Just got a Cop8 letter from Hmrc

**sal626** · 7 October 2009, 09:03

Originally posted by TheEagle View Post

Just got a letter from HMRC regarding my last self assessment. I checked the address and it seems to be coming from the Manchester office.

They sent a letter to me and my tax advisers who are not actually currently my tax advisor's I used to use them.

I don't want to mention the company I use at this point but it is not one of the ones I have seen mentioned on this site (In fact I did a search and only found one reference to them)

Is this the standard letter that the BN66 guys have been receiving? I scanned and sent the letter to my scheme and they said it was nothing to worry about.

What should my next steps if any be?

Here is the letter I received I have scanned it in using OCR I have tried to fix all the OCR mistakes so it might not be perfect appologies in advance.

================Letter to me=================

Dear' *****
Check of Self Assessment Tax Return - year ending 5 April 2008

Thank you for your Self Assessment Tax Return for the year ended 5 April 2008, which we
received on *****.

Every year we check a number of returns to make sure that they are correct and that our
customers are paying the right amount of tax. I would now like to check your return. My
check will be made under Section 9A of the Taxes Management Act 1970.
i am sending a copy of this letter to your advisers, *****. I enclose a copy
of my letter to them, which explains what I need to carry out my check. You may wish to talk
to them or your employer about this letter.

What I will be checking

I only intend to look at the employment income and benefits provided to you by ***** Ltd.
However, when i look at this aspect I may find that I need to extend my check.

After the check is completed

When I have finished my check, I will let you know if your return is correct. If it is not correct,
you might have to pay more tax or we might have to pay something back to you. We will tell
you more about this at the time. We normally charge interest on any extra tax that needs to
be paid but we can also give interest on amounts we owe you

More information

I would like to draw your attention to the booklet entitled Code of Practice 8 - cases where
serious fraud is not suspected that can be viewed at www.hmrc.gov.uk/pdfs/cop8.pdf.
This explains how we intend to conduct these checks (enquiries) and how we keep our
promise of fair treatment under the HM Revenue & Customs“ Service Commitment to you.

The code also explains how you may request that the check (enquiry) be concluded, Please
take some time to read this booklet. lf you are unable to View this booklet online please
Contact me on the telephone number above and I will forward you a copy.
If you Contact us, please quote our reference number and provide a daytime phone number.

Yours sincerely
******

====Letter to tax advisor's =========

Check of Self Assessment Tax Return - year ending 5 April 2008

Tax adviser‘s notification

I will be checking your clients Self Assessment Tax Return for the year ended 5 April 2008.
Please find enclosed a copy of the letter I have sent to your client today, which gives details
of my check. My check will he made under Section 9A of the Taxes Management Act 1970.

What you need to do now

I have issued this check because I understand that your client has been provided with
certain employment income and benefits by their employer using an arrangement involving
an Employee Benefit Trust.

I am hoping to deal with our checks centrally. I am opening this check to protect the
interests of HMRC, so that any adjustments eventually agreed can be reflected in an
amendment to your clients self assessment.

Subject to the progress of checks I may need some information regarding your clients
employment income and benefits, but for the moment I do not intend to request any
information

I shall write again when the question of tax treatment of the employment income and benefits is closer to resolution or if my enquiries do not progress this issue satisfactorily.

Yours faithfully
************
=======End HMRC letters ===========

What the hell do they mean by the part in bold? How long will I have to wait before these issues are resolved?

Please only constructive comments, if any of the BN66 guys could chip in and let me know if this sounds familiar please do!

Its with pointing out that this company is based in the IOM and I have paid full PAYE/NI on my salary as well as declared all earning on my P11D.

It’s a standard letter many who were in EBT schemes have received. If you have a good scheme provider, they should respond to HMRC and deal with it.
Pretty much all scheme providers have received these, but hardly any progress has been made by HMRC on closing EBTs.

There are two special commissioner rulings against HMRC on EBTs (in the last case, HMRC didn’t even bother to appeal), and the scheme provider I was with are actually chasing HMRC to close the queries.

I’m going to take a punt and guess you scheme provider is penfolds? I know someone else with penfolds who got the letter this week….

**DonkeyRhubarb** · 7 October 2009, 09:09

Section 9a TMA 1970 / COP 8 is the standard enquiry notification.

