2019 tax charge - consultation preparation

[Whysoserious]

Hold on. I understand now.

If the scheme wins in court 5-10 years down the line. HMRC must pay back the APN with interest. But the 5th April 2019 tax charge is then owing.

So the proposed 5th April 2019 legislation is to guarantee that all APN money collected to date and in the future never needs to be paid back regardless of the decision of the courts or the legitimacy of the scheme.

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Victor decides to take his entire life savings to a casino. Not to gamble but to deposit and walk straight back out with a bag of high value chips. The casino acts as Victors bank account, cashing in chips for cash as and when required by Victor. Victor now lives like a criminal.

[DonkeyRhubarb]

So the proposed 5th April 2019 legislation is to guarantee that all APN money collected to date and in the future never needs to be paid back regardless of the decision of the courts or the legitimacy of the scheme.

It will do that, and more. The charge will be applied to all outstanding loans, even for tax years where HMRC can't issue an APN because either (a) the years were prior to 2004 (pre-dating DOTAS) or (b) HMRC didn't open an enquiry in time.

There are only two ways to avoid the charge:
1) settle between now and 5/4/2019
2) repay the loans

[PeterF]

If the scheme wins in court 5-10 years down the line. HMRC must pay back the APN with interest. But the 5th April 2019 tax charge is then owing.

So the proposed 5th April 2019 legislation is to guarantee that all APN money collected to date and in the future never needs to be paid back regardless of the decision of the courts or the legitimacy of the scheme.

Can you explain any more about these couple of points? Apologies, it hasn't quite clicked in my mind yet!

[Whysoserious]

I'm no expert on this. Also the legislation hasn't even been drafted yet, so no one can give any solid information on how it will work (not even HMRC) IF it comes into force. It's the beauty of this announcement. It's so vague, people panic, discuss, debate and drum up fear. Fear on legislation that hasn't even been written yet.

However HMRC would like to present the 5th April 2019 tax charge as being the 'check-mate' move by the government. Regardless of whether the scheme wins in court, regardless of whether you have paid the APN or not. The 5th April 2019 tax charge will apply (in HMRC world).

I personally believe the legislation if given Royal Ascent would require so many safe guards, require to circumvent almost every existing corporate, employment and UK tax law that the limit of the legislation would limited.

Instead I see it as a tactic by HMRC to pressure people into settling, hence the 3 year wait for the legislation, that isn't even written yet, to be implemented.
If HMRC were confident APNs would bring in money without challenge, they wouldn't need this legislation.
If HMRC were confident on winning even one EBT/Loan scheme in court, they wouldn't need this legislation.

In my opinion HMRC can foresee the real risk that an EBT scheme will win in court. In that scenario all APNs would need to be paid back with interest.
Therefore they need this legislation as an insurance policy that the money collected won't ever be repaid.

Even if the nightmare scenario happens and this becomes law without being watered down (unlikely).
On the 4th April 2019, take every penny you own to the Casino. Deposit it and walk out with a bag of high value chips.
When you need money, take a chip to the Casino and cash it in. Walk back out.
Live like a criminal, but far better to live like that than handover your life savings to pay a debt that isn't due.

[AtW]

On the 4th April 2019, take every penny you own to the Casino. Deposit it and walk out with a bag of high value chips.
When you need money, take a chip to the Casino and cash it in. Walk back out. Live like a criminal, but far better to live like that than handover your life savings to pay a debt that isn't due.

You'll end up going to jail for it.

[Whysoserious]

The money is legally owned by the Casino. You are not hiding it. It is no longer yours.

[AtW]

The money is legally owned by the Casino. You are not hiding it. It is no longer yours.

You have the chips though (which are in effect IOU), which you'd have to declare in court during your bankruptcy hearing - hiding that material information would certainly get you in jail. It's no different to hiding money in an offshore company and keeping bearer share.

[Old Greg]

You have the chips though (which are in effect IOU), which you'd have to declare in court during your bankruptcy hearing - hiding that material information would certainly get you in jail. It's no different to hiding money in an offshore company and keeping bearer share.

You've missed the point, AtW. There is no doubt that owning the casino chips (or controlling them if ownership technically resides with the casino) is fraud which would land the bankrupt party in jail. However, the nuance is that the casino chips are acquired by a trust that loans the chips to the bankrupt party, and the trust is established in such a way that the loan can never be recalled.

[flamel]

They are the same as cash - no-one knows whether you've spent them or stuffed them into a box from which you pay the nanny and the window cleaner etc. As they are made of plastic, they are easier to store than UK banknotes. However, I believe that plastic banknotes will be with us soon thus saving the bus fare to the casino.

[ContrataxLtd]

Even if the nightmare scenario happens and this becomes law without being watered down (unlikely).
On the 4th April 2019, take every penny you own to the Casino. Deposit it and walk out with a bag of high value chips.
When you need money, take a chip to the Casino and cash it in. Walk back out.
Live like a criminal, but far better to live like that than handover your life savings to pay a debt that isn't due.

Putting the legalities aside for a moment, how do you expect to cash the chips so easily that you can rely on getting your money back?