HMRC enquiries for EBT schemes through SANZAR

[MrO666]

This is pure speculation but...

It sounds to me like HMRC have treated his payment as a "payment on account" and that the enquiry is still open. I'm assuming the assessment was based on an estimate? Although making a payment on account will prevent further interest accruing, the final assessment could still get adjusted up or down.

I think the normal settlement process would be for HMRC to issue a closure notice but they won't do this until they are satisfied that the assessment is correct.

Having said this, the only way to be sure what's going on is for him to contact them.

Also, remember these are an assessment and not enquiry.


Your thinking sounds correct to me.

It's interesting though. As far as my colleague is concerned, he's paid the assessment and that's it. He said he has no plans to speak to HMRC about it at all, and that if they want to alter that assessment, then they can (will) only do so based on factual information (it's pointless them guessing again). I'm assuming that at some point (months or years) HMRC will be forced to either justify altering the existing assessment, or by issuing a closure notice based on the assessment figures. Unless they can find something which discredits the assessment (in the taxpayers favour), then I can't see what else they can do.

Does this make sense ?

[DonkeyRhubarb]

Also, remember these are an assessment and not enquiry.


Your thinking sounds correct to me.

It's interesting though. As far as my colleague is concerned, he's paid the assessment and that's it. He said he has no plans to speak to HMRC about it at all, and that if they want to alter that assessment, then they can (will) only do so based on factual information (it's pointless them guessing again). I'm assuming that at some point (months or years) HMRC will be forced to either justify altering the existing assessment, or by issuing a closure notice based on the assessment figures. Unless they can find something which discredits the assessment (in the taxpayers favour), then I can't see what else they can do.

Does this make sense ?

HMRC only raised discovery assessments because they were too late to open an enquiry. They amount to the same thing in the sense that they place the taxpayer's return under "investigation".

My understanding is that, unless there has been a subsequent closure notice, the investigation remains open.

Did your colleague appeal the assessment? Or did he just make the payment?

SALF404 - Enquiries into Tax Returns: some notes on HMRC enquiries

"It is not possible for HMRC to commence enquiries under the Section 9A powers once the time limit for giving a notice of enquiry has passed. Any enquiries commenced outside these time limits may only be made for the purposes of a discovery assessment under Section 29 (see SALF409 onwards). HMRC may sometimes refer to such cases as 'investigations', in order to distinguish them from enquiries pursued under the S9A powers."

[MrO666]

HMRC only raised discovery assessments because they were too late to open an enquiry. They amount to the same thing in the sense that they place the taxpayer's return under "investigation".

My understanding is that, unless there has been a subsequent closure notice, the investigation remains open.

Did your colleague appeal the assessment? Or did he just make the payment?

SALF404 - Enquiries into Tax Returns: some notes on HMRC enquiries

"It is not possible for HMRC to commence enquiries under the Section 9A powers once the time limit for giving a notice of enquiry has passed. Any enquiries commenced outside these time limits may only be made for the purposes of a discovery assessment under Section 29 (see SALF409 onwards). HMRC may sometimes refer to such cases as 'investigations', in order to distinguish them from enquiries pursued under the S9A powers."

To the best of my knowledge he didn't appeal at all, he just paid the assessment figure in full......and has never heard another word from HMRC about it since.

I guess though that the onus is on HMRC to do something now. They're already had the money, so if they want more then they need to categorically prove what is owed. Seeing as HMRC 'appear' to be plucking assessment figures from the air (especially for sanzar users), it would appear that they clearly do not know what the actual figures should be (to the pound and penny). So from that perspective, unless they can prove the assessment is wrong (which seems unlikely), then at some point they either need to accept the assessment and payment and close it down, or have a very good reason not to. Either way, my colleague says he doesn't care as there's no interest accruing, so they can leave it open for 10 years if they want.

[DonkeyRhubarb]

To the best of my knowledge he didn't appeal at all, he just paid the assessment figure in full......and has never heard another word from HMRC about it since.

I guess though that the onus is on HMRC to do something now. They're already had the money, so if they want more then they need to categorically prove what is owed. Seeing as HMRC 'appear' to be plucking assessment figures from the air (especially for sanzar users), it would appear that they clearly do not know what the actual figures should be (to the pound and penny). So from that perspective, unless they can prove the assessment is wrong (which seems unlikely), then at some point they either need to accept the assessment and payment and close it down, or have a very good reason not to. Either way, my colleague says he doesn't care as there's no interest accruing, so they can leave it open for 10 years if they want.

