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Thread: BIG GROUP

  1. #991

    Contractor Among Contractors


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    Quote Originally Posted by Clairol View Post
    Feeling confused now. Spoke to HMRC.

    What's the difference between an EBT and Contractor Loans please? Does it make a difference from a settlement point of view?
    The HMRC chap said he couldn't advise me on settlement terms because he dealt with EBT's and we have Contractor Loans.

    Is it that EBT's are companies and Loans are for individuals?
    There is very little technical difference, but HMRC deal with them in different departments.

    Generally they see an "EBT" as a wholly owned company making contributions to a trust which then makes a loan to the individual director/shareholder. The company claims a CT deduction and the individual claims no tax due on the loan. HMRC says that the CT deduction is not available either at all, or until the individual is due to pay tax, in which case they might be able to issue a PAYE assessment.

    A contractor loan is where money for the contractors time/expertise is paid and ends up with a promoter who may have tens/hundreds/thousands of contractors on their books. The promoter pays a contribution to a trust or similar and a loan is made to the contractor. The claim is that the loan is not taxable. That claim is not accepted as being correct by HMRC.

    So there is little to chose between them aside from an EBT having some specific legislation.

  2. #992

    More time posting than coding


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    Quote Originally Posted by webberg View Post
    Correct, it's not clear.

    Up to perhaps a year ago, a settlement (CLSO or otherwise) did not usually include a closed year and no tax or interest was paid.

    From a year or so ago, HMRC started insisting that a voluntary payment was made to cover closed years. Refusal to pay usually meant that HMRC picked up "their" ball and went home, stopping play.

    When the first papers on the 2019 charge appeared, they said that the charge would not capture years that had been "implicitly" already agreed. Under questioning HMRC retreated into a shell.

    The legislation certainly contains no explicit exemption but does talk about "tax already agreed".

    So, your guess is as good as anybody's.

    My opinion is that closed years will be included in the 2019 charge. I'm sure that others will have a different view and until we see some debate on the issue (unlikely given the very limited time for this) we are not likely to have a proper answer, which is appallingly bad.

    I agree with this. It is easier for them to include it and then put up a fight if required, rather than remove it and think about what they could have had !

  3. #993

    Contractor Among Contractors


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    There is a thread below regarding the new trustee for the Horizon range of products.

    There are two points raised that relate directly to BG and as such I'll address them.

    First, that the cost of BG is prohibitive and puts people off joining.

    BG costs 200 to join and 18 a month. In the first year that is close to 400. In the real world that would buy you about an hour of a middle ranking tax manager's time.

    That is the only financial commitment required.

    Second, there is an accusation that BG chokes debate on issues.

    We have always been willing to share analysis and thoughts on public information such as tax legislation and explanatory papers. We have done so in these threads and elsewhere.

    We have always been able to share opinions on why HMRC is making enquiries and where they might lead to.

    We have never shared any analysis of particular schemes or individual enquiries in a public forum as that is professionally, morally, ethically and commercially inappropriate.

    We have never shared an analysis of new proposals we see in this sector, for the same reasons.

    To be accused of choking debate therefore is totally unfair.

  4. #994

    Nervous Newbie


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    I spoke to HMRC today about my hubbys liability and was advised that come 2019 closed and open years will be subject to NI, Tax and Interest (subject to legislation approval).

    Whereas presently we are liable for Tax and Interest on Open years and (voluntarily) tax on closed years. We don't have any years after 07. And unused tax allowances/bands can be used.

    Does that tally up with other peoples understanding please?

    Un-nervinlgly since I spoke to HMRC I have had an email from them to do with a different aspect of taxation pertinent to me! That's too much of a coincidence.

  5. #995

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    Quote Originally Posted by Clairol View Post
    I spoke to HMRC today about my hubbys liability and was advised that come 2019 closed and open years will be subject to NI, Tax and Interest (subject to legislation approval).

    Whereas presently we are liable for Tax and Interest on Open years and (voluntarily) tax on closed years. We don't have any years after 07. And unused tax allowances/bands can be used.

    Does that tally up with other peoples understanding please?

    Un-nervinlgly since I spoke to HMRC I have had an email from them to do with a different aspect of taxation pertinent to me! That's too much of a coincidence.

    So, if this is correct, what is the (voluntary) tax rate?

