Still gathering requirements...
AM Limited COP8 HMRC Investigation Letter..
I (stupidly) fell into the trap of the EBT/PBT structures and was taken in with the 'it's 100% legal' and the 'Counsel Approved' sales pitches, along with the 85%+ take home! Fortunately, I changed to running my own Limited Company as of the beginning of this year, mainly direct to clients now.
I was hoping that my naivety (and to be honest, my stupidness) wouldn't come back and bite me in the butt. I finally saw that it wasn't as 'legal' as they made out and was not worth the risk.
Today, I have received a letter from HMRC, which starts with "Thank you for your Tax Return for the year ended 5 April 2011." The letter goes on to say "I would now like to check your return. My check will be made under Section 9A Taxes Management Act 1970, and under HMRC Code of Practice 8 - cases where serious fraud is not suspected."
They go on to explain few general things about how they will conduct this check fairly, and go on to say;
"I note that during the year you took part in arrangements whereby you had entered into a contract of employment with an offshore employer AM Limited and in due course received sums of money in the form of loans or expenses."
Would you please let me know
- What sums you received in the form of loans or expenses during this year endded 5 April 2011, either directly or indirectly with your engagement with AM Limited.
- What amounts of loans you have since repaid, and on what dates.
As you can imagine, I am very worried, haven't properly slept since I got the letter and not sure what happens next. I have asked AM Limited what to do next as I am assuming that it is not just me that is been asked these questions. A tax specialist has advised that this is a 'Project case' and HMRC will be targeting everyone who usedAM Limited.
I have a few questions...
- I have already provided them the amounts on my Tax Return, why are they asking for the same figure again?
- Obviously I haven't paid any of the loan back -I am trying to find out what I should answer this question with.
- When I provide this information, are they going to straight away slap me in the face with a bill for PAYE and NI against the loan amount, or will that come once they have challenged the AM Limited EBT structure/vehicle in a court?
- If they do send me a tax bill for PAYE/NIC against the loan, for example, for around £60,000, and I cannot afford it (which I can't!), can I pay them monthly? I don't want to go bankrupt.
- I expect that if AM Limited will not help me, I will need some professional representation to deal with HMRC, and hopefully get across to them, that I was an idiot. Does anyone have any sort of idea how much someone like this would cost to do the communication between me and HMRC?
Constructive comments only please. I know I was naive, I know I was stupid to even go near these companies, but I saw this and changed things earlier this year.
Really grateful in advance. I hope the questions above will be helpful to anyone else in my situation.
(a very worried) Neo222