HMRC Enquiries: Bedouin/Redstone

[LetsGoSailing]

Hi webberg and any other advisors in the know
What action do you recommend for users of a non DOTAS registered scheme like Bedouin.
There has been much talk in the forum of the Settlement Opportunity, which is only for tax years up to 2011. APN's are starting to hit post boxes, but they are only for DOTAS schemes (as far as I know, so far). There are a number of JR groups being formed against APN's, but I assume they are only for those being hit with an APN, so what do those of us that don't fall into any of those categories do?
For an example like this: Tax year 2013, non DOTAS scheme (Bedouin), open Section 9A enquiry into self assessment, estimated liability not totally massive that it fighting is the only option, but big enough that some favourable terms to pay it back would be required over a number of months, and willing to enter some sort of settlement arrangement just to put this all to bed and to cap interest and extra charges, what does one do? It seems like none of the options on the table currently cater for this situation. Does one just wait until HMRC to make the next move?
A few from Bedouin have mentioned on the forum that they have received requests for payment from HMRC - what exactly are these? They are not APN's I don't think, are they just a recalculation of what HMRC think you owe which you can either pay or not pay? What are the consequences?
I will most likely be looking for some form of professional advice at some point, but so far am yet to see any available options being mentioned for this situation.
Cheers

[porrker]

What next

Hi webberg and any other advisors in the know
What action do you recommend for users of a non DOTAS registered scheme like Bedouin.
There has been much talk in the forum of the Settlement Opportunity, which is only for tax years up to 2011. APN's are starting to hit post boxes, but they are only for DOTAS schemes (as far as I know, so far). There are a number of JR groups being formed against APN's, but I assume they are only for those being hit with an APN, so what do those of us that don't fall into any of those categories do?
For an example like this: Tax year 2013, non DOTAS scheme (Bedouin), open Section 9A enquiry into self assessment, estimated liability not totally massive that it fighting is the only option, but big enough that some favourable terms to pay it back would be required over a number of months, and willing to enter some sort of settlement arrangement just to put this all to bed and to cap interest and extra charges, what does one do? It seems like none of the options on the table currently cater for this situation. Does one just wait until HMRC to make the next move?
A few from Bedouin have mentioned on the forum that they have received requests for payment from HMRC - what exactly are these? They are not APN's I don't think, are they just a recalculation of what HMRC think you owe which you can either pay or not pay? What are the consequences?
I will most likely be looking for some form of professional advice at some point, but so far am yet to see any available options being mentioned for this situation.
Cheers

My demand for payment arrived last week sent straight to Bedouin. They have given me details of a tax specialist and the accountant that completed my self assessment has offered to help on an individual basis which will cost.

I have 30 days to appeal and am currently considering my options. I'm finding it difficult to justify paying for individual advice as the scheme was generic amongst its users.

If anyone is involved in group action can you please PM me?

[LetsGoSailing]

My demand for payment arrived last week sent straight to Bedouin.

Ok that is interesting - thanks for clarifying, which tax year was that for?
User willcom was putting together a group for Bedouin, perhaps get in touch with him.

Everyone I have been in touch with regarding Bedouin enquiries have had their investigation opened following a self assessment submission after leaving Bedouin. Just out of interest, what will happen to those who have never submitted a self assessment, either because they are still with Bedouin or went perm after leaving them or something like that?

[porrker]

Ok that is interesting - thanks for clarifying, which tax year was that for?
User willcom was putting together a group for Bedouin, perhaps get in touch with him.

Everyone I have been in touch with regarding Bedouin enquiries have had their investigation opened following a self assessment submission after leaving Bedouin. Just out of interest, what will happen to those who have never submitted a self assessment, either because they are still with Bedouin or went perm after leaving them or something like that?

Well I received a tax rebate for the past 4 years from HMRC in February due to my self assessment this is while I was replying to their investigation letter. I was also told by HMRC 18 months ago I should stop filling out self assessments. So heavens knows it's a bit all over the place....

