BIG GROUP

[SimonJones]

IHT

This whole IHT stuff is just crazy... on one hand HMRC is saying the earnings is income, hence taxable; and on the other hand they it's a loan as well, hence IHT. How can the earnings be both Income and Loan at the same time? Surely, isn't this double taxation?

[webberg]

Bummer. I just lost a full explanation (background etc.) and my thoughts but the website dropped it as I pressed submit. I'm not typing all of that in again, sorry. Here is the short answer.

I handled it myself and I tried all the technical reasons/laws I heard of including rules from HMRC's own website. HMRC fobbed it all off. I am in a pickle regarding HMRC's IHT claim but my guess is so is everybody else, even those getting professional advice. They just don't know it yet. At least according to me, I have a contract with HMRC saying IHT is included. My problem (pickle) is, HMRC is now ignoring their own contract!!!!

At the time I looked into this I found all the professionals were guessing, I could do that myself without charging myself a lot of money. It seems like things are progressing (forums like this) but I've not seen a eureka moment yet.

Your decision. Let's say it turns out the professionals were able to save you thousands and you did not go with them, will you be OK with it. Lets say it turns out the professionals were not able to save you anything and you paid for their advice, will you be OK with it.

I have to live with my call. I did all of this before I heard of this forum and the groups on it.

A free tip: Double check everything (all the amounts) HMRC send you, they make mistakes in their favour.

I would say that a professional is unlikely to have saved you much is anything. HMRC's approach to settlement is pretty much "take this or leave it" and any attempt to change the analysis or the words is met with "sign it or else".

What a professional would do is read it all carefully and make sure that you understood the implications and consequences.

[webberg]

I am curious as to why you still think/say there is no certainty over IHT after a settlement when there is, well for people with Horizon there is. The certainty is HMRC will charge IHT after settling if you release your loan and now I'm guessing, 2019 you if you do not release it. To be clear, the IHT or 2019 (maybe ?) charge is in addition to a settlement agreement after you settled.

The only way to stop additional charges (e.g. IHT or 2019) after settling is if you (Big Group) can get HMRC to give a different settlement to your members than they did me (i.e. HMRC accept less money, I can't see this happen) or find a law that a judge will enforce.

I hope your plans works.

Be clear that Big Group is not settling on HMRC published terms. We have a different agenda.

I say no certainty because as you found out, HMRC will not confirm that any IHT included in the settlement is the final amount you will pay or not - they claim it depends on what happens to the loans after settlement - and neither will they confirm that releasing the loans post settlement will not produce another income tax charge - see the changes to section 689 announced yesterday - and neither will they confirm that liability under the DR charge 2019 will not arise on the same amounts - other than to say that "extensive measures exist for the prevention of double taxation" - not good enough.

Big Group however is not in this space.

The firm advising BG is but then so are a number of other firms.

[HMRC made Atlas Shrug]

Did you do this settlement yourself or use a professional advisor? This is absolutely in no way a criticism either way, I'm looking at settling myself and am worried about getting into just this sort of mess. Am wondering if a professional handling it might avoid things like this.

Bummer. I just lost a full explanation (background etc.) and my thoughts but the website dropped it as I pressed submit. I'm not typing all of that in again, sorry. Here is the short answer.

I handled it myself and I tried all the technical reasons/laws I heard of including rules from HMRC's own website. HMRC fobbed it all off. I am in a pickle regarding HMRC's IHT claim but my guess is so is everybody else, even those getting professional advice. They just don't know it yet. At least according to me, I have a contract with HMRC saying IHT is included. My problem (pickle) is, HMRC is now ignoring their own contract!!!!

At the time I looked into this I found all the professionals were guessing, I could do that myself without charging myself a lot of money. It seems like things are progressing (forums like this) but I've not seen a eureka moment yet.

Your decision. Let's say it turns out the professionals were able to save you thousands and you did not go with them, will you be OK with it. Lets say it turns out the professionals were not able to save you anything and you paid for their advice, will you be OK with it.

I have to live with my call. I did all of this before I heard of this forum and the groups on it.

A free tip: Double check everything (all the amounts) HMRC send you, they make mistakes in their favour.

[HMRC made Atlas Shrug]

I understand why the above posts are discussing HMRC settlement but it's important to understand your options.

