What is the 2019 Loan Charge?

[Loan Ranger]

But even final may not be final as they could still impose IHT.

Yes, there is that.

[Theythinkitsallover]

Response to Iliketax

Iliketax, I see now.

So what you omitted to say in your original post was that these "commercial loans" being repaid, were actually tax avoidance motivated loans.

In your first example though - isn't that person effectively borrowing funds to repay a loan to escape the loan charge?

I stand to be corrected but I thought that was a big no no in trying to avoid the loan charge from applying? I know in the past a few have legitimately asked this question (and I am not talking about promoters repayment schemes here or loans provided which are linked to a promoter or anyone connected) When the question has been asked they have been told categorically by yourself that its not an option. Any reason why your example 1 differs?

"But if the employer hasn't paid. Then the April 2019 tax liability belongs to the individual. Can the double tax rules apply to get rid of that liability? If you can convince a judge that "paid in full" means "not paid but should have done" then the double tax relieving rules will apply. Happy days. But I struggle with "paid in full" actually means anything else."

Now you see this is where my opinion differs or is perhaps slightly more balanced/open to interpretation than yours. Do I think that

someone could convince a judge that "paid in full" means "not paid but should have done."

Then yes I think they quite reasonably could.

You see the reason I think this is that HMRC have spent far too many years doing nothing.

Any judge who would be looking at this would be quite reasonable in asking HMRC if they have actually (based on the individuals facts) identified who their employer is (and lots of case law/legislation/time would be needed to be looked at this to establish these facts) and whether they have actually ever requested payment of the tax from their employer in the first instance before requesting it from the individual?

You see most contractors I believe would tell you that HMRC have to date never requested payment from their "employer" in the first instance or even spent time factually establishing with the contractor who their "employer" actually is.

How many "employers" out there apart from individual business owners are actually being contacted by HMRC to make this tax payment as a result of the Rangers ruling on behalf of their employees - compared to how many APN refunds are being denied to taxpayers who actually shouldnt have paid them in the first place ?? Or are they just sitting there doing nothing and waiting for the LC to kick in?

Now in my opinion a judge or tribunal might just not take too kindly to that HMRC complacency. Look at the recent ruling with regard to Mr Tooth

So yes, could a judge in theory interpret "paid in full" to mean "should have paid but didn't because they were never asked" in the favour of a contractor and to therefore allow the double taxation reliefs to still apply? Then yes I do believe they might just stand a chance.

Iliketax I am please to read your contempt for the promoters and that is good to see. What I never see you say though or admit is that HMRC/HMG are accountable in all of this too, and that perhaps their complacency and inaction over the years has allowed this industry of rogue promoters and advisors etc... to exist and indeed flourish with no accountability to these promoters/lawyers/QC's etc.. No legislation exists (or at least not retrospectively anyway)

Why are you never critical of HMRC/HMG in all of this? I would be interested to hear your views in this regard.

I am sure Phil would be critical of his old employer and it is pretty evident where webberg sits on the subject.

As I say I am not a contractor or financially impacted by this and I am not touting for business so theoretically, I sit in the same moral position as you Iliketax.

I am however, interested why your posts always tend to "crush" the contractor in favour of HMRC/HMG and effectively imply they have no rights or options to say or argue otherwise based on the legislation as written and that they should just run along and accept CLSO2 or bankruptcy ???

None of the above is to be taken as criticism as it is purely my observations and opinions which I hope will help to create a healthy balanced and informed debate for all concerned in choosing the correct path for themselves out of this mess.

[difficulttimes]

Iliketax, I see now.

So what you omitted to say in your original post was that these "commercial loans" being repaid, were actually tax avoidance motivated loans.

In your first example though - isn't that person effectively borrowing funds to repay a loan to escape the loan charge?

I stand to be corrected but I thought that was a big no no in trying to avoid the loan charge from applying? I know in the past a few have legitimately asked this question (and I am not talking about promoters repayment schemes here or loans provided which are linked to a promoter or anyone connected) When the question has been asked they have been told categorically by yourself that its not an option. Any reason why your example 1 differs?



Now you see this is where my opinion differs or is perhaps slightly more balanced/open to interpretation than yours. Do I think that Then yes I think they quite reasonably could.

