GAAR Pooling notices - Remuneration Trusts GAAR Pooling notices - Remuneration Trusts
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  1. #1

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    Default GAAR Pooling notices - Remuneration Trusts

    A general advisory.

    HMRC has begun issuing GAAR Pooling Notices in respect of arrangements using a version of "remuneration trusts".

    Without getting too detailed, HMRC is able to take a set of arrangements (the lead arrangements) to a Panel of tax specialists (weighted in favour of and appointed by HMRC) and ask them to decide if they are abuse of the tax system.

    If the Panel considers that the arrangements fail the so called "double reasonableness" test, then an opinion is published.

    Tax avoidance: General Anti-Abuse Rule - GOV.UK

    It seems that either all cases taken to the Panel have resulted in the test being failed and an opinion issued, or the Panel is not obliged to publish those arrangements that meet the test as to do so is essentially an invitation to all to use a particular scheme.

    Once a "lead arrangement" has been published, HMRC can identify all "equivalent" cases and issue initially a "pooling notice". This invites the recipient to take "corrective action" within a short window to pay the tax that the arrangements used have so far avoided. You cannot appeal this notice.

    If you choose not to take corrective action, you may in due course receive a counteraction notice. This is usually accompanied by amendments to the relevant years and an APN. You can appeal the assessments but not the APN.

    If you appeal the assessments and eventually have your day in Tribunal, a loss there will come with an automatic penalty.

    In essence the GAAR system is a way in which HMRC can (and does) not only impose its view on you but also puts up significant hurdles to going to a Tribunal.

    I'm not aware of any instance of a case going to Tribunal which has previously had an adverse GAAR opinion. That day may come of course but not sure when.

    In short - this is a notice that does not require payment of money immediately but it is a very important step in the process.

    In late October pooling notices were issued to certain users of schemes involving "remuneration trusts".

    The sort of names associated with such schemes (in those we have seen) are:

    Baxendale-Walker: Buckingham Wealth: Bay Trust International: Westwood Trustees: WUTNo1: Minerva:

    A particular feature is the use of "Fiduciary agreements".

    I am not suggesting that any of the entities above have facilitated or participated in the sort of abuse HMRC describes. I am not suggesting that a fiduciary agreement is a pointer to such abuse. I merely report the names as the pooling notices are long (12 pages plus covering notes) and many will be tempted to ignore them as they do not ask for money. Many may however recognise the above names.

    If that is the case, you should take the notice to your adviser as soon as possible.

    It is also worth pointing out that so far, known earlier uses of similar schemes have not attracted pooling notices. That may be because the use of GAAR is limited to schemes current after July 2013 and the penalty provisions only from 2016. Some taxes have fallen into the regime at a later time. It may be that HMRC is unaware of those earlier schemes. It may be that they are not seen as "equivalent". It may be because they are in the pipeline and will be issued in due course.

    I don't know why and I'm not going to share the names of likely candidates here.
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  2. #2

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    Quote Originally Posted by webberg View Post
    A general advisory.

    HMRC has begun issuing GAAR Pooling Notices in respect of arrangements using a version of "remuneration trusts".

    Without getting too detailed, HMRC is able to take a set of arrangements (the lead arrangements) to a Panel of tax specialists (weighted in favour of and appointed by HMRC) and ask them to decide if they are abuse of the tax system.

    If the Panel considers that the arrangements fail the so called "double reasonableness" test, then an opinion is published.

    Tax avoidance: General Anti-Abuse Rule - GOV.UK

    It seems that either all cases taken to the Panel have resulted in the test being failed and an opinion issued, or the Panel is not obliged to publish those arrangements that meet the test as to do so is essentially an invitation to all to use a particular scheme.

    Once a "lead arrangement" has been published, HMRC can identify all "equivalent" cases and issue initially a "pooling notice". This invites the recipient to take "corrective action" within a short window to pay the tax that the arrangements used have so far avoided. You cannot appeal this notice.

    If you choose not to take corrective action, you may in due course receive a counteraction notice. This is usually accompanied by amendments to the relevant years and an APN. You can appeal the assessments but not the APN.

