No To Retro Tax - Ongoing battle against S58 FA2008

[TheHat]

The CTD is just a credit you can apply to your tax account in any way you see fit. Common sense says that you apply them to the earliest liabilities first as this stops interest running on them.

You will not know your final liability until the dust settles - several years away.

In the meantime, the APN needs to be paid (perhaps delayed and reduced - both possible) and failing to do so will will bring a penalty which may be payable regardless of whether the final liability is more or less than the APN. (unclear).

Interest on unpaid liability is currently 3% pa.

Penalty for non payment of APN is 15% in a year, or around 5 years' worth of interest.

So, you don't know your final liability and will not for a while, but you do know that failing to pay the APN brings a 15% penalty.

Common sense says use it to pay the APN.

I think I could reduce this to a spreadsheet - I'll try.

Thanks Webberg. Let me put my question another way.

I have two objectives at this time; one, to not inform any HMRC dept (other than the CTD dept) of my CTD; two, stopping interest increasing on the liability.

Are these two objectives mutually exclusive?

[mrkitchen]

So just for clarity the APN once paid is NOT a final settlement, is that correct ?

[TonyTucker]

Correct. It just stops interest accruing on the disputed amount.

[centurian]

Correct. It just stops interest accruing on the disputed amount.

And also, it isn't even a final determination of the core amount in dispute. It's a best guess at this stage. If the case is lost FTTT the judge may award a core amount which is lower, or higher than the APN value.

It doesn't include penalties, which are unlikely in the majority of cases (especially for BN66), but impossible to rule out completely

Most of the time, APN + Interest probably comes close to full liability, but in some extreme cases, the full liability could be 2-3 times the APN amount.

[elpinar]

Thanks Webberg. Let me put my question another way.

I have two objectives at this time; one, to not inform any HMRC dept (other than the CTD dept) of my CTD; two, stopping interest increasing on the liability.

Are these two objectives mutually exclusive?

i think you should also add to that a third - whcih i think is the most important
- to avoid incurring a penanlty for not paying an APN notice

and that one you CANNOT do and keep your CTD a secret(unless you want to stump up twice and pay cash for your apn - whcih i assume you dont

[TheHat]

i think you should also add to that a third - whcih i think is the most important
- to avoid incurring a penanlty for not paying an APN notice

and that one you CANNOT do and keep your CTD a secret(unless you want to stump up twice and pay cash for your apn - whcih i assume you dont

Yes agreed, my intention is to pay the APN with the CTD before any penalties kick in.

However, my question remains, does the fact that I already have a CTD, that isn't assigned to a liability, mean that the interest on the liability is effectively stopped (or retrospectively re-calculated) from the date of the CTD once I finally make HMRC aware of it's existence?

[DonkeyRhubarb]

I have two objectives at this time; one, to not inform any HMRC dept (other than the CTD dept) of my CTD; two, stopping interest increasing on the liability.

Are these two objectives mutually exclusive?

You don't have to inform the APN dept about your CTD until you want to use it to pay the APN.

The CTD will continue to prevent interest accruing.

[DonkeyRhubarb]

Yes agreed, my intention is to pay the APN with the CTD before any penalties kick in.

However, my question remains, does the fact that I already have a CTD, that isn't assigned to a liability, mean that the interest on the liability is effectively stopped (or retrospectively re-calculated) from the date of the CTD once I finally make HMRC aware of it's existence?

When you use a CTD to pay an APN, HMRC will have to adjust your account to show that no interest is due from the date you purchased the CTD.

I'm guessing they will treat it as though you made a payment on account on the date you purchased the CTD.

[slatt]

It's not interest at all, it's a penalty.

Good point, I'm confusing the various beasts!

[slatt]

Yes agreed, my intention is to pay the APN with the CTD before any penalties kick in.

However, my question remains, does the fact that I already have a CTD, that isn't assigned to a liability, mean that the interest on the liability is effectively stopped (or retrospectively re-calculated) from the date of the CTD once I finally make HMRC aware of it's existence?

From what I've seen yes, if you bought a CTD say three years ago, when you do assign it to an APN they'll recalculate the interest and exclude any interest for the past three years.

You wont see any reduction to the amount yet though, as interest will only be applied if you lose in the fullness of time - APNs don't include interest