  6. #996

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    Quote Originally Posted by me206et View Post
    So, if this is correct, what is the (voluntary) tax rate?
    It isn't a voluntary rate, it is a voluntary payment.

  7. #997

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    Correct, it's a voluntary payment.

    HMRC will add the loans to your reported income, calculate the tax due on the total, deduct anything paid and the result is the voluntary payment.

  8. #998

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    Quote Originally Posted by regron View Post
    It isn't a voluntary rate, it is a voluntary payment.

    OK. does anyone else think this is like pulling teeth.
    It is a voluntary payment based on what they think you owe, I am sure its not on what you want to pay them.
    It must be based on something tangible. Or do they just pick a figure out of the air.
    So based on the tax that would have been paid? the tax plus NI plus employers NI?
    Someone must know about where the figure stands.

    Otherwise as nobody actually knows what the bills will be in 2019 and if nobody knows what the bills are like now, How can anyone make any kind of informed judgement.

    Just my pennies worth.

  9. #999

    Contractor Among Contractors


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    Quote Originally Posted by me206et View Post
    OK. does anyone else think this is like pulling teeth.
    It is a voluntary payment based on what they think you owe, I am sure its not on what you want to pay them.
    It must be based on something tangible. Or do they just pick a figure out of the air.
    So based on the tax that would have been paid? the tax plus NI plus employers NI?
    Someone must know about where the figure stands.

    Otherwise as nobody actually knows what the bills will be in 2019 and if nobody knows what the bills are like now, How can anyone make any kind of informed judgement.

    Just my pennies worth.
    I think that as all these questions have been answered at least once in these threads, you would be rewarded by an hour or so's research.

    I will supply short answers below, but believe me, these points have all been explored to the last comma in the past 2 years and the truth is out there.

    1. The voluntary payment, as I said, is based on adding your loan to the reported income in the year and calculating the tax. You will be asked for the loan value. If you do not have it, HMRC will make an estimate. Many mass marketed schemes paid loans that were a multiple of salary and that is what HMRC use.

    2. Please read the post above which is very clear that it's only tax that is calculated. As the payment is voluntary it cannot include NIC or interest.

    3. The 2019 charge is based on adding the cumulative loans in unpaid to your 2018/19 income and then calculating the tax and employees NIC due and deducting what has been paid.

    4. Nobody knows the correct figure or calculation. HMRC probably don't. I certainly don't. I do however have a very good idea based on reading the law, reading the tax cases, reading other advisers opinions and analysis, understanding the basics of how the tax system works, taking into account the stories from those who have already settled, collecting information from HMRC by calling them, reading more forums that this one, predicting what might be done in challenge to HMRC, etc.

    We are probably 10 years into a much longer enquiry and HMRC are changing and "reinterpreting" laws and practice. They are inconsistent and some would argue pernicious and will often invent what a law may mean in contravention of the legislation. They are backed by Tribunals and the like who often turn logical somersaults to find for HMRC. They are backed by policy that often changes without reason or notice.

    So, is it confusing? Yes.

    There is no substitute for proper research or from talking with knowledgeable people (contractors or advisers).

    As such I suggest being polite and professional is likely to be more productive.

  10. #1000

    Still gathering requirements...


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    Quote Originally Posted by webberg View Post
    There is a thread below regarding the new trustee for the Horizon range of products.

    There are two points raised that relate directly to BG and as such I'll address them.

    First, that the cost of BG is prohibitive and puts people off joining.

    BG costs 200 to join and 18 a month. In the first year that is close to 400. In the real world that would buy you about an hour of a middle ranking tax manager's time.

    That is the only financial commitment required.
    I am still confused what this payment actually entitles the individual making the payments, Webberg are you able to clarify what this provides ?

    I.e just past loans being challenged on a group basis ? The best settlement individually ? Representation for all Hmrc letters etc related to this ? Challenge of 2019 charges to years they haven't even opened an enquiry for on a group basis ?

    Is there any other organisation or group challenging the 2019 issue as a collective action which no doubt is affecting many people ? Small groups are unlikely to have an effect on Hmrc, I would of thought it needs a strong challenge from a large group ?

    Interested in joining the right group but just want to be fully informed and think we should target our efforts. I'm sure many contractors would join when they see a strong movement and split the cost.

    Don't think the cost is an issue, just many like myself have already paid accountants / specialists quite a bit who have only been happy to get their fees with no real beneficial result.

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