BIG GROUP

[webberg]

Except if you've got closed (unprotected) years, where there's no interest.

For people who have all open (protected) years, BG may be worth a punt. Even though HMRC say CLSO2 has a limited window of availability, I can't see them ever turning anyone away who wants to settle. The terms may be slightly less favourable in a year or so but it's probably not a big risk.

It's definitely more of a dilemma for people with closed years.

Agreed that closed years muddy the waters.

Our plan says that a closed year cannot result in liability for that year.

We also say that there are grounds for excluding such years from the DR charge - HMRC probably disagree and certainly many here will for reasons I posted about last week.

[ChimpMaster]

Agreed that closed years muddy the waters.

Our plan says that a closed year cannot result in liability for that year.

We also say that there are grounds for excluding such years from the DR charge - HMRC probably disagree and certainly many here will for reasons I posted about last week.

Many of us are still in shock that closed/unprotected years are being subjected to the DR charge, right back from 1999.

A closed year is by its very nature meant to imply certainty. Especially if one has declared everything on their tax returns and waiting 6 years for that certainty.

Is that any chance at all that HMRC will change their view of opening closed years for the DR charge?

[Loan Ranger]

Is that any chance at all that HMRC will change their view of opening closed years for the DR charge?

The law has been passed by Parliament, and it makes no distinction between open and closed years.

It's basically a windfall tax on outstanding loans.

[webberg]

What he said.

No chance.

This is HMRC hiding all their failures to stop these schemes and failures to open enquiries behind a catch all retrospective charge.

[Finalwhistle]

What he said.

No chance.

This is HMRC hiding all their failures to stop these schemes and failures to open enquiries behind a catch all retrospective charge.

If there are no formal records dating back to 1999 (because no one is actually legally obliged to keep records for that long) how on earth can anyone be charged? HMRC can’t suddenly hit people with DR charges on loan values that they cannot substantiate or have no evidence even existed. So at some point there have to be closed years in that there is no evidence of what actually occurred during those closed years. Even banks are not required to keep statements over 5 years. So at some point closed years have to be closed years.

[webberg]

If there are no formal records dating back to 1999 (because no one is actually legally obliged to keep records for that long) how on earth can anyone be charged? HMRC can’t suddenly hit people with DR charges on loan values that they cannot substantiate or have no evidence even existed. So at some point there have to be closed years in that there is no evidence of what actually occurred during those closed years. Even banks are not required to keep statements over 5 years. So at some point closed years have to be closed years.

The tax law is littered with guidance and rules for HMRC and taxpayers to follow in these circumstances.

Basically HMRC can raise a charge on a basis that is "just and reasonable" and it is then for the taxpayer to prove that is incorrect.

We have seen HMRC use multiples of salary as the loan amount - and you know what, a lot of these are pretty accurate as most promoters ran schemes without much imagination or thought.

Where it becomes more tricky for HMRC is if they want to add things like promoters fees. I'm not getting into a long debate over beneficial versus legal ownership of funds, but my view is that fees paid to promoters were never the individuals.

In any event, HMRC produce a "just and reasonable" position and then YOU have to prove it's wrong.

With no records, no buddies you know who used the same scheme who might have contemporary records, no bank statements, it's hard. You can use some sort of estimate such as you see in enquiry cases, i.e. known expenditures (mortgage etc) assets at beginning and end of year, to guess at the income in the middle, but these are cumbersome and inaccurate most of the time.

However, make no mistake, it's your job to prove HMRC's value is wrong.

If you get to a Tribunal and say "no records, no requirement to keep records" you might get some sympathy but without data you cannot prove the number wrong.

So where can you get it?

Lenders.
Trustees
Promoters if around
Liquidation statements
Distributions statements
Banks - don't be put off by claims of being unable to fund it.
HMRC
Did you claim/pay any means tested benefits and made a declaration
Mortgage applications
statements of worth for a will
statements to brokers etc
credit card applications

Start now.

[ChimpMaster]

If you've lost all records, why can't HMRC just use the P11D values or BIK calculations to determine the loan amounts?

[webberg]

If you've lost all records, why can't HMRC just use the P11D values or BIK calculations to determine the loan amounts?

First because HMRC probably doesn't have the P11Ds.

Second, the P11Ds were notoriously inaccurate.

Third, without knowing when loans started or stopped in a year, back solving is actually quite difficult.

However, I'm sure that pretty much any source of data that is better than a memory will be called into help.

Our approach has been to go to lenders for the data. In the majority of instances they have been cooperative.

Where they are not, we plan on having HMRC ping them as one of the parties who are responsible for supplying information. Many of course are not the same entity as made the loan, but the data is still there.

[Finalwhistle]

Good idea. Let's all tell HMRC what we're planning so they can impose a rule variation or produce an interpretation of the law that makes it impossible for BG's case to proceed.

I think you pretty much put the nail in Big Groups coffin for me with this comment. If a rule variation can be implemented into law to counter the BG case then it is irrelevant when that is done. As we all know HMRC can apply retrospective law, so if even the BG case gets accepted with today’s legislation.. it may not necessarily be the case the day after, the week after or even the year after. HMRC can sit as long as they like to make a counter case and retrospectively apply it... then we start another BG case, more money...

[Invisiblehand]

Good idea. Let's all tell HMRC what we're planning so they can impose a rule variation or produce an interpretation of the law that makes it impossible for BG's case to proceed.

Are you planning on making it secret forever? Or just waiting for the time to be right to jump out of the cupboard and yell surprise?