Settlement Opportunity

[FINN]

Will HMRC settle for less?

Hi,
apologies if this question has been discussed before, there are so many pages to read..

Apparently I owe £150k for 2 years of using EBTs 2009/10 & 2010/11 - the numbers on the notices sent by HMRC are very wrong and I asked an accountant to check them. The actual amount would have been approx. £90k if I had gone PAYE at the time. Given that I don't have any of this money, I may be able to re-mortgage and get £25k, does anyone think HMRC will accept this on the basis the scheme was legal at the time blah blah blah - I just want this problem to go away and I don't think hiring a specialist tax advisor to take my case will help my finances.

Has any one tried to just settle in this way? Sorry I know its giving in to those evil people at HMRC but the stress is too much for me and the family!

Cheers FINN

[Rob79]

Hi,
apologies if this question has been discussed before, there are so many pages to read..

Apparently I owe £150k for 2 years of using EBTs 2009/10 & 2010/11 - the numbers on the notices sent by HMRC are very wrong and I asked an accountant to check them. The actual amount would have been approx. £90k if I had gone PAYE at the time. Given that I don't have any of this money, I may be able to re-mortgage and get £25k, does anyone think HMRC will accept this on the basis the scheme was legal at the time blah blah blah - I just want this problem to go away and I don't think hiring a specialist tax advisor to take my case will help my finances.

Has any one tried to just settle in this way? Sorry I know its giving in to those evil people at HMRC but the stress is too much for me and the family!

Cheers FINN

Good morning.

You cannot be asked to pay tax that has been incorrectly calculated. If HMRC are asking you for £150k, ask them how it has been calculated both in terms of analysis of the sums received and the arithmetic. (You'd probably not be surprised that they make errors in both).

Once you have the correct number, talk to HMRC (Debt Management and Banking) about "time to pay". Don't leave things until the bill is due to be paid. Speak to them EARLY.

Will HMRC accept less than the amount calculated?

In all but the most serious of circumstances, I doubt it.

One of the maddening issues in this whole debacle is that fact that HMRC have their APN's etc but nobody (and I mean NOBODY) in HMRC can explain to me what their policy is for people in your position.

It would make absolutely no sense (and be bad politics) to make several thousand people bankrupt. Not only is that expensive but also leads to a large reduction in tax collected.

Therefore you'd think that they had some plan in place to allow extended periods for payment of tax (say up to 5 years) and some form of policy to forgive tax in some circumstances.

I would love to report that HMRC has this plan, but I can detect no sign of it and suggestions to this effect are met with a brick wall.

So I'm afraid it's be prepared to pay all the tax (plus interest) but perhaps over an extended period.

[gettingangry]

Settlement Figure

Emailed HMRC about 5 times now asking for a settlement figure (just to see what the come up with) - they have read the emails (return reciept on them) but nothing - not even an acknowledgement that something is being done. Useless t**ts.

[meanttobeworking]

Emailed HMRC about 5 times now asking for a settlement figure (just to see what the come up with) - they have read the emails (return reciept on them) but nothing - not even an acknowledgement that something is being done. Useless t**ts.

I emailed them as soon as the settlement opportunity landed (for the same reasons) and I've not had a reply either. I asked this forum about a week ago if anyone had heard from them and nobody replied. No doubt we'll finally get figures about 24 hours before the deadline...

[Safe]

I emailed them as soon as the settlement opportunity landed (for the same reasons) and I've not had a reply either. I asked this forum about a week ago if anyone had heard from them and nobody replied. No doubt we'll finally get figures about 24 hours before the deadline...

Did you provide the details of the loans in your email?

[FINN]

Good morning.

You cannot be asked to pay tax that has been incorrectly calculated. If HMRC are asking you for £150k, ask them how it has been calculated both in terms of analysis of the sums received and the arithmetic. (You'd probably not be surprised that they make errors in both).

Once you have the correct number, talk to HMRC (Debt Management and Banking) about "time to pay". Don't leave things until the bill is due to be paid. Speak to them EARLY.

Will HMRC accept less than the amount calculated?

In all but the most serious of circumstances, I doubt it.

One of the maddening issues in this whole debacle is that fact that HMRC have their APN's etc but nobody (and I mean NOBODY) in HMRC can explain to me what their policy is for people in your position.

It would make absolutely no sense (and be bad politics) to make several thousand people bankrupt. Not only is that expensive but also leads to a large reduction in tax collected.

