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Advice on process please

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    Advice on process please

    This isn't a contractor scheme - its an employee share scheme - but it is caught up in the same review process so I'm after some advice on how things work.



    Can anyone enlighten me on due process?
    Last edited by SarahL2012; 9 November 2015, 14:07.

    #2
    Originally posted by SarahL2012 View Post
    This isn't a contractor scheme - its an employee share scheme - but it is caught up in the same review process so I'm after some advice on how things work.

    In 2009/10 I was a Director at a small company listed on the AIM. We were members of a scheme that one of the big accounting firms put in place where we had 'notional' shares. We paid a small amount of money for these shares (not market value) and when the business was sold we got the net amount (so price on day business sold less price on day shares awarded). I knew there was a bit of a risk around capital gains versus income tax so put some money away at the time. Tax would have been paid via 10/11 tax return. {incidentally before you all start thinking I made a fortune out of this I absolutely didn't!!}

    A few weeks ago a letter dropped on the doorstep from HMRC saying that they were going to investigate the scheme. Another letter followed today saying that they have concluded 'the scheme does not work'. I think they would have been time barred after next April.

    So when HMRC say 'they are prepared to litigate against the employer who made the payments' - does that mean we / they now start a long laborious process to defend the position (presumably with the accounting firm who designed the scheme and sold it to numerous companies) or does HMRC litigation mean its a done deal?

    Can anyone enlighten me on due process?
    Pass! I strongly recommend speaking to a tax professional. You could start with WTT Consulting who set up Big Group. If they are not the right people I am sure Graham will point you in the direction of someone you can rely upon.

    In this forum we know a fair bit about EBT loan schemes and the like but probably not able to offer much useful help otherwise. (speaking for myself!).

    Comment


      #3
      Definitely something Graham could help with I'm sure. Either way seek independent professional advice on this.

      Just a side note - HMRC are known to view these forums, so be careful what you discuss on here.

      Comment


        #4
        Originally posted by SarahL2012 View Post
        This isn't a contractor scheme - its an employee share scheme - but it is caught up in the same review process so I'm after some advice on how things work.

        In 2009/10 I was a Director at a small company listed on the AIM. We were members of a scheme that one of the big accounting firms put in place where we had 'notional' shares. We paid a small amount of money for these shares (not market value) and when the business was sold we got the net amount (so price on day business sold less price on day shares awarded). I knew there was a bit of a risk around capital gains versus income tax so put some money away at the time. Tax would have been paid via 10/11 tax return. {incidentally before you all start thinking I made a fortune out of this I absolutely didn't!!}

        A few weeks ago a letter dropped on the doorstep from HMRC saying that they were going to investigate the scheme. Another letter followed today saying that they have concluded 'the scheme does not work'. I think they would have been time barred after next April.

        So when HMRC say 'they are prepared to litigate against the employer who made the payments' - does that mean we / they now start a long laborious process to defend the position (presumably with the accounting firm who designed the scheme and sold it to numerous companies) or does HMRC litigation mean its a done deal?

        Can anyone enlighten me on due process?
        Hello - a (blushing) Graham here.

        Do you know if HMRC has discussed the details with the accounting firm who suggested the plan? Has that firm been in touch with you?

        As is suggested above, professional advice is key and your first port of call should be to the firm who sold you the scheme and executed it. They may well carry insurance for costs and fees or you may be able to prove that they sold you a scheme that they knew would not work, or executed it so poorly that it had no chance of working. If so, then they should attempt to fix the problem at their cost.

        ONLY if that firm is squeaky clean in terms of culpability should you need to consider going elsewhere for advice.

        Presumably the other Directors/shareholders used a similar or the same scheme? If so, get in touch and see if HMRC has also picked them up.

        Discuss with the scheme promoters and users your options. These will be roughly;

        1. The accounting firm/you believe that you have a 75% or better chance of winning the technical argument = stand tall and go to Tribunal if necessary and don't give an inch.

        2. The accounting firm is hopeless and perhaps culpable, the scheme has been struck down in other circumstances, there is no appetite amongst users to defend, i.e. 40% or less chance of winning = talk with HMRC and try to rescue a small benefit.

        3. The accounting firm is solid but you've lost faith, the scheme is complicated but not been in Court before, the HMRC argument is not an open and shut case, but you think (or are advised) that confidence at litigation is between say 40% and 75% = negotiate.

        Ask the accounting firm about option 1.

        Ask the accounting firm if a similar case has already lost in option 2.

        Ask the accounting firm the questions from the above and then seek a second opinion from another firm for option 3.

        Most immediate thing to do is write back to HMRC and tell them that you disagree with their opinion, appeal any assessment they make and tell them you're seeking professional advice.

        PM me if you wish.
        Best Forum Adviser & Forum Personality of the Year 2018.

        (No, me neither).

        Comment

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