Big Group has an analysis that it believes in and which, if correct, will produce an answer very different from the settlement terms issued on 7th November. It will also deal with the loans.

HMRC has proposed a settlement which is essentially pay tax on all loans, plus interest, pay for closed years, have no certainty over IHT etc and will not deal with the loan.

You can choose to litigate and groups exist for that on certain schemes.

You can choose to bat back HMRC enquiries until one or other the above becomes inevitable.

The one thing you cannot do is bury your head in the sand.

I am curious as to why you still think/say there is no certainty over IHT after a settlement when there is, well for people with Horizon there is. The certainty is HMRC will charge IHT after settling if you release your loan and now I'm guessing, 2019 you if you do not release it. To be clear, the IHT or 2019 (maybe ?) charge is in addition to a settlement agreement after you settled.

The only way to stop additional charges (e.g. IHT or 2019) after settling is if you (Big Group) can get HMRC to give a different settlement to your members than they did me (i.e. HMRC accept less money, I can't see this happen) or find a law that a judge will enforce.

I hope your plans works.

[starstruck]

Did you do this settlement yourself or use a professional advisor? This is absolutely in no way a criticism either way, I'm looking at settling myself and am worried about getting into just this sort of mess. Am wondering if a professional handling it might avoid things like this.

[HMRC made Atlas Shrug]

I don't think that the big picture on the April 2019 loan charge is going to change. But that is just my view. If anything changes in relation to employees, it will be (i) to require more information to be given to HMRC for historic loans, and (ii) to plug any perceived loopholes. In my view, neither of these should stop you thinking about a settlement.

The next Finance Bill is due to be published on Friday week. Assuming that the current government stays in power, there will be one a year later. Obviously, there may be an election before then and so there would be opportunities for more Finance Bills. As an aside, if there were to be an election, you'd want to think about what the tax rate would be in April 2019 when you consider whether a settlement is worthwhile.

HMRC don't need to change, they are already asking for information on all historic loans once they got you interested in settling.

This is what HMRC sent me: "I also need to ask for additional information about your loans for the years (listed all the tax years from my start date at Horizon until the years they already had loan information for)."

Since HMRC know who our employer was (Horizon in my case), they know our start date therefore also when our loans would have started. Our options are, either provide the actuals or HMRC make it up which is a lot more than the actuals.

I settled and now HMRC is coming after me for IHT because I had my loan released as part of HMRC's settlement agreement which included IHT. My issue is, HMRC included the release of my loans and IHT in their own settlement agreement and now they want IHT as an addition after the event, to which I'm not agreeing.

This is from HMRC's letter under Inheritance tax section : "If you intend to have the loan written-off as part of the settlement, please let me know on the enclosed Settlement Option form (CL5a)."

In the same letter under Other points they say: "If you settle now, you will only have to pay income tax on the sums you received in the form of loans."

In the next letter from HMRC (the Expected offer that HMRC ended up accepting) it states: "I also acknowledge that inheritance tax is due in respect of my interest in the Trust as set out in the Schedule."

It is HMRC that did not put any IHT due on the Schedule that was part of (included in) HMRC's settlement agreement.

Going on the above. HMRC's own documentation says the release of my loans is to be included in the settlement. HMRC specifically states IHT is due as per the Schedule and HMRC chose not to put any IHT due on said Schedule.

Surely this is a legal contract between HMRC and myself that HMRC should also adhere to ?

[webberg]

That's fair enough if you want to continue but can I suggest that a separate thread might be better as putting it in this one (which has a wider remit) risks losing point of making people aware?

[ChimpMaster]

I think the debate here is helpful too, especially for those that might not otherwise contribute regularly or for new entrants.

I would hope HMRC have better things to do than trawl through the guesswork we spew out here. But even if they don't, they will choose to attack in a manner that always produces the maximum tax take for them, regardless of whether it is correct to the law.

So it's useful to share information that we're learning (from HMRC's own manuals online). At the very least it enables one to push back on HMRC if you believe they are incorrectly applying tax rules against you.

[Iliketax]

I suggest that this debate is best carried on via PM or email.

Just to be clear, I don't think information should be chained. I'm happy to comment on a public forum but I'm not happy to correspond by PM.