BN66 - charges and interest

[smalldog]

following brillopads suggestion I thought it might be a good idea to highlight this point....

If/when BN66 clause 55 becomes law I would say there is a strong case to refute interest charges on the basis that:

A) The moment HMRC decided they were to refute the schemes validity they should have closed it that budget year and not let us all acquire interest charges on what they deemed to be taxable income. That would have been fair, you could argue they purposely let it continue to maximise their income with penalty interest.

B) interest is only payable upon acknowledged tax debt, how in that case pre BN66 clause 55 could they commence accumulating interest on what are not acknowledged tax liabilities? Sure interest can only be accumulated from the moment BN66 clause 55 becomes law mid july (if it actually does)

I think this would make for an interesting court battle.

[DonkeyRhubarb]

Whether they can get away with this or not I don't know but they made their intentions clear in a letter I received dated 19th March 2008.

Quote:

In the Budget the Government announced proposals to introduce legislation to retrospectively put it beyond doubt that claims such as yours are invalid.

The consequence of the announcement is that assuming the proposals become law, the share of the income arising in the Partnership(s) will be chargeable on you for every year in which such income arose or arises.

As the additional liabilities that are due will attract interest you may think it is appropriate now to make a payment on account of the additional duties that are due. Please note that as this is a share of income from a partnership, Class 4 National Insurance Contributions will be due in addition to income tax. Making a payment on account now will act to reduce the interest charge that will be due once the final liabilities are established. Interest is currently running at 8.5% per annum on tax paid late. Interest will be chargeable from the original due date(s) for each year and not from the date the proposals become law.

[IR35 Avoider]

I think you are wasting your time complaining about the interest.

It always was the case that the original income was or was not taxable in the year in question. If it was taxable, then in terms of standard tax payment procedure interest is due at the official rate from that year.

If you only found out it was taxable five years later, as a result of losing a court case, that wouldn't change the fact that five years interest was due. The fact that the dispute over whether it was taxable might be settled by retrospective legislation instead of (or in addition to) court argument doesn't really change anything.

HMRC have always said that this income is taxable. You have not paid tax because you believe it isn't. If you are right, you will not pay interest. If you are wrong, then you have to be charged interest. If this were not the case, everyone would just say they disagreed with HMRC about every tax bill, to delay payment indefinitely.

The interest rate charged on late payment used to be a lot lower, something like BOE rate. I think they put it up a few years ago to discourage late payment, as some people were quite willing to pay late in order to get a relatively low-interest loan.

The interest is not a penalty, it is just meant to be an economic fee for the benefit of holding onto your money longer. The rate is a bit higher than I would think was fair for me, but for other people who are a greater credit risk (i.e. might go bankrupt without paying HMRC) the rate is probably to low. As they have to have a single rate for everyone I guess it has to be a compromise.

[smalldog]

Avoider, but the important point here is:

HMRC have always said that this income is taxable. You have not paid tax because you believe it isn't. If you are right, you will not pay interest. If you are wrong, then you have to be charged interest. If this were not the case, everyone would just say they disagreed with HMRC about every tax bill, to delay payment indefinitely.

I havent had a tax bill, so on what basis should I pay interest? If i had received a tax bill and not paid it fair dues....this is my point, I havent been told by HMRC I should definitely pay them any money so how can it be due, and therefore interest payable....

[malvolio]

Avoider, but the important point here is:

HMRC have always said that this income is taxable. You have not paid tax because you believe it isn't. If you are right, you will not pay interest. If you are wrong, then you have to be charged interest. If this were not the case, everyone would just say they disagreed with HMRC about every tax bill, to delay payment indefinitely.

I havent had a tax bill, so on what basis should I pay interest? If i had received a tax bill and not paid it fair dues....this is my point, I havent been told by HMRC I should definitely pay them any money so how can it be due, and therefore interest payable....

Gets better and better, doesn't it...

You haven't had a tax bill because presumably you haven't declared the income and presumably you haven't filled in an annual SA form. I probably wouldn't rely on that too much as a defence then...

The onus is on you to tell HMRC about any taxable income you have received, even if no tax is actually due on it. They may well take a dim view if you haven't been doing so.

[BrilloPad]

You haven't had a tax bill because presumably you haven't declared the income and presumably you haven't filled in an annual SA form.

You make alot of presumptions and assumptions based on that. Are you one of the project managers here?

I know of someone on mtm scheme who filled in a tax return and got back a "we know where you live" letter from HMRC with no suggestion as to how much he owes!

[smalldog]

mal, of course I have filled in the tax returns!! All income I received from the scheme or otherwise has always been listed in my SA forms under income from foreign trusts. HMRC have suggested they think it should be in a different section, i.e. under general taxable income....They have never insisted it is wrong.....and this is my point. IT HAS ALWAYS BEEN DECLARED, not declaring it would and quite rightly have been tax evasion which is a criminal offense!

Your comment just goes to show your ignorance of how this whole thing works which makes me even mader that you seem to deem yourself such an authority, why dont u get some facts first before trying to argue a point which just so happens to always be biased in one direction, the side of HMRC...DOH!

[BrilloPad]

Your comment just goes to show your ignorance of how this whole thing works which makes me even mader that you seem to deem yourself such an authority, why dont u get some facts first before trying to argue a point which just so happens to always be biased in one direction, the side of HMRC...DOH!

Mal makes some excellent posts - he is actually one of my favourite posters - unfortunately he puts up a few rubbish ones too! You will get used to him...

[DonkeyRhubarb]

Mal makes some excellent posts - he is actually one of my favourite posters - unfortunately he puts up a few rubbish ones too! You will get used to him...

Maybe but why is he so darn interested in the scheme when it doesn't affect him? I mean how many times does he need to keep repeating the "you're screwed" message. I think we got his point of view ages ago which unless he now tells us he's a Tax Barristor is of little use to us.

[smalldog]

even if and this is a big IF Montp fail on all counts and come summer we all get big bills from hector I for one will tell them to stick their interest and take me to court to get it. I will pay whatever they deem to have been payable excluding interest on the basis that I never got a tax bill so had nothing due on which interest could have been charged. If I go to court and lose then fine but Im not going to pay a fotune in interest without a fight.....Not looking for an opinion from anyone whether they think my stance is right or wrong, thats my own personal strategy, each to their own....