If he appealed the assessment then I assume it would show on-line that it had been suspended.

It's curious that HMRC appear to have left it in limbo like this.

[MrO666]

If he appealed the assessment then I assume it would show on-line that it had been suspended.

It's curious that HMRC appear to have left it in limbo like this.

Just asked him......he said he never appealed it, just paid the assessment in full.

As crazy as it sounds, it's almost like HMRC aren't quite sure whether they can do what they're done, hence it's being left as is.

He says he's never heard a single word from them since paying, so they are certainly aware that he coughed up as otherwise they would be chasing him surely, as the appeal time limit was over a year ago.

[DonkeyRhubarb]

Just asked him......he said he never appealed it, just paid the assessment in full.

As crazy as it sounds, it's almost like HMRC aren't quite sure whether they can do what they're done, hence it's being left as is.

He says he's never heard a single word from them since paying, so they are certainly aware that he coughed up as otherwise they would be chasing him surely, as the appeal time limit was over a year ago.

The payment on account should have prevented any enforcement action.

They may eventually tie up these loose ends but I suspect things are a bit chaotic at the moment.

Btw, did the assessment include interest? The ones I've seen from our group only estimated the tax.

[MrO666]

The payment on account should have prevented any enforcement action.

They may eventually tie up these loose ends but I suspect things are a bit chaotic at the moment.

Btw, did the assessment include interest? The ones I've seen from our group only estimated the tax.

Don't think it did include interest no........although I'm not positive.

One thing that is interesting, is the lack of NI. I've spoken to numerous accountants regarding this, and the general consensus seems to be that HMRC are 'unlikely' to go for it, due in part to it being a nightmare for them to even attempt to work out accurately what the liability would be. In addition to that, NI contributions are/were as we all know the responsibility of the employer. Although there are circumstances where that debt can be transferred to the tax payer, what i'm hearing is that it is very unlikely that HMRC would go for that, as that on it's own would open up yet another huge round of litigation Not impossible, but unlikely from what I'm hearing, if they could get their mitts on tax £'s alone they'd be happy.

Hey, i'm not an expert though, i'm just relaying what the general thought seems to be from what i'm hearing.

[ASB]

Don't think it did include interest no........although I'm not positive.

One thing that is interesting, is the lack of NI. I've spoken to numerous accountants regarding this, and the general consensus seems to be that HMRC are 'unlikely' to go for it, due in part to it being a nightmare for them to even attempt to work out accurately what the liability would be. In addition to that, NI contributions are/were as we all know the responsibility of the employer. Although there are circumstances where that debt can be transferred to the tax payer, what i'm hearing is that it is very unlikely that HMRC would go for that, as that on it's own would open up yet another huge round of litigation Not impossible, but unlikely from what I'm hearing, if they could get their mitts on tax £'s alone they'd be happy.

Hey, i'm not an expert though, i'm just relaying what the general thought seems to be from what i'm hearing.

Ok, I will have a go at my understanding which may not be fully accurate and is based on my own experience of the enquries I have had. (Normal compliance not scheme based)

- NI: Different procedure for NI. There has been posting on here of a technical nature as to why NI claims are unlikely to be assessed, or even if it is sucessful transferred. I'm guessing it was classified as earnt income. In my case the agreed settlement should have resulted in NI and some class 1A. They never mentioned it.

- Payment: If he just paid then it is simply a payment on account. The enquiry is still open. However if he said "reference your assessment blah blah, and settlement enclosed" then although the enquiry is still open HMRC would have a damn hard job coming back for a second bite. Strictly he should have requested determination which should trigger the closure process or hmrc should have invoked it anyway.

It is in his interest in my view to request closure.

[DonkeyRhubarb]

It is in his interest in my view to request closure.

I tend to agree.

It is over 12 months since he accepted the assessment and made a payment in full, so he has every right to ask for closure.

[Rex Munday]

I tend to agree.

It is over 12 months since he accepted the assessment and made a payment in full, so he has every right to ask for closure.

He might have every right but HMRC are now ruling by decree and really couldn't care less