You see the reason I think this is that HMRC have spent far too many years doing nothing.

Any judge who would be looking at this would be quite reasonable in asking HMRC if they have actually (based on the individuals facts) identified who their employer is (and lots of case law/legislation/time would be needed to be looked at this to establish these facts) and whether they have actually ever requested payment of the tax from their employer in the first instance before requesting it from the individual?

You see most contractors I believe would tell you that HMRC have to date never requested payment from their "employer" in the first instance or even spent time factually establishing with the contractor who their "employer" actually is.

How many "employers" out there apart from individual business owners are actually being contacted by HMRC to make this tax payment as a result of the Rangers ruling on behalf of their employees - compared to how many APN refunds are being denied to taxpayers who actually shouldnt have paid them in the first place ?? Or are they just sitting there doing nothing and waiting for the LC to kick in?

Now in my opinion a judge or tribunal might just not take too kindly to that HMRC complacency. Look at the recent ruling with regard to Mr Tooth

So yes, could a judge in theory interpret "paid in full" to mean "should have paid but didn't because they were never asked" in the favour of a contractor and to therefore allow the double taxation reliefs to still apply? Then yes I do believe they might just stand a chance.

Iliketax I am please to read your contempt for the promoters and that is good to see. What I never see you say though or admit is that HMRC/HMG are accountable in all of this too, and that perhaps their complacency and inaction over the years has allowed this industry of rogue promoters and advisors etc... to exist and indeed flourish with no accountability to these promoters/lawyers/QC's etc.. No legislation exists (or at least not retrospectively anyway)

Why are you never critical of HMRC/HMG in all of this? I would be interested to hear your views in this regard.

I am sure Phil would be critical of his old employer and it is pretty evident where webberg sits on the subject.

As I say I am not a contractor or financially impacted by this and I am not touting for business so theoretically, I sit in the same moral position as you Iliketax.

I am however, interested why your posts always tend to "crush" the contractor in favour of HMRC/HMG and effectively imply they have no rights or options to say or argue otherwise based on the legislation as written and that they should just run along and accept CLSO2 or bankruptcy ???

None of the above is to be taken as criticism as it is purely my observations and opinions which I hope will help to create a healthy balanced and informed debate for all concerned in choosing the correct path for themselves out of this mess.

Well said it was definitely not an oversight that there was no mention of Rangers for CLSO2 when you compare this to CLSO1 they mention the Boyle case a number of times and that was only a FTT case so there is no case law that can be created.

If the Rangers case went the way the wanted they wouldn't have changed part 7A and to make a change to section 689 of ITEPA 2003 to ensure that the employee who benefitted from the disguised remuneration avoidance scheme is liable for the tax arising on the loan charge where their employer is based offshore”.

They covered their tracks by changing the legislation which was not at all surprising.

I definitely won't be involved but I do hope that someone or a group do take it to the courts to test this but if the APN legislation is anything to go by then I don't hold out much hope of the courts over-turning this legislation. Even if they do then they will go back and make the necessary changes and do it again for an updated LC in 2020/21! Anyway, it will also take years and years so it will need to be someone with very deep pockets.

They have about £2+ billion to protect here so it will take a brave judge to make a judgement other than to support HMG. I'm sure this has already been 'spent' as well.

[Iliketax]

In your first example though - isn't that person effectively borrowing funds to repay a loan to escape the loan charge?

Yes.

I stand to be corrected but I thought that was a big no no in trying to avoid the loan charge from applying? I know in the past a few have legitimately asked this question (and I am not talking about promoters repayment schemes here or loans provided which are linked to a promoter or anyone connected) When the question has been asked they have been told categorically by yourself that its not an option. Any reason why your example 1 differs?

Yes, the anti-avoidance legislation in para 4 of Schedule 11.

I'm comfortable that borrowing to repay an April 2019 loan charge is fine provided:

(i) the new loan is not within the scope of DR (so a borrowing from your favourite bank secured on your house is fine, but something arranged by a promoter with preferred terms is not), or

(ii) there is no connection between the payment and a tax avoidance arrangement (other than the arrangement under which the loan was made), or

(iii) that the money you've used to repay the loan is not subject to a relevant step before 5 April 2019 (unless that is itself taxed and that tax is paid in full). So the trust earmarking the money you paid back for your benefit or for the benefit of your family/friends/companies, etc (or some dodgy scheme to get it back to you) is a problem.

