Using a scheme (Non DOTAS) in the last 1-2 years - Help needed to rectify

[BlasterBates]

Thanks very much for this information. I will do as you say and gather my documents and try and consult an adviser to see what they say.
I would be happy to work out my total earnings for the periods that I have used this company and then apply the tax bands for these periods (20% and 40%) to the amounts and pay it back to HMRC for peace of mind.
I know that I could potentially be handing over thousands to HMRC for nothing if my scheme is not deemed to be tax avoidance but with the stress this has caused so far I would prefer to take the immediate financial hit.

I think this a good approach, i.e. getting everything taxed, by doing this you are taking the initiative. Having straightened out your affairs you will take the wind out of the sails of any enquiry and they'll probably leave you alone, i.e. when they query it your accountant sends them information as to how everything has now been taxed "end of story".

I think if you let it lie probably in several years the whole thing will become a huge burden. From what I see, no-one gets off scott free, you probably will have to spend many years fighting through the legal system.

Good luck.

[contractor46]

If you want to rest more easily then you could always buy a CTD

I have certainly considered this but I am struggling to first of all work out how I would calculate what is owed.

Can anyone suggest a way that I could calculate this?

[MrO666]

I was involved in various 'things' over the years and have more or less made my peace with HMRC for all years now.

Personally I agree it's better to get it all settled now. HMRC seem relentless in their pursuit of any scheme users and I think it's fair to say that unless you're VERY lucky, then at some point you're likely to get pulled.

To work out your liability is pretty easy really. Just add your small PAYE income and all loans together for the tax year, then pump them into a website such as 'listentotaxman'. That will show you what your liability might be.

Remember, National Insurance is NOT due on loans as HMRC have so far always classed them as 'Other Income' which is not subject to NI contributions. There's been a load of people trying to state that NI will be sought by HMRC, however I'm speaking from first hand experience. My tax adviser has explained that they cannot legally ask for it (due to current legislation), and having dealt with HMRC to put to bed 4 years worth of schemes, they have never once mentioned it.

I now have letters from HMRC confirming that any issues for all 4 years are closed, and that they will not be re-opened (subject to the usual rules).

I think you'll get an easier (not cheaper) ride from HMRC if you try to resolve this now, instead of waiting for the APN's at some point down the long road.

[LandRover]

I was involved in various 'things' over the years and have more or less made my peace with HMRC for all years now.

Personally I agree it's better to get it all settled now. HMRC seem relentless in their pursuit of any scheme users and I think it's fair to say that unless you're VERY lucky, then at some point you're likely to get pulled.

To work out your liability is pretty easy really. Just add your small PAYE income and all loans together for the tax year, then pump them into a website such as 'listentotaxman'. That will show you what your liability might be.

Remember, National Insurance is NOT due on loans as HMRC have so far always classed them as 'Other Income' which is not subject to NI contributions. There's been a load of people trying to state that NI will be sought by HMRC, however I'm speaking from first hand experience. My tax adviser has explained that they cannot legally ask for it (due to current legislation), and having dealt with HMRC to put to bed 4 years worth of schemes, they have never once mentioned it.

I now have letters from HMRC confirming that any issues for all 4 years are closed, and that they will not be re-opened (subject to the usual rules).

I think you'll get an easier (not cheaper) ride from HMRC if you try to resolve this now, instead of waiting for the APN's at some point down the long road.

Did you claim any expenses back?

Anyone using a EBT scheme deducted expenses from their net income, whereas normally with a LTD company you would claim them first before drawing an income. If HMRC deem loans were income then can't you deduct the expenses before calculating what is taxable income?

[MercladUK]

I was involved in various 'things' over the years and have more or less made my peace with HMRC for all years now.

Personally I agree it's better to get it all settled now. HMRC seem relentless in their pursuit of any scheme users and I think it's fair to say that unless you're VERY lucky, then at some point you're likely to get pulled.

To work out your liability is pretty easy really. Just add your small PAYE income and all loans together for the tax year, then pump them into a website such as 'listentotaxman'. That will show you what your liability might be.

Remember, National Insurance is NOT due on loans as HMRC have so far always classed them as 'Other Income' which is not subject to NI contributions. There's been a load of people trying to state that NI will be sought by HMRC, however I'm speaking from first hand experience. My tax adviser has explained that they cannot legally ask for it (due to current legislation), and having dealt with HMRC to put to bed 4 years worth of schemes, they have never once mentioned it.

I now have letters from HMRC confirming that any issues for all 4 years are closed, and that they will not be re-opened (subject to the usual rules).

I think you'll get an easier (not cheaper) ride from HMRC if you try to resolve this now, instead of waiting for the APN's at some point down the long road.

Each to their own, but I wonder how you will feel if HMRC actually lose some of these EBT schemes in court in the near future?

HMRC has scared people into settling, as opposed to fighting their corners. It may well be that Hector wins, but not with out a fight!!!!

[contractor46]

Each to their own, but I wonder how you will feel if HMRC actually lose some of these EBT schemes in court in the near future?

HMRC has scared people into settling, as opposed to fighting their corners. It may well be that Hector wins, but not with out a fight!!!!

So since my scheme is currently not a DOTAS would you say there is any value in fighting it as opposed to paying approx 30-40k back to HMRC voluntarily (as i have not been contacted by HMRC in any way yet)?

[MrO666]

Each to their own, but I wonder how you will feel if HMRC actually lose some of these EBT schemes in court in the near future?