I received my first one of these for the Montpelier scheme (BN66) back in November 2003 (yes, 6 years ago!).

I presume the scheme you used was registered with HMRC. Can you remember if your tax return contained a Scheme Reference Number?

I would expect everyone in the scheme you used to receive one of these letters, as it seems to be standard practice now for HMRC to open enquiries on anyone that used a scheme.

If the experience of other people I've heard from is anything to go by, it could be several years before you hear anything further.

HMRC's Litigation and Settlements strategy is worth a read.
http://www.hmrc.gov.uk/practitioners/lss.pdf

21. Litigating where our chances of success are less than 50% would need to be justified by the particular circumstances, such as a very large amount of tax at stake (in the case itself or from immediate precedent value) or a fundamental point of principle at issue.
22. We should also give priority to cases where taxpayers have set out to undermine the purpose of tax legislation, including the more aggressive avoidance schemes.

I've got this nasty suspicion that HMRC may be parking enquiries into other schemes like yours until after the BN66 Judicial Review. If they were to win the case, then they could use this as a precedent to go back to the Treasury and ask for more retrospective legislation.

**DonkeyRhubarb** · 7 October 2009, 09:20

Originally posted by sal626 View Post

Pretty much all scheme providers have received these, but hardly any progress has been made by HMRC on closing EBTs.

If enough people used the same loophole (even through different schemes) and there is a lot of tax revenue at stake, then HMRC are going to be loathed to let this go.

If they were to win BN66, then this could set a precedent for further retrospective legislation.

Does anyone seriously think they won't use it again?

Once they've got this then it doesn't matter how slowly they investigate a scheme, or even if the scheme is watertight, because they can always go back in time and move the goalposts like BN66. What was lawful becomes unlawful by virtue of time travel.

Retrospective legislation is the Holy Grail for HMRC.

**sal626** · 7 October 2009, 09:30

DR, Don’t HMRC already have powers to go back to 2004 or 2005 and claim tax for those schemes that they can legally close down?

I’m not sure if they are simply parking them (queries into EBTs)…this may be the case, but I think also HMRC do not yet know how to defeat these schemes. I think it’s quite important that they have had two defeats with the special commissioner, and since then have not bought another case on EBTs (as far as I know and from speaking to the tax advisors on two of these EBT schemes)…

**Toocan** · 7 October 2009, 09:41

Originally posted by TheEagle View Post

Just got a letter from HMRC regarding my last self assessment. I checked the address and it seems to be coming from the Manchester office.

...

I shall write again when the question of tax treatment of the employment income and benefits is closer to resolution or if my enquiries do not progress this issue satisfactorily.

Eagle - it is possible to force the issue to the commissionaires - NONE of us affected by BN66 did this - to our regret. By all means take advice, but if it were me I would get it into the commissionaires courts ASAP - certainly before any budget. Once you are in the legal system, even retrospection cannot affect you.

Get advice, and do not wait. You have to peg the law before they try to change it after the fact.

**sal626** · 7 October 2009, 09:49

I know you can go to first tier tribunal to request closure of your enquiry (especially if some time has passed and no progress made). But I’m not sure if that is the same as going to the commissioner. The advice I was given, by an independent tax advisor was that for any tax avoidance schemes, the tribunal would probably force the case into court – i.e. they will want a court decision before closing the query.

**DonkeyRhubarb** · 7 October 2009, 09:50

Originally posted by sal626 View Post

DR, Don’t HMRC already have powers to go back to 2004 or 2005 and claim tax for those schemes that they can legally close down?

As far as I know, Dawn Primerola's PBR statement is not enshrined in law. It stikes me that this was more a warning/threat than anything else.

If they can legally close a scheme down (ie. defeat it in court) then they can claim back tax from anyone under enquiry. This is why their priority is to issue enquiry notices, and then ask questions later.

I’m not sure if they are simply parking them (queries into EBTs)…this may be the case, but I think also HMRC do not yet know how to defeat these schemes.

They didn't know how to defeat the Double Tax Treaty scheme either, which is why they resorted to retro. They've also used Discovery Assessments to get around the normal enquiry window and make sure they catch everyone.