I think I've been consistent on that on everything I've posted.

Now you see this is where my opinion differs or is perhaps slightly more balanced/open to interpretation than yours. Do I think that Then yes I think they quite reasonably could.

You see the reason I think this is that HMRC have spent far too many years doing nothing.

Any judge who would be looking at this would be quite reasonable in asking HMRC if they have actually (based on the individuals facts) identified who their employer is (and lots of case law/legislation/time would be needed to be looked at this to establish these facts) and whether they have actually ever requested payment of the tax from their employer in the first instance before requesting it from the individual?

You see most contractors I believe would tell you that HMRC have to date never requested payment from their "employer" in the first instance or even spent time factually establishing with the contractor who their "employer" actually is.

How many "employers" out there apart from individual business owners are actually being contacted by HMRC to make this tax payment as a result of the Rangers ruling on behalf of their employees - compared to how many APN refunds are being denied to taxpayers who actually shouldnt have paid them in the first place ?? Or are they just sitting there doing nothing and waiting for the LC to kick in?

Now in my opinion a judge or tribunal might just not take too kindly to that HMRC complacency. Look at the recent ruling with regard to Mr Tooth

So yes, could a judge in theory interpret "paid in full" to mean "should have paid but didn't because they were never asked" in the favour of a contractor and to therefore allow the double taxation reliefs to still apply? Then yes I do believe they might just stand a chance.

Great. So what are you worried about? But then I stand a chance of winning the lottery tomorrow. But tax shouldn't be a lottery.

Iliketax I am please to read your contempt for the promoters and that is good to see. What I never see you say though or admit is that HMRC/HMG are accountable in all of this too, and that perhaps their complacency and inaction over the years has allowed this industry of rogue promoters and advisors etc... to exist and indeed flourish with no accountability to these promoters/lawyers/QC's etc.. No legislation exists (or at least not retrospectively anyway)

Why are you never critical of HMRC/HMG in all of this? I would be interested to hear your views in this regard.

I've been critical to the face of the policy people at HMRC, I've been critical to the face of Dave Hartnett (in 2011 when DR first came in) and Edward Troup. I've been critical to the face of people at HMT. I've also had go at David Gauke to his face. Most of it to do with disguised remuneration. Some of it to do with the different way workers are taxed. Some on other things. Sometimes legislation has been changed as a result. Sometimes I've been ignored.

You mention Mr Tooth and his scheme. I've known one of the promoters of that since 1995 or so. I think he's a complete tosser who should be in prison (not Mr Tooth, I don't know him).

How does me being critical on an internet forum help anyone with a loan?

I do know that when I speak to the technical or policy people at HMRC then I think that they are nice, sensible people. I would trust each of them to look after my purse. While I disagree with some of the changes that they make or propose, I don't have issues with the people there. But other people interact with different people at HMRC and have their own views.

As to no accountability, thing changed a long time ago (look at enablers, POTAS, GAAR, Criminal Finance Act. etc). Things are different to what they were. But you are right that they are not retrospective.

As I say I am not a contractor or financially impacted by this and I am not touting for business so theoretically, I sit in the same moral position as you Iliketax.

What moral position do you sit in? I'm posting on here because I'm fed up of people being screwed over by promoters and some 'professional' advisers? I also think information should be in the public domain. And I want that information to be realistic.

I am however, interested why your posts always tend to "crush" the contractor in favour of HMRC/HMG and effectively imply they have no rights or options to say or argue otherwise based on the legislation as written and that they should just run along and accept CLSO2 or bankruptcy ???

I think they tend to be balanced. I certainly say where I don't know. I'm not paid to sugar coat things for my clients (who are not contractors). I rarely sugar coat things for my kids.

[iheartclso2]

Yes.



Yes, the anti-avoidance legislation in para 4 of Schedule 11.