HMRC has scared people into settling, as opposed to fighting their corners. It may well be that Hector wins, but not with out a fight!!!!

They may loose the odd battle but don't be in any doubt they'll win the war, to think otherwise is in my own opinion (and that of a top tier tax consultancy) foolish. String it out as long as you want though.

HMRC have far too much at stake to just drop the issue if they loose the odd case. They can afford to just continually go all the way through the legal process without battering an eyelid, for most scheme users the legal costs alone would dwarf the potential tax liabilities, making it a pointless endeavour. Remember that if you (the scheme) goes to a FTT and loses, HMRC will seek to have their costs awarded against you, which will add a nice £100k minimum to the combined debt. Appeal and it will just continue the same way.

It was put to me like this by Grant Thornton...........

If you go to a tribunal against HMRC, and HMRC loose, they will be default appeal. If they loose that, the will then take it to the next level. Each time HMRC raise the level of judiciary, you need to remember that that very judiciary are the same people who at the very top are on the lookout for knighthoods and peerages. They do NOT get these by continually siding against HMRC and the UK Government. The higher up the UK chain of command you go, the more likely it will be that the outcome will favour HMRC, that's exactly what I was told by those who know.

Remember that all of this is subject to the smallest interpretations of law, so it's not like the appeal judges will be making some radical stance they cannot backup by siding with HMRC.

Each to their own obviously, but i'm happy that i'm done with it all now, I can get on with my life and not have that constant worry that one day HMRC will more than likely get what they want, and if I've fought them all the way you can be pretty sure that HMRC will take great delight in piling on penalties as well as interest.

Lets be clear here, i am not agreeing with HMRC or what they're doing, but i'm a realist, and I accept that unless I have millions at stake and can afford to go all the way to the high court, then in reality it's not a fight worth picking. HMRC's approach is totally wrong and bullying I agree, but it's not worth stressing the rest of your life over.

If you genuinely think it is, then my opinion would be to liquidate all you have and then go bankrupt, which would write the debt off and bring the whole sorry affair to a close far sooner than battling HMRC.

[webberg]

So since my scheme is currently not a DOTAS would you say there is any value in fighting it as opposed to paying approx 30-40k back to HMRC voluntarily (as i have not been contacted by HMRC in any way yet)?

Cool minds and considered decisions required.

make a choice based on information, not speculation.

[MercladUK]

They may loose the odd battle but don't be in any doubt they'll win the war, to think otherwise is in my own opinion (and that of a top tier tax consultancy) foolish. String it out as long as you want though.

HMRC have far too much at stake to just drop the issue if they loose the odd case. They can afford to just continually go all the way through the legal process without battering an eyelid, for most scheme users the legal costs alone would dwarf the potential tax liabilities, making it a pointless endeavour. Remember that if you (the scheme) goes to a FTT and loses, HMRC will seek to have their costs awarded against you, which will add a nice £100k minimum to the combined debt. Appeal and it will just continue the same way.

It was put to me like this by Grant Thornton...........

If you go to a tribunal against HMRC, and HMRC loose, they will be default appeal. If they loose that, the will then take it to the next level. Each time HMRC raise the level of judiciary, you need to remember that that very judiciary are the same people who at the very top are on the lookout for knighthoods and peerages. They do NOT get these by continually siding against HMRC and the UK Government. The higher up the UK chain of command you go, the more likely it will be that the outcome will favour HMRC, that's exactly what I was told by those who know.

Remember that all of this is subject to the smallest interpretations of law, so it's not like the appeal judges will be making some radical stance they cannot backup by siding with HMRC.

Each to their own obviously, but i'm happy that i'm done with it all now, I can get on with my life and not have that constant worry that one day HMRC will more than likely get what they want, and if I've fought them all the way you can be pretty sure that HMRC will take great delight in piling on penalties as well as interest.

Lets be clear here, i am not agreeing with HMRC or what they're doing, but i'm a realist, and I accept that unless I have millions at stake and can afford to go all the way to the high court, then in reality it's not a fight worth picking. HMRC's approach is totally wrong and bullying I agree, but it's not worth stressing the rest of your life over.

If you genuinely think it is, then my opinion would be to liquidate all you have and then go bankrupt, which would write the debt off and bring the whole sorry affair to a close far sooner than battling HMRC.

As I said, it is fine if you have given up hope of seeing your money again and moved on.

No one, not even Grant Thornton know how the challenges will go in the coming years.

I for one will pay the APN and see what happens, at least with the potential that I may see my money returned.

[StrengthInNumbers]

Based on facts and only referring to a proper loan based EBT scheme, HMRC has ToAA to fight with. That is definitely not a sure shot win for HMRC. For starters no tax benefit in using an EBT offshore if EBT onshore was legal (Rangers etc) and thus no ToAA. many other arguments exist.

Secondly I don't believe that everyone is corrupt. I believe in judicial system and even HMRC and will pay what will be found legally due. Current actions are politically driven. Judicial system will make a fair decision in due course. HMRC will appeal and so will we if we lose. An individual cannot fight HMRC but an association of 1000s surely can. Truly strength is in numbers.

In my view above only applies to scheme run until dec 2010 and worst case before GAAR came into play in 2013. Anyone in scheme after Apr 2013 should settle. (Although what worries me is that soon HMRC will call ltd company a scheme and all hell will break lose again - I hope that does not happen).