[webberg]

Hi webberg and any other advisors in the know
What action do you recommend for users of a non DOTAS registered scheme like Bedouin.
There has been much talk in the forum of the Settlement Opportunity, which is only for tax years up to 2011. APN's are starting to hit post boxes, but they are only for DOTAS schemes (as far as I know, so far). There are a number of JR groups being formed against APN's, but I assume they are only for those being hit with an APN, so what do those of us that don't fall into any of those categories do?
For an example like this: Tax year 2013, non DOTAS scheme (Bedouin), open Section 9A enquiry into self assessment, estimated liability not totally massive that it fighting is the only option, but big enough that some favourable terms to pay it back would be required over a number of months, and willing to enter some sort of settlement arrangement just to put this all to bed and to cap interest and extra charges, what does one do? It seems like none of the options on the table currently cater for this situation. Does one just wait until HMRC to make the next move?
A few from Bedouin have mentioned on the forum that they have received requests for payment from HMRC - what exactly are these? They are not APN's I don't think, are they just a recalculation of what HMRC think you owe which you can either pay or not pay? What are the consequences?
I will most likely be looking for some form of professional advice at some point, but so far am yet to see any available options being mentioned for this situation.
Cheers

A bit of a hospital pass - thanks!

Disclaimer - I have not studied the Bedouin scheme details, whether reported under DOTAS or not, nor your personal circumstances. As such the following represents my personal opinion based on what I know and have assumed and you CANNOT and MUST NOT rely upon anything below. You should ALWAYS seek appropriate professional advice.

The HMRC position on non DOTAS schemes is that most should probably have been disclosed and that failure to do so is a potential offence. They rely upon the wording of the legislation that discusses a "notifiable" scheme. The words are widely drawn, ill defined and not yet tested in Court. In the event that a Court eventually decides a scheme should have been disclosed, HMRC will seek penalties. These are the primary responsibility of the provider. However if the provider has failed to disclose, then there is a chain of others who become liable. This starts with intermediaries, goes to advisers and eventually to users.

In summary, you could find yourself liable for penalties for failing to disclose. These were originally modest at around £5k plus a daily charge. They have been ramped up most years. Most recently a provider could be fined up to £1m for not disclosing. I'd have to research the history of fines to be accurate and frankly don't have the time at the moment.

APN's can be issued ONLY for DOTAS registered schemes at the moment. A non DOTAS scheme would need to be hit with a Follower Notice (unlikely as no finally decided cases at the moment), a GAAR counteraction notice (no sign publicly of any GAAR notice yet but I understand we will see the first within 6 months, not a contractor scheme), or HMRC get a ruling that a scheme was "notifiable". That would require a Court hearing, so such a beast in 2015 in unlikely.

A JR is looking to challenge APN on jurisdictional or procedural grounds. These are usually accompanied by an injunction that stalls payment. A JR hearing will decide whether HMRC has the right to issue an APN and how. Opinion is divided as to whether a JR will succeed. If it does, my opinion is that the rules will be re-written and we'll see new incontestable rules later this year. If not, the APN is valid and needs to be paid. It's presently unclear whether the latter would mean that the original penalty dates (due payment date - 5%, plus 5 and 11 months later at 5% each) would be valid. There are others here trying to chase that issue down.

I think this is one of those issues where if you put 5 experts in a room, you get 6 replies. You have to weigh the various factors, legal and political and economic to get an answer. For what it's worth, my personal opinion is that a JR will fail.

If you have used a non disclosed scheme, I would suggest the following.

1. Assume that you will get a demand for tax based on the funds you received being fully taxable.
2. That may arise via an APN - see above - or an assessment - which can be appealed
3. Start saving for the liability and if possible buy a Certificate of Tax Deposit which stops interest running
4. Look at what you've told HMRC via your returns. If this is less than full disclosure of all the facts, ask the provider what they have told HMRC. If you are unsure, tell HMRC all the details you know. This will reduce any penalties in due course.
5. Get active in joining or forming a group of people in similar situations.
6. Do not rely upon the provider to stay around to help. A few exceptional firms do, most disappear.
7. Do not rely upon the providers adviser. They will help only for so long as the provider pays them.
8. Get you own adviser.