I'm comfortable that borrowing to repay an April 2019 loan charge is fine provided:

(i) the new loan is not within the scope of DR (so a borrowing from your favourite bank secured on your house is fine, but something arranged by a promoter with preferred terms is not), or

(ii) there is no connection between the payment and a tax avoidance arrangement (other than the arrangement under which the loan was made), or

(iii) that the money you've used to repay the loan is not subject to a relevant step before 5 April 2019 (unless that is itself taxed and that tax is paid in full). So the trust earmarking the money you paid back for your benefit or for the benefit of your family/friends/companies, etc (or some dodgy scheme to get it back to you) is a problem.

I think I've been consistent on that on everything I've posted.




Great. So what are you worried about? But then I stand a chance of winning the lottery tomorrow. But tax shouldn't be a lottery.




I've been critical to the face of the policy people at HMRC, I've been critical to the face of Dave Hartnett (in 2011 when DR first came in) and Edward Troup. I've been critical to the face of people at HMT. I've also had go at David Gauke to his face. Most of it to do with disguised remuneration. Some of it to do with the different way workers are taxed. Some on other things. Sometimes legislation has been changed as a result. Sometimes I've been ignored.

You mention Mr Tooth and his scheme. I've known one of the promoters of that since 1995 or so. I think he's a complete tosser who should be in prison (not Mr Tooth, I don't know him).

How does me being critical on an internet forum help anyone with a loan?

I do know that when I speak to the technical or policy people at HMRC then I think that they are nice, sensible people. I would trust each of them to look after my purse. While I disagree with some of the changes that they make or propose, I don't have issues with the people there. But other people interact with different people at HMRC and have their own views.

As to no accountability, thing changed a long time ago (look at enablers, POTAS, GAAR, Criminal Finance Act. etc). Things are different to what they were. But you are right that they are not retrospective.



What moral position do you sit in? I'm posting on here because I'm fed up of people being screwed over by promoters and some 'professional' advisers? I also think information should be in the public domain. And I want that information to be realistic.



I think they tend to be balanced. I certainly say where I don't know. I'm not paid to sugar coat things for my clients (who are not contractors). I rarely sugar coat things for my kids.

Tahnkyou allclear and sound agin/ I read more Wait CLS02. is clear CSLO2 ONLY way t NOT TO PAY april 200019 renumberation . or secure laon

knowing beans (not small contactars bean}aslo directy FACE to Gauke ( toFACE NO FEAR - toptop brass advisor NO DOUBT}, HRT AND toptop HRMC people/ law was CHANGED soemtimes as reslut/ / all TOPTOP brass tax brians

(i) to keep anymonus UNDESTANDARLBE not anoy toptop nice HRMC HRT peopels. Anymonus keep toptop job BUT contactars get toptop brass ADVICE/ makesense.

(ii)NO NEED proove tax brian (not contactars tax) / SZs AND lovley nice HRMC HRT chagned law form FACETO FACE (not small contactars law] PROOVES toptop tax brian

/

(iii) HRMC trustworhty on purses and nice NO DOUBTING / kindly CSL02 offer prooves HRMC trustworthy nice .

(iiii) NO ESCAPE CSLO" otterwise ONLY WAY no UNCETRAINTY of april 2019 digised renumberation/

(iiiii) Forutneate contactars have kindlyand hepful HRMC and kingly and
hepful toptop avdisor {not little cotractar advise)

(iiiiii) NO SUGARCOATS CSL02 ONLY WAY

NO FEAR NO UNCETRAINTY

[phil@pmtc]

Tahnkyou allclear and sound agin/ I read more Wait CLS02. is clear CSLO2 ONLY way t NOT TO PAY april 200019 renumberation . or secure laon

knowing beans (not small contactars bean}aslo directy FACE to Gauke ( toFACE NO FEAR - toptop brass advisor NO DOUBT}, HRT AND toptop HRMC people/ law was CHANGED soemtimes as reslut/ / all TOPTOP brass tax brians

(i) to keep anymonus UNDESTANDARLBE not anoy toptop nice HRMC HRT peopels. Anymonus keep toptop job BUT contactars get toptop brass ADVICE/ makesense.

(ii)NO NEED proove tax brian (not contactars tax) / SZs AND lovley nice HRMC HRT chagned law form FACETO FACE (not small contactars law] PROOVES toptop tax brian

/

(iii) HRMC trustworhty on purses and nice NO DOUBTING / kindly CSL02 offer prooves HRMC trustworthy nice .