Therefore you'd think that they had some plan in place to allow extended periods for payment of tax (say up to 5 years) and some form of policy to forgive tax in some circumstances.

I would love to report that HMRC has this plan, but I can detect no sign of it and suggestions to this effect are met with a brick wall.

So I'm afraid it's be prepared to pay all the tax (plus interest) but perhaps over an extended period.

many thanks for your reply Rob79.

I can see how they calculated it. They took figures entered by the accountants on the P11D forms. On the forms you have to specify the loan amount for year 1 then on year 2 you specify how much year 2 loan was then there is a box asking you to fill in the outstanding loans from previous years, For some reason they add year 2 to the combined year 1 and year 2 figures. Bizarre.

I was interested to see that you seem resigned to the fact we will all have to pay up, no fighting talk, hang in there don't pay etc :-)

regards FINN.

ps to the guys waiting for replies to emails, I wouldn't rely on emails. A letter sent recorded delivery is the only way to know for sure.

[Rob79]

I was interested to see that you seem resigned to the fact we will all have to pay up, no fighting talk, hang in there don't pay etc :-)

Resigned? I would have said not but rather I think I'm asking everybody to be practical in their approach.

If the scheme you used has not been struck down in a decision that is final, then you have every right to request not to pay the tax that HMRC say is due.

If your scheme has been struck down but the calculation is incorrect or the HMRC interpretation of the decision is incorrect, then again I would resist paying until the final figure is known.

An APN unfortunately does not obey the above rules. It requires you to pay regardless of the final decision. If you don't, then a penalty of up to 15% can be due.

For an APN I recommend waiting until you get one, check it carefully, marshal your arguments against and make them one at a time towards the end of the permitted period of 90 days.

(I would caution that the idea of making separate representations on an APN, consecutively rather than concurrently, is not tested and may be deemed invalid. I spoke about this yesterday with a tax barrister who could see no real flaw in doing this but equally thought HMRC would amend the rules.)

If and when you reach a point where you have no more arguments on the APN, then I would recommend payment rather than risk the penalty.

You also need to think about interest. An interest charge runs from the date the tax is due (check this) to the date paid. The APN is a payment on account. Interest on the amount covered by the APN will run until the APN is paid. Interest is 3% at the moment and as a general rule will be 2.5% to 3% above base rate.

All of the above is predicated on the basis that you have the resources to pay. Many don't. If you are genuinely struggling to pay, speak with HMRC as early as you can to arrange time to pay.

[lara400]

Hello - can I ask a stupid question....if for arguemnt sake I did say a year of EBT and supposedly got paid loans of say 5k a month for 12 months = 60k....does this mean that I have to pay HMRC 60k back...surely not? Or do you have to pay a percentage of the tax that is due - if it is the percentage does anyone how much that will be?

[Rob79]

Hello - can I ask a stupid question....if for arguemnt sake I did say a year of EBT and supposedly got paid loans of say 5k a month for 12 months = 60k....does this mean that I have to pay HMRC 60k back...surely not? Or do you have to pay a percentage of the tax that is due - if it is the percentage does anyone how much that will be?

With a warning that I have yet to find time to get to the fine print, I think it works something like this.

HMRC consider that you have received a net £60k. Let's assume you have personal allowances of £8,000. Tax rates are 20% on the first £30,000 of taxable income and 40% after that.

So you need to calculate what the gross salary would have been to leave you with £60k.

Back of an envelope that's a gross of £84,000 and tax due around £24,000.

I'm assuming there is no NI as you are already paying that.

Interest will be due as well.

Anybody else have any views on this?

[dangerouswhensober]

Hello - can I ask a stupid question....if for arguemnt sake I did say a year of EBT and supposedly got paid loans of say 5k a month for 12 months = 60k....does this mean that I have to pay HMRC 60k back...surely not? Or do you have to pay a percentage of the tax that is due - if it is the percentage does anyone how much that will be?

The basic argument of HMRC is that the loans were not loans, but were income - so should be treated the same way as other income (e.g. salary). So they are claiming the tax on that extra income at whatever your marginal rate was for that period - normally 50%, as this was the top rate of tax in past years.

(I personally received assessments for three years consisting of the loan amounts for each year multiplied by 50% - that is the total amount claimed from me by HMRC as unpaid tax).

So in your case you should have received or should expect a "discovery" assessment in the region of £30k, if HMRC know how much your loan totals were.

BTW - I was under the impression that all "discovery" assessments for years up to and including 2010-2011 had been sent out already - have you not received an actual assessment, or is your hypothetical situation later than that ?