As I mentioned, the fact that there is no disclosure under DOTAS has temporarily stopped an APN unless and until HMRC get a ruling, but they have other routes. Enquiry notice (9A) plus assessment is the usual (makes you wonder how HMRC know who is in the scheme?) but they have other routes such as discovery.

If you take anything from the long piece above (apologies), it's this.

Assume your scheme should have been disclosed; calculate the possible liability; start making provision to pay it; seek independent personal advice based on your circumstances; get organised in a group.

As I said, this is a general overview and you cannot rely upon it (because you're not my client and have not paid a fee).

I also think that the above might be useful as a separate thread. Do you have any objection to this being posted as such?

[Boobetty]

Forgive the intrusion, but under what circumstances would a court ruling on the substance of 'notifiable' occur? I assume you are talking about this in the context of the definition of "DOTAS arrangements" under 219(5)? There is no right of appeal here so how could this question ever be put before a court, other than under a JR?

This is the master stroke of the APN legislation. By removing the right of appeal, HMG gave themselves carte blanche to write the legislation as badly as they pleased, happy in the knowledge that it could never be challenged, other than by those JR guys with ludicrously deep pockets.

[webberg]

Forgive the intrusion, but under what circumstances would a court ruling on the substance of 'notifiable' occur? I assume you are talking about this in the context of the definition of "DOTAS arrangements" under 219(5)? There is no right of appeal here so how could this question ever be put before a court, other than under a JR?

This is the master stroke of the APN legislation. By removing the right of appeal, HMG gave themselves carte blanche to write the legislation as badly as they pleased, happy in the knowledge that it could never be challenged, other than by those JR guys with ludicrously deep pockets.

I understand that HMRC has details of a number of schemes that were not notified and which they consider should have been. The intention is to raise a penalty for non disclosure. The penalty will have rights of appeal etc. Obviously should they be exercised, a Court will decide and will help define what is meant by notifiable in the context of DOTAS rules.

I think HMRC is relying more upon FA 2004 sec 306 et seq rather than the APN rules.

I agree on the JR though, my personal opinion is that it should be used ONLY by those who view delaying payment of tax as a "win".

[DonkeyRhubarb]

I understand that HMRC has details of a number of schemes that were not notified and which they consider should have been. The intention is to raise a penalty for non disclosure. The penalty will have rights of appeal etc. Obviously should they be exercised, a Court will decide and will help define what is meant by notifiable in the context of DOTAS rules.

I think HMRC is relying more upon FA 2004 sec 306 et seq rather than the APN rules.

I agree on the JR though, my personal opinion is that it should be used ONLY by those who view delaying payment of tax as a "win".

At the moment HMRC is probably content picking off the schemes which were disclosed under DOTAS. At some point I'm sure they'll revisit those that weren't. It won't be easy to justify non-disclosure for any schemes implemented after 2006 when DOTAS was extended.

I also agree about JR. If you can afford to pay APNs you should seriously consider doing so. Time to pay is also an option to consider.

[LetsGoSailing]

A bit of a hospital pass - thanks!

Apologies for the loaded question, and thank you very much for such a detailed reply!
So far non of the advice mentioned has specifically addressed non disclosed schemes not eligible for the Settlement Opportunity, so I really appreciate you taking the time to elaborate on it.

No objection at all to starting a new thread.

[webberg]

Apologies for the loaded question, and thank you very much for such a detailed reply!
So far non of the advice mentioned has specifically addressed non disclosed schemes not eligible for the Settlement Opportunity, so I really appreciate you taking the time to elaborate on it.

No objection at all to starting a new thread.

I think that HMRC is struggling to put together details of non disclosed schemes and as such is not in a position to have an opinion about settlement. Short of a mole or whistleblower HMRC will have to drag details out of individual returns and that is not a short nor easy task.

I do really worry about non disclosure. I can see no real reason for not disclosing and if the primary entity responsible for the failure disappears, then the cost is going to drop on to users. It would be an interesting exercise to debate with some of the knowledgeable forum users (Mr Donkey and Mr Bobbety and others) in a separate thread?