(iiii) NO ESCAPE CSLO" otterwise ONLY WAY no UNCETRAINTY of april 2019 digised renumberation/

(iiiii) Forutneate contactars have kindlyand hepful HRMC and kingly and
hepful toptop avdisor {not little cotractar advise)

(iiiiii) NO SUGARCOATS CSL02 ONLY WAY

NO FEAR NO UNCETRAINTY

I’m amazed you haven’t been banned yet.

[CanPayButWouldRatherNot]

Yes, there is that.

but for those with loans under £325k .. it isnt an issue ... right ?

[ConfusedEasily]

Tahnkyou allclear and sound agin/ I read more Wait CLS02. is clear CSLO2 ONLY way t NOT TO PAY april 200019 renumberation . or secure laon

knowing beans (not small contactars bean}aslo directy FACE to Gauke ( toFACE NO FEAR - toptop brass advisor NO DOUBT}, HRT AND toptop HRMC people/ law was CHANGED soemtimes as reslut/ / all TOPTOP brass tax brians

(i) to keep anymonus UNDESTANDARLBE not anoy toptop nice HRMC HRT peopels. Anymonus keep toptop job BUT contactars get toptop brass ADVICE/ makesense.

(ii)NO NEED proove tax brian (not contactars tax) / SZs AND lovley nice HRMC HRT chagned law form FACETO FACE (not small contactars law] PROOVES toptop tax brian

/

(iii) HRMC trustworhty on purses and nice NO DOUBTING / kindly CSL02 offer prooves HRMC trustworthy nice .

(iiii) NO ESCAPE CSLO" otterwise ONLY WAY no UNCETRAINTY of april 2019 digised renumberation/

(iiiii) Forutneate contactars have kindlyand hepful HRMC and kingly and
hepful toptop avdisor {not little cotractar advise)

(iiiiii) NO SUGARCOATS CSL02 ONLY WAY

NO FEAR NO UNCETRAINTY

HMRC are outsourcing their trolls.....

[freddythefrog]

Yes.

There is another difference between CLSO2 and LC19. CLSO2 is a final settlement, bringing closure. Theoretically, LC19 doesn't. You would still have open enquiries after paying LC19.

Maybe phil@dswtres has a view on this but, personally, I'd be surprised if HMRC did anything further after someone paid LC19.

So in summary, LC19 is summing all the outstanding loans of the previous years and applying appropriate tax bands (obviously be hit at 40%).
This would work out better compared to CLSO where there are various years outstanding since 2005/6 in my case.
However, LC19 is not a final closure - is this because:
(1) the interest element is not taken into account? But if tax is paid in 2019, than in theory the interest should freeze going forward, should'nt it? ie only interest liable would be from the loan inception year to 2019.
(2) What about NIC? Does that come into play for LC19?
(3) And what about IHT (this is a complete joke in my opinion)? Where does this stand in LC19?

Sums wise, LC19 works out better (for me) primarily due to loans are old.
From from finality point of view, it appears the only option is CLSO - but I do not understand why they are applying IHT as HMRC is classing this whole affair as income.

Is my understanding correct as I would really welcome your thoughts and comments.

[phil@pmtc]

Yes.

There is another difference between CLSO2 and LC19. CLSO2 is a final settlement, bringing closure. Theoretically, LC19 doesn't. You would still have open enquiries after paying LC19.

Maybe phil@dswtres has a view on this but, personally, I'd be surprised if HMRC did anything further after someone paid LC19.

Id agree with this. CLSO2 is final, LC is not but tbh I think probably will be anyway. That being said, that's my personal opinion on LC, I'm not offering that as professional advice as its not certain what HMRC will do and I gave up trying to guess a long time ago.
Apologies that its hardly the most useful answer but its impossible to state with 100 % certainty that LC is final, whereas I'm confident enough to state that settlement is. If you were to ask me for a % on LC being final it would be above 90%.
In interests of giving a fully honest answer, at least one other advisor believes CLSO2 isn't final either (which I appreciate makes this response even more unhelpful!)