HMRC Enquiries: Bedouin/Redstone

[DonkeyRhubarb]

What will HMRC genuinely do to someone who has no way of paying with no assets?

We're yet to find out.

I'm guessing there will be a lot of people in this position, so HMRC better have a plan.

[ads1980]

We're yet to find out.

I'm guessing there will be a lot of people in this position, so HMRC better have a plan.

I bet they haven't though. Because if they had really thought this through then we wouldn't be in this situation.

[porrker]

We're yet to find out.

I'm guessing there will be a lot of people in this position, so HMRC better have a plan.

My understanding is the APN and follower notices are for schemes that applied for a DOTAS code. Bedouin/Redstone did not apply for a DOTAS code.

[DonkeyRhubarb]

My understanding is the APN and follower notices are for schemes that applied for a DOTAS code. Bedouin/Redstone did not apply for a DOTAS code.

You're half right.

APN only applies to DOTAS schemes*. FN applies to any scheme.


* Strictly speaking it applies to any scheme which was a notifiable arrangement. This could come back to bite schemes which didn't disclose under DOTAS.

[webberg]

I bet they haven't though. Because if they had really thought this through then we wouldn't be in this situation.

HMRC does not have a plan or if they do it's one that they're not willing to share.

My best guess at the moment is that they will push everybody they can to pay as much as they can. When that reaches its limit, a few will be pushed into bankruptcy or to agreeing an IVA (Individual Voluntary Arrangement).

The latter is used to prevent to sort of damage a full bankruptcy can cause such as credit score reduction, lack of credit, not able to work in financial services, etc. I'm told (but have not confirmed) that if you agree an IVA BEFORE the HMRC debt is finalised, so that you put it down as a nominal £1, then HMRC cannot seize control of the situation and demand sales of assets at fire sale prices etc. Like I say, I'm not an expert here but that sounds to be an effective strategy.

For those who still can't pay (or won't pay) HMRC will probably seek sequestration of income and/or a charge on assets.

The fear with sequestrating assets is whether that might be used as a back door to pushing everybody on to PAYE? That has consequences beyond tax issues, so you'd hope that somebody had thought of that!

[ads1980]

HMRC does not have a plan or if they do it's one that they're not willing to share.

My best guess at the moment is that they will push everybody they can to pay as much as they can. When that reaches its limit, a few will be pushed into bankruptcy or to agreeing an IVA (Individual Voluntary Arrangement).

The latter is used to prevent to sort of damage a full bankruptcy can cause such as credit score reduction, lack of credit, not able to work in financial services, etc. I'm told (but have not confirmed) that if you agree an IVA BEFORE the HMRC debt is finalised, so that you put it down as a nominal £1, then HMRC cannot seize control of the situation and demand sales of assets at fire sale prices etc. Like I say, I'm not an expert here but that sounds to be an effective strategy.

For those who still can't pay (or won't pay) HMRC will probably seek sequestration of income and/or a charge on assets.

The fear with sequestrating assets is whether that might be used as a back door to pushing everybody on to PAYE? That has consequences beyond tax issues, so you'd hope that somebody had thought of that!

The issue with this though is if they force people in to bankruptcy or IVA, not only will they not receive any of their debt, but as people will lose their jobs in the industry that they are employed in, HMRC will not receive any further income tax.

[Rab]

What will HMRC genuinely do to someone who has no way of paying with no assets?

My tax/NICs demand is addressed to my Ltd Company. So what can they do if a Ltd company hasn't got the funds to pay up?

[malvolio]

My tax/NICs demand is addressed to my Ltd Company. So what can they do if a Ltd company hasn't got the funds to pay up?

They could do you for trading while insolvent for one option...

[webberg]

The issue with this though is if they force people in to bankruptcy or IVA, not only will they not receive any of their debt, but as people will lose their jobs in the industry that they are employed in, HMRC will not receive any further income tax.

Do you honestly think that thought has crossed their minds.

HMRC collect tax full stop.

If unemployment increases that's a different department.

If tax take falls, they will invent a new tax or hike an old one.

[webberg]

My tax/NICs demand is addressed to my Ltd Company. So what can they do if a Ltd company hasn't got the funds to pay up?

On the tax side, it depends on why the Ltd Co has got the demand.

If the demand is for Corporation Tax (i.e. tax relief on paying the trust/EBT a premium is denied), then short of seizing assets OF THE COMPANY, not much.

If the demand is for unpaid PAYE they allege is due, then responsibility for the tax/NI can shift to the recipient of the alleged remuneration. HMRC would have to first issue a Reg 29 determination I think. Then they would perhaps need to show that the recipient had received funds KNOWING that they were not taxed when they should have been. they would expect the recipient to have asked relevant questions.

If that is the case, then all your assets and income are at risk.