The loan charge is NOT a settlement "option" The loan charge is NOT a settlement "option" - Page 2
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  1. #11

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    Quote Originally Posted by GhostofTarbera View Post
    What happens if you can’t actually pay?

    You have zero assets (rent a house, no car etc) have only a few months rent money in the bank

    + you have no contract, and unlikely to get one in the next 6-12 months due to covid19

    Do they send you to jail ?


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    HMRC will take enforcement action.

    This will end with HMRC making a value judgement as to whether to push you into insolvency (or you pre-empt it by choice) or to accept perhaps a very long time to pay. A lot will depend on the policy being followed at that time and with the pandemic playing havoc with the economy, who knows where that will be.

    Jail is really reserved for those who could pay but chose not to.
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  2. #12

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    Quote Originally Posted by webberg View Post
    If you do not reach settlement with HMRC by 30th September 2020, then HMRC will claim that the loan charge applies.

    That does NOT absolve you from agreeing the final liability for those tax years where you received loans and HMRC has open enquiries.

    Once you reach agreement with HMRC on those years, the tax paid on the loan charge is a credit against the final liability (which will include interest).

    The loan charge is NOT an either/or option. If you pay the loan charge you will have to pay any difference between that and the final liability.
    Am I right in understanding from the above that HMRC wants the tax due on the loan amount plus any interest & penalties (regardless of disclosure method)?

    If you include the loan amounts in your 19/20 SATR - you will owe the applicable tax; then later HMRC will want whatever interest & penalties it deems you owe?

    If you declare the loan amounts via the portal - you can spread the applicable tax over three years; but later HMRC will then expect interest & penalties?

    Therefore settlement is essentially offering you now (today) the tax due (at 40%) plus interest & penalties?
    Last edited by dmuk; 20th September 2020 at 14:29.

  3. #13

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    Quote Originally Posted by dmuk View Post
    Am I right in understanding from the above that HMRC wants the tax due on the loan amount plus any interest & penalties (regardless of disclosure method)?

    If you include the loan amounts in your 19/20 SATR - you will owe the applicable tax; then later HMRC will want whatever interest & penalties it deems you owe?

    If you declare the loan amounts via the portal - you can spread the applicable tax over three years; but later HMRC will then expect interest & penalties?

    Therefore settlement is essentially offering you now (today) the tax due (at 40%) plus interest & penalties?
    As I said on the other thread, there are no penalties, and interest only applies to open years.

    The "later" could be quite a long time. If paying the loan charge works out significantly cheaper than settling then this may be worth a punt. Worst case scenario, you might have to pay the shortfall at some point in the future.
    Scoots still says that Apr 2020 didn't mark the start of a new stock bull market.

  4. #14

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    Quote Originally Posted by dmuk View Post
    Am I right in understanding from the above that HMRC wants the tax due on the loan amount plus any interest & penalties (regardless of disclosure method)? [Where did I mention penalties? HMRC's position is that tax is due on loans for the year they were received and as that tax is now late it will attract interest. The loan charge - if paid - is a payment on account toward that final liability.]

    If you include the loan amounts in your 19/20 SATR - you will owe the applicable tax [no - you owe the loan charge which is a separate and distinct tax]; then later HMRC will want whatever interest & penalties it deems you owe? [interest yes]

    If you declare the loan amounts via the portal - you can spread the applicable tax over three years; but later HMRC will then expect interest & penalties? [see below]

    Therefore settlement is essentially offering you now (today) the tax due (at 40% [no - tax is calculated by adding loans to your other income in the year and calculating the tax due which could be at BR, higher rate or additional rate, dependent on the value]) plus interest & penalties?
    See above.

    Nobody has said anything about penalties so why go there?

    Surely the fact that the loan charge is little more than a payment on account toward the final liability cannot be a surprise to anybody at this stage?

    We've been explaining this for close on three years now.
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  5. #15

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    If the loan charge was £60k but settling was £100k, I would pay the loan charge and invest the £40k. It could be a long time before HMRC comes looking for it.
    Scoots still says that Apr 2020 didn't mark the start of a new stock bull market.

  6. #16

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    Quote Originally Posted by DealorNoDeal View Post
    As I said on the other thread, there are no penalties, and interest only applies to open years.

    The "later" could be quite a long time. If paying the loan charge works out significantly cheaper than settling then this may be worth a punt. Worst case scenario, you might have to pay the shortfall at some point in the future.
    Assuming the settlement offer from HMRC for an open year was 20k, however via the loan charge (which works out significantly cheaper) ends up being 10k. Per your note above, where you say "you may have to pay the shortfall at some point in the future" - would that payment of the shortfall just be the difference between the 20k and the 10k, or would there also be penalties and interest attached to it?

    Would really appreciate any thoughts on the above. Thanks

  7. #17

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    Quote Originally Posted by Ozcontractor View Post
    Assuming the settlement offer from HMRC for an open year was 20k, however via the loan charge (which works out significantly cheaper) ends up being 10k. Per your note above, where you say "you may have to pay the shortfall at some point in the future" - would that payment of the shortfall just be the difference between the 20k and the 10k, or would there also be penalties and interest attached to it?

    Would really appreciate any thoughts on the above. Thanks
    No penalties. But there would be some additional interest on the outstanding 10k.
    Scoots still says that Apr 2020 didn't mark the start of a new stock bull market.

  8. #18

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    interesting in that just come off the phone and and confirmed by HMRC if I declare on my SATR and pay the loan charge the case is closed. Obviosuly I know from some learned on here that is actually not true. Interesting or not but I made it absolutely clear in my questioning in once I agree the payment for the loan charge that is my case for those years closed....reply "yes sir"

  9. #19

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    Quote Originally Posted by lowpaidworker View Post
    interesting in that just come off the phone and and confirmed by HMRC if I declare on my SATR and pay the loan charge the case is closed. Obviosuly I know from some learned on here that is actually not true. Interesting or not but I made it absolutely clear in my questioning in once I agree the payment for the loan charge that is my case for those years closed....reply "yes sir"
    Do you have the name of the person who told you that and more importantly did you ask for confirmation in writing.
    merely at clientco for the entertainment

  10. #20

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    Quote Originally Posted by eek View Post
    Do you have the name of the person who told you that and more importantly did you ask for confirmation in writing.
    I certainly have the name, exact date and time of the call.

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