**Tax_shouldnt_be_taxing** · 7 October 2009, 09:57

Originally posted by TheEagle View Post

Just got a letter from HMRC regarding my last self assessment. I checked the address and it seems to be coming from the Manchester office.

They sent a letter to me and my tax advisers who are not actually currently my tax advisor's I used to use them.

I don't want to mention the company I use at this point but it is not one of the ones I have seen mentioned on this site (In fact I did a search and only found one reference to them)

Is this the standard letter that the BN66 guys have been receiving? I scanned and sent the letter to my scheme and they said it was nothing to worry about.

What should my next steps if any be?

Here is the letter I received I have scanned it in using OCR I have tried to fix all the OCR mistakes so it might not be perfect appologies in advance.

================Letter to me=================

Dear' *****
Check of Self Assessment Tax Return - year ending 5 April 2008

Thank you for your Self Assessment Tax Return for the year ended 5 April 2008, which we
received on *****.

Every year we check a number of returns to make sure that they are correct and that our
customers are paying the right amount of tax. I would now like to check your return. My
check will be made under Section 9A of the Taxes Management Act 1970.
i am sending a copy of this letter to your advisers, *****. I enclose a copy
of my letter to them, which explains what I need to carry out my check. You may wish to talk
to them or your employer about this letter.

What I will be checking

I only intend to look at the employment income and benefits provided to you by ***** Ltd.
However, when i look at this aspect I may find that I need to extend my check.

After the check is completed

When I have finished my check, I will let you know if your return is correct. If it is not correct,
you might have to pay more tax or we might have to pay something back to you. We will tell
you more about this at the time. We normally charge interest on any extra tax that needs to
be paid but we can also give interest on amounts we owe you

More information

I would like to draw your attention to the booklet entitled Code of Practice 8 - cases where
serious fraud is not suspected that can be viewed at www.hmrc.gov.uk/pdfs/cop8.pdf.
This explains how we intend to conduct these checks (enquiries) and how we keep our
promise of fair treatment under the HM Revenue & Customs“ Service Commitment to you.

The code also explains how you may request that the check (enquiry) be concluded, Please
take some time to read this booklet. lf you are unable to View this booklet online please
Contact me on the telephone number above and I will forward you a copy.
If you Contact us, please quote our reference number and provide a daytime phone number.

Yours sincerely
******

====Letter to tax advisor's =========

Check of Self Assessment Tax Return - year ending 5 April 2008

Tax adviser‘s notification

I will be checking your clients Self Assessment Tax Return for the year ended 5 April 2008.
Please find enclosed a copy of the letter I have sent to your client today, which gives details
of my check. My check will he made under Section 9A of the Taxes Management Act 1970.

What you need to do now

I have issued this check because I understand that your client has been provided with
certain employment income and benefits by their employer using an arrangement involving
an Employee Benefit Trust.

I am hoping to deal with our checks centrally. I am opening this check to protect the
interests of HMRC, so that any adjustments eventually agreed can be reflected in an
amendment to your clients self assessment.

Subject to the progress of checks I may need some information regarding your clients
employment income and benefits, but for the moment I do not intend to request any
information

I shall write again when the question of tax treatment of the employment income and benefits is closer to resolution or if my enquiries do not progress this issue satisfactorily.

Yours faithfully
************
=======End HMRC letters ===========

What the hell do they mean by the part in bold? How long will I have to wait before these issues are resolved?

Please only constructive comments, if any of the BN66 guys could chip in and let me know if this sounds familiar please do!

Its with pointing out that this company is based in the IOM and I have paid full PAYE/NI on my salary as well as declared all earning on my P11D.

The only question I have is in the use of the word "check". Section 9A is an enquiry power. Have HMRC stated that this is a formal enquiry or just a "check"? If the latter, then what constitutes a "check" versus an enquiry?

**SantaClaus** · 7 October 2009, 09:58

Originally posted by DonkeyRhubarb View Post

I've got this nasty suspicion that HMRC may be parking enquiries into other schemes like yours until after the BN66 Judicial Review. If they were to win the case, then they could use this as a precedent to go back to the Treasury and ask for more retrospective legislation.

Agree DR, and this is why anyone who is reading this forum and hasn't yet taken an active part in our campaign (because they dont think this will affect them) needs to now!

Just got a Cop8 letter from Hmrc