BN66 - Time to fight back (Chapter 3)

[BrilloPad]

Sounds like a few of us are a bit confused then...can you tell us what this is about?

From Original "will prevent future double taxation or double relief under the COAP Regulations with regard to foreign exchange gains or losses on certain foreign currency denominated financial instruments. "

Apparently montp have such a scheme.

But this is not the same as Loan schemes.......

[MrRaincheck]

I got my CN for 2001-2002, 2003-2004 and 2004-2005 the week before last. The first call I made was for MP who have appealed on my behalf within the 28 days. However last week, I got a late payment reminder already, thats 11 days after the CN. I was going to call directly put will probably advise MP first. However I don't want to bother them as I know they are so busy - any ideas? Rather than a CTD I have an offset mortage, however the payment remainder has the interest ticking already and its frightening how much its building up already.

[nuffsaid]

Sorry if this has already been discussed, but have you seen this?
http://www.citywire.co.uk/personal/-...aspx?ID=321947

Looks like the gov are now considering opening the doors to an offshore tax avoidance scheme!!!

[sgee]

Just de-lurking and wanted to say thank god for this forum, this whole thing is stressing me out. I just hope the optimism in the forum is not misplaced... at least in the meantime it gives me a glimmer of hope. I feel like the rug has been pulled out from under me at the moment and am having difficulty getting a grip on the future. Its like we are the victims of a hit-and-run.

feeling generally sorry for myself right now!

[DonkeyRhubarb]

I got my CN for 2001-2002, 2003-2004 and 2004-2005 the week before last. The first call I made was for MP who have appealed on my behalf within the 28 days. However last week, I got a late payment reminder already, thats 11 days after the CN. I was going to call directly put will probably advise MP first. However I don't want to bother them as I know they are so busy - any ideas? Rather than a CTD I have an offset mortage, however the payment remainder has the interest ticking already and its frightening how much its building up already.

I would contact MP as I think they'll want to keep a record of all these HMRC screw-ups.

You should be OK with the offset mortgage if:

• the mortgage is similar in size (or larger) than your tax liability
• the interest rate you are paying is similar (or higher) than what HMRC charge (currently 6.5%)
• you are able to remortgage in the future, or finance the accrued interest some other way

While we are on the subject of CTDs, IMO it is going to be very difficult to keep pace with HMRC's interest using a savings account over the next couple of years.

I have been looking at fixed rate accounts recently and it's getting hard to find much that pays above 5%. It is likely the BOE will cut interest rates further, and you might be lucky to get 3% (gross) in a savings account early next year. I doubt very much that HMRC's rate will come down by as much.

[Ratican]

Smacked bottom

For those on any of the various loans schemes out there, this may be of interest from the budget:-

5.102 The Government can announce its intention to amend the Change of Accounting
Practice (COAP) Regulations dealing with the taxation of loans and derivatives. This will
prevent future double taxation or double relief under the COAP Regulations with regard to
foreign exchange gains or losses on certain foreign currency denominated financial
instruments. This measure will apply with effect from 1 January 2009. The Government will
publish draft legislation shortly.

No fair! Why don't they get retrospective changes!!

Odd that they mention other avoidance schemes they have closed down this year, but not the 'retrospective' one.

Is this significant to our situation - or were these schemes considered "more" legitimate than our scheme. I.e. HMRC believe that they "work" - whereas for our scheme HMRC do not believe it ever worked. Hence the retrospective "clarification" and the smacked bottom.???

[tendo71]

With regards a CTD. I have one for the amount I owe (well almost). However I was looking at taking some out as you do not pay interest on interest. Whilst digging out the documentation I had a quick read and it says that you only get 2% when using to pay of tax and 1% if you redeem for cash. Just checking the current rates and that has dropped to 1.75 for tax and 0.75 for cash.

I am understanding that correct? If thought a CTD stopped all interest from incurring on the amount owed.

[DonkeyRhubarb]

CTD Clarification

With regards a CTD. I have one for the amount I owe (well almost). However I was looking at taking some out as you do not pay interest on interest. Whilst digging out the documentation I had a quick read and it says that you only get 2% when using to pay of tax and 1% if you redeem for cash. Just checking the current rates and that has dropped to 1.75 for tax and 0.75 for cash.

I am understanding that correct? If thought a CTD stopped all interest from incurring on the amount owed.

The difference between the "tax rate" and "cash rate" is a bit confusing. Let me see if I can explain.

The cash rate (0.75%) is what the CTD pays out if you cash it in (ie. if we win).

The tax rate (1.75%) is what the CTD pays if you had taken it out before the due date of the tax. This does not apply in our case because we are using CTDs to cover over-due (old) tax liabilities.

So, to answer your question, a CTD will prevent any further interest accruing.

Example

Let's suppose your liability for tax was £100k and they have already added £30k interest. If you take out a CTD for £100k then this will prevent further interest being added.

If you have taken out a CTD for £130k, then this is inefficient because HMRC don't charge compound interest. You would be better off withdrawing the £30k and sticking it in a high-interest savings account which will give you a better return than the 0.75% that the CTD pays.

I hope this makes it clearer.

[tendo71]

Yes it does. Understand now. I will remove the excess I have in my CTD and put into a savings account.

Thanks a lot. And thanks to everyone in this thread for all the info. Been much appreciated. This website is my most read

[BrilloPad]

The difference between the "tax rate" and "cash rate" is a bit confusing. Let me see if I can explain.

The cash rate (0.75%) is what the CTD pays out if you cash it in (ie. if we win).

The tax rate (1.75%) is what the CTD pays if you had taken it out before the due date of the tax. This does not apply in our case because we are using CTDs to cover over-due (old) tax liabilities.

So, to answer your question, a CTD will prevent any further interest accruing.

Example

Let's suppose your liability for tax was £100k and they have already added £30k interest. If you take out a CTD for £100k then this will prevent further interest being added.

If you have taken out a CTD for £130k, then this is inefficient because HMRC don't charge compound interest. You would be better off withdrawing the £30k and sticking it in a high-interest savings account which will give you a better return than the 0.75% that the CTD pays.

I hope this makes it clearer.

DEspite being a regular reader/contributor - I never understood the tax/cash bit! many thanks for explaining. Would it be possible to add a link to your post on the first page of this thread? Worth a CTD section or a brief description next to it?