HMRC extends Contractor Loan Settlement Opportunity

HM Revenue & Customs has extended the lifetime of its Contractor Loan Settlement Opportunity, which will now be open until June 30th, not January 9th as originally announced.

The extension is due to “exceptional reasons” but does not represent a “better deal” than the initial Contractor Loan Settlement Opportunity (CLSO), which “we will not extend” again.

HMRC’s vow came in a four-part update suggesting those reasons to be popularity (“thousands of users”), confusion (‘clarification could help’) and user concern (“feedback”).

The update’s first part – details on issues raised in the CLSO’s first few months – seems the most relevant to contractors, some of whom will also heed part two – IHT under the CLSO.

But all the parts (the third is on payment plans and the fourth on contacting HMRC), appear designed to help users settle -- an outcome which HMRC would prefer to tribunal action.

The first part addresses Accelerated Payment Notices (APN) which, if received by a contractor using the CLSO, must be either paid or the subject of representations within the 90-day limit.

So even if contractors are “discussing” settlement with the Revenue’s CLSO staff, the HMRC update says they must pay the sum or make representations in the timeframe or risk penalties.

However if contractors “reach” a settlement with HMRC within the specified time limit and pay the amount due, then the APN will be withdrawn. The guidance for contractors adds:

“If you reach settlement…after the due date for payment of the accelerated payment, then the amount paid will be treated as a payment on account and offset against the final amount due.”

The other areas HMRC tackles in the update’s first part relate to reasons why contractors may have heard (or been told) wrongly that its staff will fail in their bid to collect tax from them.

For example, in a section on EBTs that mentions the Dextra, Sempra and Murray cases, the Revenue argues that these rulings in favour of the taxpayer do not apply to CL scheme users.   

And in an adjacent section, HMRC dismisses the claim that it is prohibited from using the Transfer of Assets Abroad rules, and points to the Fisher ruling as evidence it can.

The taxman also says he will soon issue discovery assessments for CL scheme users for the 2010-11 tax year, and will hold a webinar for any contractor or agent unsure about the CLSO.

Before IHT liabilities are explored and how to settle them if a discretionary trust was used, there is a short paragraph on not settling, yet getting in touch with HMRC is still advised (as it is for those who want to settle).

The tax office says: “If you have taken advice and do not want to settle, please contact us. You do not have to wait until September 2015 before you can progress a case to First Tier Tribunal.

“We can help you to ensure we have all the information we need to have your case heard by the Tribunal, and we can issue any paperwork required before you can ask the Tribunals Service to hear your appeals.”

Further addressing those who do not wish to settle, HMRC advised them to not destroy any documents relating to arrangements used, as the tribunal “may” require them to hear the case.

As for would-be settlers, HMRC said it expected them to have come forward by 30.06.15 and be discussing “possible” settlement, which should be agreed no later than 30.09.15.

Editor’s Note: Related Reading –

Offshore loan scheme contractors ‘deserve Time to Pay’

Contractors’ Questions: What if I face a Section 9A tax investigation?

Contractors’ Questions: Why did IT contractor use EBTs?

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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