What can I expect when being investigated by HMRC for offshore loan umbrellas etc?

[ChimpMaster]

Seems like I may be in for some taxing trouble due to a span of indiscretion in my past. Employees (and ex-employees) of this company are having last year's tax returns queried through a surprisingly pleasant letter from HMRC. The company paid a reasonable salary and the rest as loans, which are eventually paid off through a complex mechanism involving trusts. It's a small company, especially when compared to companies like MTM and PayScheme Plus.

Anyway, long story short is that I was young and naive, but eventually left them after the whole debacle over offshore/loans/EBTs kicked off with HMRC. And now I have to pay the price.

So, from those of you who have some experience in these matters, what do I have to look forward to during this investigation?

[ads1980]

Seems like I may be in for some taxing trouble due to a span of indiscretion in my past. Employees (and ex-employees) of this company are having last year's tax returns queried through a surprisingly pleasant letter from HMRC. The company paid a reasonable salary and the rest as loans, which are eventually paid off through a complex mechanism involving trusts. It's a small company, especially when compared to companies like MTM and PayScheme Plus.

Anyway, long story short is that I was young and naive, but eventually left them after the whole debacle over offshore/loans/EBTs kicked off with HMRC. And now I have to pay the price.

So, from those of you who have some experience in these matters, what do I have to look forward to during this investigation?

Have the company in question offered to help you at all? I was with one of these schemes and decided to cut my ties from it too. Just wondering if it is the same one?

[ChimpMaster]

Have the company in question offered to help you at all? I was with one of these schemes and decided to cut my ties from it too. Just wondering if it is the same one?

Yes, they are requesting that employees contact them once they receive a letter from HMRC. I haven't received a letter yet but am expecting one - unless of course HMRC is only selecting a few individuals for test case purposes.

Have PM'd you too.

[Jet Setter]

Yes, they are requesting that employees contact them once they receive a letter from HMRC. I haven't received a letter yet but am expecting one - unless of course HMRC is only selecting a few individuals for test case purposes.

Have PM'd you too.

I've been involved with one of these two. Feel free to PM me if you want some more detailed info on how it's played out.

[DonkeyRhubarb]

It is pretty much automatic these days if you use a scheme you get investigated (COP8 enquiry).

Of itself, HMRC opening enquiries doesn't mean squat. For example, it doesn't imply that they have got any legal grounds whatsoever for challenging the scheme.

Through Freedom of Information, I recently discovered that HMRC have a backlog of nearly 30,000 people under COP8 enquiry.

As it stands, there is no time limit on how long HMRC can keep enquiries open, and I am aware of numerous cases where they have kept people under "investigation" for years without doing anything.

I bet they have no intention of pursuing most of these 30,000 people but just leave the enquiries open to act as a deterrant.

Eventually, taxpayers are going to start to realise that when HMRC opens a COP8 enquiry, more often than not they are just pissing in the wind.

[ChimpMaster]

Thanks DR.

I haven't received a letter yet, but other employees of the offshore company have received enquiry letters. I guess it's just a matter of time for one to get sent to me.

I wonder, since the tax law changes over the past 6 years, has anyone actually been done for using an offshore EBT?

[pastalista]

Getting "done" for using an EBT

Thanks DR.

I haven't received a letter yet, but other employees of the offshore company have received enquiry letters. I guess it's just a matter of time for one to get sent to me.

I wonder, since the tax law changes over the past 6 years, has anyone actually been done for using an offshore EBT?

Hi

The problem is that once the enquiry is opened (and activated) then the COP 8 investigation into one year can very quickly become 20 years (as it did for me).

The further problem is that "guilty until you can prove yourself innocent" is the order of the day and although Hector may never actually "do" you for using an EBT (for example in my case my lawyer proved that under UK law I was doing nothing wrong), they can assess you for unpaid tax in the years concerned because using an EBT is classed as "aggressive avoidance" and it matters not whether the scheme was legal or otherwise.

In most cases, after years of the investigation dragging on, the beleaguered tax payer will do some sort of deal to end matters just so that life can go back to some kind of normality.

My sympathies, good luck and pm me if you want to discuss further

Pastalista

[Jet Setter]

Hi

The problem is that once the enquiry is opened (and activated) then the COP 8 investigation into one year can very quickly become 20 years (as it did for me).

The further problem is that "guilty until you can prove yourself innocent" is the order of the day and although Hector may never actually "do" you for using an EBT (for example in my case my lawyer proved that under UK law I was doing nothing wrong), they can assess you for unpaid tax in the years concerned because using an EBT is classed as "aggressive avoidance" and it matters not whether the scheme was legal or otherwise.

In most cases, after years of the investigation dragging on, the beleaguered tax payer will do some sort of deal to end matters just so that life can go back to some kind of normality.

My sympathies, good luck and pm me if you want to discuss further

Pastalista

Can I ask which structure you were using?

[ChimpMaster]

Hi

The problem is that once the enquiry is opened (and activated) then the COP 8 investigation into one year can very quickly become 20 years (as it did for me).

The further problem is that "guilty until you can prove yourself innocent" is the order of the day and although Hector may never actually "do" you for using an EBT (for example in my case my lawyer proved that under UK law I was doing nothing wrong), they can assess you for unpaid tax in the years concerned because using an EBT is classed as "aggressive avoidance" and it matters not whether the scheme was legal or otherwise.

In most cases, after years of the investigation dragging on, the beleaguered tax payer will do some sort of deal to end matters just so that life can go back to some kind of normality.

My sympathies, good luck and pm me if you want to discuss further

Pastalista

Even at this very early stage, I have significant doubts over the scheme provider and would be quite happy to entertain a settlement with HMRC - but it really depends on the amount of the settlement.

The real question is whether HMRC would be happy to settle - I can imagine them going for the full whack and then some.