BIG GROUP

[jbeer]

Previous Settlement

It's worth talking to your tax adviser but it sounds like you have not settled the closed year as you have not "agreed terms with an officer of Revenue and Customs for the discharge of that liability" (current version of s554Z5 ITEPA 2003). The fact that HMRC know about a closed year is not enough. So you would still have to pay tax on the closed year loans under the April 2019 loan charge.

Assuming you actually paid the tax for the settled year (or have reached an agreement with HMRC about paying it) then there will be no tax due under the April 2019 loan charge. It does get more complex if, for some reason, you were taxed on less than the full amount of the loan under the settlement. Also, you may well have some reporting obligations in respect of the settled year but your going to have to wait for some new legislation to see what they are.

Hi, referring to the document below, it states....

"Some employment based contractor loans schemes operated until 5 April 2011. If someone settled their use of these schemes by 16 March 2016, they don’t need to pay any further Income Tax or NICs to obtain relief from a future DR charge (including the loan charge) which would otherwise arise in relation to those schemes. This doesn’t apply to any scheme which they asked us to exclude from the settlement.

For any settlement entered into after 16 March 2016, or any settlement in relation to a scheme which operated after 5 April 2011, the amounts in respect of which relief from a DR charge can be claimed will be restricted to those specified in the settlement agreement."

This sounds to me that if you entered CLSO 1, then there should be no loan charge applicable (even for closed years) ?? Otherwise why differentiate between pre 16 March 16 and post ?


https://www.gov.uk/government/public...ttlement-terms

[vern19]

OK. When you talk to you tax specialist, ask her what she thinks about the "payment condition" in s554Z5(4) ITEPA [the current version, not the one in their "red" or "yellow" book].

Will do

[Iliketax]

Discussing with others in exactly my situation and discovering what their tax specialists think

OK. When you talk to you tax specialist, ask her what she thinks about the "payment condition" in s554Z5(4) ITEPA [the current version, not the one in their "red" or "yellow" book].

[vern19]

Why's that? Even if there was a settlement agreement for the earlier years, tax would still be due under the April 2019 loan charge unless (i) you've actually paid the tax, or (ii) you've agreed a payment plan with HMRC.

Discussing with others in exactly my situation and discovering what their tax specialists think

[Iliketax]

I'm a little more confident than you

Why's that? Even if there was a settlement agreement for the earlier years, tax would still be due under the April 2019 loan charge unless (i) you've actually paid the tax, or (ii) you've agreed a payment plan with HMRC.

[vern19]

It's worth talking to your tax adviser but it sounds like you have not settled the closed year as you have not "agreed terms with an officer of Revenue and Customs for the discharge of that liability" (current version of s554Z5 ITEPA 2003). The fact that HMRC know about a closed year is not enough. So you would still have to pay tax on the closed year loans under the April 2019 loan charge.

I'll keep everyone informed but I'm a little more confident than you

[webberg]

No offence to webberg, but he has a business to run and the more uncertainty that he can generate, the more fees he can get.

Appreciate that the above is one point of view but in my own defence, we do not sell or trade on uncertainty.

We pride ourselves on telling the truth as we see it.

Most settlement terms we have seen do not withstand any stress testing and do leave areas of uncertainty. We point these out. Recent HMRC activities have done nothing to remove those uncertainties.

Ultimately we charge a fee for doing work on settlements which is usually higher than that for BG membership or answering HMRC questions on enquiries. Before we charge this fee, we are clear in our advice to would be clients that we are unlikely to advise accepting a settlement because of the perceived and actual deficiencies.

Many choose a different route (or adviser) before spending a penny.

We have looked at perhaps 300 settlement opportunities and recommended perhaps less than 20. Clients know this before they sign up.

So, yes we are a commercial outfit, but we like to think that we sell on very clear principles and if we can't help, we will say so.

[Iliketax]

My tax advisor settled an open year based on the understanding with HMRC that an earlier year was closed. HMRC knew about the earlier year because the liquidator of the scheme previously passed on records to HMRC.

It's worth talking to your tax adviser but it sounds like you have not settled the closed year as you have not "agreed terms with an officer of Revenue and Customs for the discharge of that liability" (current version of s554Z5 ITEPA 2003). The fact that HMRC know about a closed year is not enough. So you would still have to pay tax on the closed year loans under the April 2019 loan charge.

Assuming you actually paid the tax for the settled year (or have reached an agreement with HMRC about paying it) then there will be no tax due under the April 2019 loan charge. It does get more complex if, for some reason, you were taxed on less than the full amount of the loan under the settlement. Also, you may well have some reporting obligations in respect of the settled year but your going to have to wait for some new legislation to see what they are.

[vern19]

From the sounds of it you will have to still declare the 'closed year' loans on the 2019 Loan Charge

They offered a settlement, I agreed, but now I feel I have settled under false pretences

[ChimpMaster]

Not too sure what the tax advisor has in writing but he says an agreement is in place and in 20 years of practice HMRC have not reneged. But this is a new Hector so who knows

From the sounds of it you will have to still declare the 'closed year' loans on the 2019 Loan Charge