Settlement Opportunity

[frodo]

Urgh, if it weren't for IHT I would probably settle as I don't want this hanging over my head for years (including the possible recall of the loans - god forbid).

I believe trusts are set up for the benefit of employees and trustees are not able to act in a way that would be detrimental to them. That would include recalling loans. But I don't know how yours was set up.

[LadyPenelope]

If it is any consolation, IHT for many of us is only triggered by loans being written off. Therefore if you do not settle (which, it seems, can trigger the loan write off) IHT does not arise. I believe therefore it is extremely unlikely that IHT will be included in APN's, although it is HMRC's view that it will continue to accrue until, I guess, we die.

It's a great shame for me. I WAS willing to settle. But now with this talk of IHT I can no longer afford to do so. Not to mention that, on principal, I would rather emigrate to Venezuela than be taxed twice.

The sensible option therefore is to pay the APN when it arrives, then wait and see what happens. The Settlement Opportunity was intended to provide closure, but for me personally it appears to have achieved the opposite.

That is a consolation indeeed - thanks for posting.

I'm sorry the IHT makes it impossible to pay. I still remember getting the letter and feeling the initial disbelief followed by shock.

[frodo]

If it is any consolation, IHT for many of us is only triggered by loans being written off. Therefore if you do not settle (which, it seems, can trigger the loan write off) IHT does not arise. I believe therefore it is extremely unlikely that IHT will be included in APN's, although it is HMRC's view that it will continue to accrue until, I guess, we die.

It's a great shame for me. I WAS willing to settle. But now with this talk of IHT I can no longer afford to do so. Not to mention that, on principal, I would rather emigrate to Venezuela than be taxed twice.

The sensible option therefore is to pay the APN when it arrives, then wait and see what happens. The Settlement Opportunity was intended to provide closure, but for me personally it appears to have achieved the opposite.

Does anyone know how settling actually rights the loan off? Wouldn't the trustees then have to be involved in the process?

[DonkeyRhubarb]

It's a great shame for me. I WAS willing to settle. But now with this talk of IHT I can no longer afford to do so. Not to mention that, on principal, I would rather emigrate to Venezuela than be taxed twice.

HMRC don't appear to have a commercial bone in their body. If only they were a bit more pragmatic a lot more people would settle.

[TykeMerc]

Does anyone know how settling actually rights the loan off? Wouldn't the trustees then have to be involved in the process?

I assume (this is best guess) that by setting you admit that the loan was in fact income and not a loan so the loan no longer exists.
I'd guess that's legally different from a write off, but the effect would be the same.

[squirrel]

I believe trusts are set up for the benefit of employees and trustees are not able to act in a way that would be detrimental to them. That would include recalling loans. But I don't know how yours was set up.

Couldn't recalling the loans be a good thing?

Wouldn't HMRC have to go away then?

Obviously I can't afford to pay the loan but it would then be a matter of the Trust and me coming to some kind of an arrangement or the Trust offloading the debt to a third party for pennies in the pound because I can't pay and then me settling with the third party. Happens all the time with other credit so why not these loans?

I fully appreciate what I say above is a daft suggestion, but it does show the something of a similarity to what we're involved in and the rest of the financial sector. It astounds me how the government on one hand come down so hard on banks et al for their failings and on the other allow (and indeed encourage with ridiculous legislation) HMRC to behave so inexplicably poorly - apart from it's to win votes of course! I'm not sure if this is normal practise for HMRC, but to actually suggest someone take out loans to pay a tax demand that HMRC haven't any (proper) legal right to is astonishing. Why on earth do we let them get away with it? I would, assume if someone did extend their mortgage or take out a loan to pay the APN then HMRC would take the extra interest into account with their repayment when they lose?

I think I'm quite lucky (if that's the word for it!), I have absolutely no means of settling up front and my exposure is quite large (I was in an EBT scheme for just over two years from 2005-2007, permanent since then on PAYE) so they can load me up with whatever penalties and IHT they desire it won't make a difference, I still can't pay. Its a no brainier for me, don't settle, wait for the apn, can't pay it, shoot me. There's no point worrying about it. Like I said, I feel quite lucky in that respect. I honestly do feel for all of you out there who are agonising but I'd still recommend (for what my opinions worth!) not settling. That's not based on any legal opinion or understanding of the tax law, just an HMRC can go #### attitude, pay my fair share my back side, I've never claimed any benefits whatsoever but paid over half a million in tax during my working career. Makes me sick how we're being treated.

[Boobetty]

Does anyone know how settling actually rights the loan off? Wouldn't the trustees then have to be involved in the process?

Yes, they are involved. And it is this write off that triggers the IHT charge. If you read the latest guidance issued by HMRC here you will note that inclusion of IHT appears to be optional (i.e. you can choose not to have your loans written off). However, this then leaves you open to future assessments for IHT.

[centurian]

HMRC don't appear to have a commercial bone in their body. If only they were a bit more pragmatic a lot more people would settle.

Actually I think they do realise this, but after the Goldman Sachs / Hartnett lunch fiasco, they can no longer be seen as conceding a single penny from the "full" amount of tax - even though they know it's making it harder for them.

And while the Goldies/Hartnett case had it's issues - not least of which you needed to be able to take Hartnett to lunch to get such a deal - it was a model of pragmatism. It was a case of "we're not 100% of your case, you are not 100% sure of yours - pay about half the total amount (including interest/penalties) and we'll call it quits"

[jbryce]

Elections?

...so there's an election in May. I wonder if the postponement has anything to do with that?

[DonkeyRhubarb]

Actually I think they do realise this, but after the Goldman Sachs / Hartnett lunch fiasco, they can no longer be seen as conceding a single penny from the "full" amount of tax - even though they know it's making it harder for them.

And while the Goldies/Hartnett case had it's issues - not least of which you needed to be able to take Hartnett to lunch to get such a deal - it was a model of pragmatism. It was a case of "we're not 100% of your case, you are not 100% sure of yours - pay about half the total amount (including interest/penalties) and we'll call it quits"

You're right, there is too much external pressure on HMRC and their hands are tied.

Any relaxation of the settlement policy needs to come from Government, which is unlikely to happen.

The Government have probably put in enough new measures now to curtail the use of schemes going forward but that still leaves an enormous legacy case load to deal with.

APNs will address this to a certain extent but they won't settle disputes. What HMRC have no way of knowing at the moment is how many people will go to court to try and get the money back. It will be surprising if there isn't a rise in litigation.