    If you appeal the assessments and eventually have your day in Tribunal, a loss there will come with an automatic penalty.

    In essence the GAAR system is a way in which HMRC can (and does) not only impose its view on you but also puts up significant hurdles to going to a Tribunal.

    I'm not aware of any instance of a case going to Tribunal which has previously had an adverse GAAR opinion. That day may come of course but not sure when.

    In short - this is a notice that does not require payment of money immediately but it is a very important step in the process.

    In late October pooling notices were issued to certain users of schemes involving "remuneration trusts".

    The sort of names associated with such schemes (in those we have seen) are:

    Baxendale-Walker: Buckingham Wealth: Bay Trust International: Westwood Trustees: WUTNo1: Minerva:

    A particular feature is the use of "Fiduciary agreements".

    I am not suggesting that any of the entities above have facilitated or participated in the sort of abuse HMRC describes. I am not suggesting that a fiduciary agreement is a pointer to such abuse. I merely report the names as the pooling notices are long (12 pages plus covering notes) and many will be tempted to ignore them as they do not ask for money. Many may however recognise the above names.

    If that is the case, you should take the notice to your adviser as soon as possible.

    It is also worth pointing out that so far, known earlier uses of similar schemes have not attracted pooling notices. That may be because the use of GAAR is limited to schemes current after July 2013 and the penalty provisions only from 2016. Some taxes have fallen into the regime at a later time. It may be that HMRC is unaware of those earlier schemes. It may be that they are not seen as "equivalent". It may be because they are in the pipeline and will be issued in due course.

    I don't know why and I'm not going to share the names of likely candidates here.
    I was using one of the schemes named above from 2014 till 2016 BUT have already settled in 2019 under the CLS02, assuming I’m clear?
    (Although that probably doesn’t mean they won’t send me a letter!)

  3. #3

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    You may still get a letter but I think you should have no worries over this as you have settled.
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    Quote Originally Posted by webberg View Post
    You may still get a letter but I think you should have no worries over this as you have settled.

    So does this mean that HMRC don't see these schemes as being caught by the Loan Charge?

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    Quote Originally Posted by Delendog View Post
    So does this mean that HMRC don't see these schemes as being caught by the Loan Charge?
    I have no idea but I suspect HMRC will see the schemes being subject to loan charge AND GAAR.

    Don't forget, the loan charge is NOT settlement. Even if paid, it is still necessary to agree the position for each year which has an open enquiry.

    (Closed years post December 2010 are subject to loan charge).

    GAAR is an alternative way to agree the tax due in each year money was received.
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  6. #6

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    Quote Originally Posted by webberg View Post
    I have no idea but I suspect HMRC will see the schemes being subject to loan charge AND GAAR.

    Don't forget, the loan charge is NOT settlement. Even if paid, it is still necessary to agree the position for each year which has an open enquiry.

    (Closed years post December 2010 are subject to loan charge).

    GAAR is an alternative way to agree the tax due in each year money was received.
    Ok thanks - so it is also a way for HMRC to issue an APN when a scheme isn't DOTAS, under GAAR can an APN be issued on a closed year?

  7. #7

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    Webberg, do you think schemes pre December 2010 will fall into this? Even ones that have long since vanished?

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    Quote Originally Posted by Delendog View Post
    Ok thanks - so it is also a way for HMRC to issue an APN when a scheme isn't DOTAS, under GAAR can an APN be issued on a closed year?
    Yes.

    The pooling notice gives you the chance to take action to "correct" your reported position.

    If you do not then chances are you will get a counter action notice which will arrive with an APN.
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  9. #9

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    Quote Originally Posted by Simon100 View Post
    Webberg, do you think schemes pre December 2010 will fall into this? Even ones that have long since vanished?
    GAAR applies only from July 2013.
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  10. #10

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    Hi Webberg,

    I assume anyone who gets a pooling notice is highly likely to also get a counteraction notice & APN.

    As the APN can't be challenged, are there any real defences to the process (short if a JR)?

    Thanks

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