Loans from EBTs and other Trusts

[AtW]

You simply cannot apply criminal sanction to a civil case.

They just need to hire Super Tax Collector from IRS to advise Osborne on how to deal with this problem

[craig1]

In principle they could do something like that yes. Though in the case of your actual example they couldn't do that at all. You simply cannot apply criminal sanction to a civil case. In theory they could create an offence of "wilfully using a tax avoidance scheme which subsequently fails for an amount in excess of 20k" but I do imagine they would struggle to get it on the statute books. Not least because civil cases are tried under balance of probabilities rather than burden of proof. After all would a jury have reached a guilty verdict on the original avoidance based on the evidence.

Consider Ken Dodd and what happened there.

They don't need to. They have the power to impose penalties up to 100% of the underpaid tax if they think it's deliberately "incorrect". That can amount to a very hefty "fine" without them having to bother with pesky courts.

[DonkeyRhubarb]

They just need to hire Super Tax Collector from IRS to advise Osborne on how to deal with this problem

I'm sure HMRC could find a position for the fella in your avatar when he becomes available. Culturally he'd be a perfect fit with Hartnett & Co.

[AtW]

I'm sure HMRC could find a position for the fella in your avatar when he becomes available. Culturally he'd be a perfect fit with Hartnett & Co.

Aye.

He'd have right laugh at your line of reasoning.

[sal626]

More on the HMRC Amnesty on EBTs

Taxman’s letters to EBT users ‘are hot air’

HM Revenue & Customs is writing to individuals who lowered their tax bills through Employee Benefit Trusts, asking to them to pay what it says they owe or face potential litigation, an advisor says.

According to UHY Hacker Young, HMRC claims in one letter to an affected taxpayer that £160,000 in tax is still outstanding, with the offer that settling up will see any financial penalty quashed.

Other terms of the offer, which the accountancy firm says is likely to be received in writing by thousands of taxpayers, include the prospect of being taken to court for refusing to pay the Revenue’s estimate in full.

“These letters are essentially hot air,” reflected Hacker Young partner Steve Theaker. “Several of the letters I have seen are wildly inaccurate estimates of the amounts of tax actually in dispute. HMRC could at least get the numbers right.

“HMRC is in effect saying, ‘pay all of the tax you would have paid if you had taken your loan as a bonus, and we’ll forget all about it’. But why would anyone who has entered into this form of tax planning to pay less tax do that?”

EBTs, which date back to the 1980s, became popular in the IT and consultant sectors, for allowing employers to ring-fence cash to pay bonuses, which were taken tax-free as loans, or to buy shares on behalf of staff.

“HMRC has litigated twice on the taxability of loans from EBTs and lost on both occasions,” Mr Theaker said. “ The courts have essentially ruled that EBTs were a legitimate form of tax planning prior to HMRC’s announcement last December. HMRC seems to be pinning its hopes on judges reversing the precedent which has already been set – but why would they do that?”

As a result, “HMRC’s case is far from watertight,” the advisor said, adding: “Taxpayers should think very carefully about how they respond to these letters.

“If they chose to settle they may end up paying tax which HMRC has no legal right to. The letter actually says that if taxpayers chose to settle, but subsequent litigation finds in taxpayers’ favour, the settlement cannot be reopened.”


Linky:
Taxman

[Fred Bloggs]

If your first question is true than there is no point whatsoever in hiding over in the IoM. The solution would work just as well on shore if that was the case.

Just wondering why nobody has answered this point? In view of the latest HMRC "Spotlight" article, it is obvious to me that you'd be nuts to consider one of these schemes now IMO.

[AtW]

Just wondering why nobody has answered this point? In view of the latest HMRC "Spotlight" article, it is obvious to me that you'd be nuts to consider one of these schemes now IMO.

I am sure someone will come long to say that it is just "hot air"...

[OnYourBikeGB]

I doubt it is hot air and it'd be a mistake to assume that it was. I suspect they are buoyed by their success, so far anyway, with BN66. Putting myself in their shoes, there's no reason to stop and every reason to keep pushing the envelope. That's simply the facts. As someone affected by BN66, I know only too well that the defences that you think you have may not be as impenetrable as you'd like to believe. They have been given the green light by the politicians and the judiciary and no-one is prepared to stand in their way. Incidentally, unlike some others, it gives me no pleasure at all to make that observation. I'd just urge caution in dismissing it too lightly. I think HMRC will ride this wave for some considerable time.

[CanPayButWouldRatherNot]

HMRC sending a letter for the MTM loan scheme

A friend had a letter about the 09/10 loan scheme to say its still under investigation ...

anyone else had one of these (in time for xmas ?)

[fractionater]

yup received letter, few days before xmas saying inquiry into my 09/10 return has been opened...specifically wrt to the interest free loan amount.

I'll just leave it for Montp to deal with now.

Just wondering what the general view is out there at present for continuing with the Montp loan scheme...anyone having secnd thought or will you continue into the 12/13 tax year?