Given that it seems likely that the case will drag on for several years, is it worth discussing ideas for how best to cover ourselves if the verdict ultimately goes against us?
As I see it these are the options: (Have I missed anything?)
Making Payments on Account
Like CTD below, this stops further interest charges. It also has the benefit of earning a higher rate of interest than a CTD if we win. Personally I've got an aversion to handing money over to HMRC willingly, so I would rather keep control over it. However, if you are in the unfortunate position of being unlikely to be able to repay all of the debt, it may count in your favour if you have shown willing by making some form of payments. HMRC and the courts may well treat you more sympathetically than if (like me) you play hardball.
Certificate of Tax Deposit (CTD)
Making a payment into the tax deposit scheme stops any further interest accruing. Currently, for every £10k you deposit, it will save you £750/year in interest. It's hard to match this with any savings vehicle, particularly if you have to pay tax. The down side is that if we win, it only pays out a meagre 1 or 2% (before tax) in interest when you cash it in.
Savings Account
The problem here is even though you can get 6.5% (7% fixed) which is only slightly less than HMRC's 7.5%, if you have to pay tax then there will be a shortfall which could mount up over the years. You could put money in a Cash ISA but that's limited to £3k per person per year which is unlikely to be much help.
Offset Mortgage
This is not a bad option, particularly if your mortgage rate is above 6%. Also, unlike savings, this is a 100% tax efficient solution because you are using the money to offset debt.
Overpaying Mortgage
This depends on what type of mortgage you've got as to whether you will be allowed to overpay. Fixed or discount deals might have redemption penalties. If you can overpay, then it has similar benefits to an offset mortgage in that it's tax efficient because you are paying off debt. However, the drawback is you would have to remortgage in the future to pay off any tax bill.
Other Forms of Investment
ISAs (equities, commodities), property etc. This is obviously a higher risk strategy but some people might decide it's worth taking a punt with some of the money to potentially achieve a higher return. I have got a few ideas in this area but I will save this for another post if there is any interest in discussing this.
Bankruptcy or IVA
I know very little about this but the following link discusses some of the pros and cons.
http://www.ukadvice.com/bankruptcy/c...kruptcy/7.html
As I see it these are the options: (Have I missed anything?)
Making Payments on Account
Like CTD below, this stops further interest charges. It also has the benefit of earning a higher rate of interest than a CTD if we win. Personally I've got an aversion to handing money over to HMRC willingly, so I would rather keep control over it. However, if you are in the unfortunate position of being unlikely to be able to repay all of the debt, it may count in your favour if you have shown willing by making some form of payments. HMRC and the courts may well treat you more sympathetically than if (like me) you play hardball.
Certificate of Tax Deposit (CTD)
Making a payment into the tax deposit scheme stops any further interest accruing. Currently, for every £10k you deposit, it will save you £750/year in interest. It's hard to match this with any savings vehicle, particularly if you have to pay tax. The down side is that if we win, it only pays out a meagre 1 or 2% (before tax) in interest when you cash it in.
Savings Account
The problem here is even though you can get 6.5% (7% fixed) which is only slightly less than HMRC's 7.5%, if you have to pay tax then there will be a shortfall which could mount up over the years. You could put money in a Cash ISA but that's limited to £3k per person per year which is unlikely to be much help.
Offset Mortgage
This is not a bad option, particularly if your mortgage rate is above 6%. Also, unlike savings, this is a 100% tax efficient solution because you are using the money to offset debt.
Overpaying Mortgage
This depends on what type of mortgage you've got as to whether you will be allowed to overpay. Fixed or discount deals might have redemption penalties. If you can overpay, then it has similar benefits to an offset mortgage in that it's tax efficient because you are paying off debt. However, the drawback is you would have to remortgage in the future to pay off any tax bill.
Other Forms of Investment
ISAs (equities, commodities), property etc. This is obviously a higher risk strategy but some people might decide it's worth taking a punt with some of the money to potentially achieve a higher return. I have got a few ideas in this area but I will save this for another post if there is any interest in discussing this.
Bankruptcy or IVA
I know very little about this but the following link discusses some of the pros and cons.
http://www.ukadvice.com/bankruptcy/c...kruptcy/7.html
Comment