HMRC will approach those taxpayers it sees as having used the structure/claim, wave the GAAR report in their faces and ask them (by way of various counteraction notices) to reverse their claims.

If the the taxpayer has the temerity to say "no" and goes to a Tribunal, then a loss there which is final WILL carry a heavy penalty. (I confess I thought it was 50% but I have not had time to check).

If the taxpayer wins and the GAAR opinion is therefore incorrect, then clearly no penalty.

Hope this clarifies.