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Settlement : The Empire strikes back

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    Settlement : The Empire strikes back

    OK, so I am settling, or have been for years. My MP got involved so now I am getting VIP treatment.

    A few things to look out for:

    - to IHT or not, the IHT makes up about 25% of settlement amount, i was never given an option to exclude - what should I do? do the trusts still exist?
    - Read, then weep on the below text in the cover letter, all my loans are pre 2010 - so no need to declare anything should i not settle...

    What you need to do next
    Please read the enclosed letter called ‘About your settlement – without prejudice’. It tells you
    what to do next. You need to make sure that you reply by the date shown in that letter. If you
    cannot reply by then, please phone us straightaway to tell us why.
    About your return for the tax year 6 April 2018 to 5 April 2019
    If you carry on working with us, and settle under the November 2017 terms, you do not have
    to:
    • report and pay your loan charge by sending us your return for the tax year 6 April 2018 to
    5 April 2019
    • report your disguised remuneration loans to us using the online reporting form


    - I have asked for 4 years to pay, so now they charge me forward interest; is this even allowed? seems to be 4% annually?

    When we agree a settlement that includes instalment payments, we also charge ‘forward
    interest’ on the amount that will be paid by instalments. The rate we charge is the same as
    our standard rate for late payment interest plus 1%. The amount of forward interest is shown
    in the table above.
    We can reduce the amount of forward interest if you make any extra payments on top of the
    instalments that are due. If you make any, please let us know.


    I am pretty fed up and the UK is all but bankrupt, so I guess i will need to settle, but nothing seems simple.

    #2
    I'm assuming all your years are 'open' (protected by a HMRC enquiry), as the Morse Review meant anyone with pre-DR (before 9/12/2010) loans and no enquiries (or closed enquiries) took those loans out of scope of the Loan Charge?

    There is no requirement for you to settle pre-DR open years, and it is entirely up to you to decide whether you want to.

    For the late-payment interest, HMRC can charge it from the point at which a tax payment becomes overdue. I think it was 2.75% and then 3.25% but can't be certain, so some years will be charged at 2.75% and some at 3.25%. On the subject of the forward interest, this isn't statutory - HMRC do not *have* to charge it, but they do because they're punishing us. The extra 1% on top is for HMRC's "risk" and is also not statutory; it's simply a cash-grab. They have no reason to charge it, given that the risk is all on your side. If you fail to make one payment in your settlement, HMRC will go after you for the full amount in one go; there's no risk for HMRC.

    I have been asking HMRC for years to explain what specific IHT law applies to my case, and they continually refuse to answer the question, or just say that my use of a Trust might mean I have to pay IHT. They then helpfully add IHT on without figuring out if it's due or not.

    So, all open years and all before 9/12/2020 means you could likely stand behind the Hoey case which has already been to the First Tier Tribunal (FTT) in July 2019 and the Upper Tier Tribunal (UTT) in October 2020.

    Hoey is awaiting the judgement from the UTT, and the guys running the case are "cautiously optimistic" that they'll win.

    if they win, then no tax is due, and any APNs paid will have to be refunded.

    There is a thread on the Hoey litigation here.

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