The loan charge is NOT a settlement "option" The loan charge is NOT a settlement "option"
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  1. #1

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    Default The loan charge is NOT a settlement "option"

    At least half a dozen times this week I have had people tell me that because paying the loan charge is less costly than the settlement figures they have, they will go with the loan charge "option" to settle their tax enquiries.

    THIS IS ENTIRELY INCORRECT

    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.

    This has always been the case ever since the loan charge was first introduced. Looking back at HMRC communications I would say that these have always been clear and have said that the loan charge does NOT resolve open enquiries. I think therefore HMRC cannot be blamed for the misconception that has grown up around this point.
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    Quote Originally Posted by webberg View Post
    At least half a dozen times this week I have had people tell me that because paying the loan charge is less costly than the settlement figures they have, they will go with the loan charge "option" to settle their tax enquiries.

    THIS IS ENTIRELY INCORRECT

    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.

    This has always been the case ever since the loan charge was first introduced. Looking back at HMRC communications I would say that these have always been clear and have said that the loan charge does NOT resolve open enquiries. I think therefore HMRC cannot be blamed for the misconception that has grown up around this point.
    What if the Loan Charge is actually more than the Settlement. Once finality is reached over the back tax do HMRC pay back that additional tax. I'm kinda assuming they wont be rushing to sort that out so whatever the process is it will be painful

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    Quote Originally Posted by lowpaidworker View Post
    What if the Loan Charge is actually more than the Settlement. Once finality is reached over the back tax do HMRC pay back that additional tax. I'm kinda assuming they wont be rushing to sort that out so whatever the process is it will be painful
    Why do you think tax advisors are telling you to get everything agreed and settled before the Loan Charge kicks in? If you over pay there is no mechanism for a refund as the loan charge is simply just a payment point with a particular set of rules. The only way of avoiding that set of rules is by settling before hand at which point the Loan Charge no longer applies.
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    Quote Originally Posted by lowpaidworker View Post
    What if the Loan Charge is actually more than the Settlement. Once finality is reached over the back tax do HMRC pay back that additional tax. I'm kinda assuming they wont be rushing to sort that out so whatever the process is it will be painful
    Loan charge paid in excess of final settlement is non refundable.
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    On the other hand, I would expect there to be quite a time lag between A and B.

    A) paying the loan charge
    B) HMRC proactively pushing for settlement

    Anyone fancy hazarding a guess?
    1 year
    2 years
    5 years
    10 years

    Although, never say never. Otherwise, Mr W will have one of his hissy fits.
    Scoots still says that Apr 2020 didn't mark the start of a new stock bull market.

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    Quote Originally Posted by DealorNoDeal View Post
    On the other hand, I would expect there to be quite a time lag between A and B.

    A) paying the loan charge
    B) HMRC proactively pushing for settlement

    Anyone fancy hazarding a guess?
    1 year
    2 years
    5 years
    10 years

    Although, never say never. Otherwise, Mr W will have one of his hissy fits.
    How about October when Hoey reaches Upper Tier?
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  7. #7

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    Quote Originally Posted by webberg View Post
    How about October when Hoey reaches Upper Tier?
    I think they might be a bit preoccupied for a while chasing those who haven't paid the loan charge but should have. Including those challenging the charge on various grounds (flimsy, contrived, or otherwise).

    Then there are all those, with pre-2010 open years, who have been let off the loan charge.

    Plenty to keep them busy for many years to come.
    Last edited by DealorNoDeal; 10th September 2020 at 11:26.
    Scoots still says that Apr 2020 didn't mark the start of a new stock bull market.

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    As has been noted, Mr DealorNoDeal and I have agreed to disagree on whether HMRC will or will not chase outstanding enquiries to a conclusion.

    I am of the view that there is no legislation that permits HMRC to leave open enquiries outstanding ad infinitum and that they would be failing in an obligation to be "fair" to all taxpayers if they did that.

    Mr DoND thinks that once HMRC has the majority of its money via the loan charge, then lack of resource, will and perhaps a rudimentary risk/reward calculation will say that complying with my view of life is not worth the effort.

    I suggest that planning for the worst and hoping for the best is a sensible play here.
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  9. #9

    Default The loan charge is NOT a settlement "option"

    Quote Originally Posted by webberg View Post
    As has been noted, Mr DealorNoDeal and I have agreed to disagree on whether HMRC will or will not chase outstanding enquiries to a conclusion.

    I am of the view that there is no legislation that permits HMRC to leave open enquiries outstanding ad infinitum and that they would be failing in an obligation to be "fair" to all taxpayers if they did that.

    Mr DoND thinks that once HMRC has the majority of its money via the loan charge, then lack of resource, will and perhaps a rudimentary risk/reward calculation will say that complying with my view of life is not worth the effort.

    I suggest that planning for the worst and hoping for the best is a sensible play here.
    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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  10. #10

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    Quote Originally Posted by webberg View Post
    As has been noted, Mr DealorNoDeal and I have agreed to disagree on whether HMRC will or will not chase outstanding enquiries to a conclusion.

    I am of the view that there is no legislation that permits HMRC to leave open enquiries outstanding ad infinitum and that they would be failing in an obligation to be "fair" to all taxpayers if they did that.

    Mr DoND thinks that once HMRC has the majority of its money via the loan charge, then lack of resource, will and perhaps a rudimentary risk/reward calculation will say that complying with my view of life is not worth the effort.

    I suggest that planning for the worst and hoping for the best is a sensible play here.
    But, equally, there is no legislation which precludes them from doing so.

    I'm not saying they won't ever pursue people who've paid but I'm sure it will be very low down on their list of priorities. Top of the list will be those who've tried to "dodge" the charge. Then they've got all the pre-2010 open years to contend with.
    Scoots still says that Apr 2020 didn't mark the start of a new stock bull market.

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