Montpelier & Newquay 10% loan repayment demands

[webberg]

I suspect that the borrowers and the beneficiaries are not the same people?

I suspect that one trust made a contribution/loan to another and the second trust made a loan to a borrower.

Consequently, if correct, then money going back to the second trust will go to the first trust and the beneficiary of that trust is ... ?

It is also a fallacy to think that repaying all/part of the loan proves anything for the purposes of tax (in my opinion).

The argument from HMRC as seen in Rangers is that the sum due to the individual by the employer is taxable at the point it becomes due. That works as a tax analysis.

For tax purposes therefore the money must have then been paid to a trust (and then on to another trust and/or paid as a loan). There is a question about who paid, on behalf of whom and whether the trust was ultra vires - for tax purposes.

In contract law however, there is a loan agreement that has rights and obligations. Repaying all/some of the loan will perhaps verify (or not) the contract law position but will not (in my view) impact the tax analysis.

[QUODM]

Theft is different from having a wrong opinion

One of the people who paid 10% did ask for it back. And did not get it.

What were they told as a reason?

Bearing in mind HMRC have done nothing against promoters so far, there is no way they will get involved in any technical breach. You may think it is fraud - others will not. In fact, many will consider it just desserts(quite wrongly).

In terms of tax there is no illegality at the moment (just an impending charge) and I'm not talking about them winning a case but stealing money from a trust is a different affair than trying it on with a scheme and losing and having no real consequence as your users are the ones who have to pay up.
HMRC may not care but IoM regulator might and you could have a legal case if they stole your money and failed to fulfil their duties as a trustee, not the same as the consequences (seemingly none) if a proposed scheme backed by 'opinion' lost?

[QUODM]

but, but, but...

I suspect that the borrowers and the beneficiaries are not the same people?

I suspect that one trust made a contribution/loan to another and the second trust made a loan to a borrower.

Consequently, if correct, then money going back to the second trust will go to the first trust and the beneficiary of that trust is ... ?

Interesting theory. Do you have any evidence for this or is this speculation? How did the money get into the first trust?

It is also a fallacy to think that repaying all/part of the loan proves anything for the purposes of tax (in my opinion).

Yes I'm aware of your opinion on this re earmarking and rangers and more tax investigations for open years etc. I have heard various solutions to earmarking (that I perhaps won't discuss here) that appear to exist.
Paying off the loan is one of the primary ways to prevent the loan charge. I know its probably a fake concession but it is still clear in the legislation, a fake solution promised by HMRC that holds no water is something I hope LCAG capitalises on. Secondary taxation, post having repaid a loan is a separate thing.

Why do you think HMRC never raised an FN in the year they had following rangers? Was the rangers case too tightly defined in terms of the side letters (which were clear they would never repay) or are HMRC relying on the Loan charge (which seems risky) or does the NTRT result mean they can't actually raise an FN on a single point as other schemes are too different? If the latter is true, repaying the loan avoids the loan charge which has a hard deadline (ignoring current rumours) and means various schemes go through the courts again. At the minimum that might mean it being kicked down the line and tax being paid (assuming HMRC then win) in different years.

On another front if you don't repay the loan you're still left with the provider trying to call it in at some point so its still a headache to face.

tbh if I could get sense and/or trust from the providers and I could be sure that they can't just steal the money (as this seems like a quite different affair from promoting a scheme which retrospectively doesn't work), then I'd actually repay the loan and pay the subsequent tax. As its a cleaner solution to paying a bogus charge and having a legal fight with various providers.

[Iliketax]

Why do you think HMRC never raised an FN in the year they had following rangers?

They have.

[webberg]

They have indeed.

We've also seen elements of the Rangers decision being brought forward in GAAR pooling notices.

Repaying the loan, even if accepted as bona fide and not part of an avoidance arrangement, will avoid the loan charge applying.

Repaying the loan does not settle the alleged liability in the year the loan was paid to you. That remains under enquiry (subject to having been properly opened etc).

And you are correct in that my view is that HMRC will take a lot of convincing that a loan has been repaid with no prospect of that money coming back to you. If HMRC were able to define the circumstances or provide some clarity here, I'd find some comfort. However they have not, will not, can not, and frankly I don't trust them not to argue that the charge will apply.

[QUODM]

and one more thing...

Thanks for replies.
I keep reading unconnected snippits from various threads which don't tie up (in my head anyway) so sorry for more questions...

Has the last TAA/NTRT verdict affected HMRCs ability to raise FNs on this? They are out of time for further FNs on rangers anyway aren't they?
I read somewhere that "April 2019 charge provisions specifically override the analysis emerging from the RFC case" (because the answer in that case was that the employers have to pay the tax). Is this just the NIC transfer (Reg 80/81) and general loan charge itself or have any of you seen RFC mentioned specifically in this? THx

[GammaMadrid]

Has the last TAA/NTRT verdict affected HMRCs ability to raise FNs on this?

You mean to raise FNs on the loan charge?

Then no.

The NTRT verdict related to APNs/penalties.

[QUODM]

You mean to raise FNs on the loan charge?

Then no.

The NTRT verdict related to APNs/penalties.

OK so does that mean they are out of time to raise FNs from rangers (on LC affected schemes) and NTRT verdict says then can't raise APN's/penalties on any scheme that have more than one differing characteristic?

So any new non investigation (other than loan charge) probably has to be a new investigation with new legal action to determine?

[GammaMadrid]

OK so does that mean they are out of time to raise FNs from rangers (on LC affected schemes) and NTRT verdict says then can't raise APN's/penalties on any scheme that have more than one differing characteristic?

So any new non investigation (other than loan charge) probably has to be a new investigation with new legal action to determine?

I am a bit confused by the questions. The thing about the NTRT verdict is that there was one scheme and two defenses. It was not about one defense to two schemes.

So NTRT were relying on Huitson and TAA. They have been forced to drop Huitson. Which was effectively dead anyway. Its quite moot as they will probably win TAA anyway. Remember this is not about TAA(where it has not gone to court yet). It is about penalties. So if TAA win, there can be no penalties. If they drop Huitson, and TAA lose, they will not get penalties. Complex isn't it?

So HMRC can still raise FNs on Rangers. And HMRC can still raise APNs on LC schemes. Any non-loan-charge investigation will require legal action. I am sure there are schemes being used now that are not loan charge.

[webberg]

As far as I am aware - and in my opinion - the answers to the above points are:

I am not in the habit of sharing speculation. The information on the trust arrangements is available to anybody who used those plans and a careful reading of the documents is recommended.

The Huitson case is over - both the issue of legality of retrospection and the application of the retrospective law to the arrangement used. I'm aware that there are claims of the first point continuing into the ECJ but to be honest I've not bothered spending time checking if that has happened or not.

On the second issue, FNs were issued.

Rangers has produced a number of FNs.

TAA has apparently cleared the final hurdles to get to FTT and hopefully will be there soon (i.e. next 6 months).

The claim that the loan charge overrides Rangers is nonsense. We've seen that from HMRC but unless they want to be held to be in contempt of Court, it's scare mongering.

HMRC could change the law post Rangers decision. They have tried to do that with the loan charge - or more accurately have said that the loan charge is new and is not changing the past (ha ha) and therefore as it comes into effect post Rangers, it's not in contempt of that decision. Good luck arguing that one.

I have to say that in my mind the "snippets" in the forum are consistent and certainly we try to maintain a common theme in line with our resolution plan. You may not believe in that plan - that's fine - but we are sticking to it.