HMRC Consultation : Tackling Disguised Remuneration

[dezze]

An APN is a payment on account of a disputed liability.

The proposed legislation is an attempt to put that liability beyond dispute.

My (basic) understanding is that an APN can be applied against an open enquiry for (at the moment) a year where a DOTAS registered scheme was used.

The proposed legislation means that ANY outstanding loan you have, be it DOTAS, Non DOTAS (I think) that was received from 1999 onwards (from a contractor scheme) is now to be taxed, NI'd, charged Interest, IHT and whatever HMRC dream up before 2019.

So before, HMRC had to play (sort of) by the rules - they've now thrown that away and say any loan outstanding (from a contractor scheme) is now caught, from 1999 onwards.

I'm happy to be corrected as it will enhance my understanding....

[DotasScandal]

Correct.

[DonkeyRhubarb]

And to make matters worse, all the loans are lumped together and treated as earnings (tax+nic) in 2018/19*.

Example

You received £200k in loans over several years.

In 2018/19 you earn £50k through work.

If all the loans are outstanding, then you will be taxed (+nic) as though you earned £250k.

A big chunk of this will be at 45%. You'll also lose your personal allowance because it reduces once you earn over £100k.

* according to HMRC

[difficulttimes]

Would you pay interest as well? I would hope not as that couldn't make any sense and not sure how that would work.
Is there now NIC for employed based schemes?

[DonkeyRhubarb]

Would you pay interest as well? I would hope not as that couldn't make any sense and not sure how that would work.
Is there now NIC for employed based schemes?

Interest would only be charged from the late payment date for 2018/19.

Re. NICs, Page 5

"6. This technical consultation and the draft legislation primarily provides detail of how the new rules will work for income tax purposes. However, it is the government’s intention that the changes will also apply for NICs purposes, including the changes to the transfer of liabilities rules (see chapter 3). Further details of the equivalent NICs changes will be provided in due course."

I would hope it's only employees nics, not employers as well.

[eazy]

Spotlight 31 - Transitional Relief Withdrawal

Another HMRC Guidance from few weeks ago and the classic line "pay their fair share of tax"

Spotlight 31: change of date for withdrawal of transitional relief on investment growth
20th July

https://www.gov.uk/government/public...estment-growth


Technical Note :
https://www.gov.uk/government/public...technical-note

The withdrawal of the relief was announced at Budget on 16 March 2016, as part of the package of changes to tackle the use of disguised remuneration avoidance schemes (such as Employee Benefit Trusts (EBTs) and contractor loans) and ensure that those who have used these schemes pay their fair share of tax and National Insurance contributions. More information can be found in the Technical note.

[difficulttimes]

Options

So the way I see it you have 3 unfortunate options..

1 - Settle now on possible CLSO terms (if you can still get them) so it's Income tax, interest and IHT
2 - Wait til 2019 (well actually 31st January 2020 would be the due date) and you pay income tax and NIC on your loan and are left with a lifetime of debt
3 - Leave the country and never return or due to the stress and anguish of being chased by debt collectors for sums you can't possibly afford you take your own life to save your family

Here I thought I lived in a free and fair country.. how wrong I was..

[dezze]

So the way I see it you have 3 unfortunate options..

1 - Settle now on possible CLSO terms (if you can still get them) so it's Income tax, interest and IHT
2 - Wait til 2019 (well actually 31st January 2020 would be the due date) and you pay income tax and NIC on your loan and are left with a lifetime of debt
3 - Leave the country and never return or due to the stress and anguish of being chased by debt collectors for sums you can't possibly afford you take your own life to save your family

Here I thought I lived in a free and fair country.. how wrong I was..

Plus
4. Go bankrupt and depending on your circumstances, keep your head above water and manage to recover enough to to make something of your life.

5. An option that has recently been discussed, but ends with a death notice. I know people don't want to think about this, but will be the escape for some.

[difficulttimes]

Will HMRC care if people are taking their own lives? Nah... they know that mainstream media won't pick that up or probably care - just another tax dodger so that got what they deserve.
Sad state of affairs..

[DonkeyRhubarb]

HMRC are also saying that, due to the way Part 7A works, being non-resident in 2018/19 wouldn't help. Residency is determined by the years when the loans were received, even though the charge arises in tax year 2018/19.

I can't get my head around this one.