Settling is more expensive that paying the 2019 loan charge

[webberg]

hello,

On reading:

https://www.gov.uk/government/consul...l-consultation

It not's clear how HMRC intend to tackle closed years which agreed as part of CLSO.

Will they come back and unpick the agreement and return with a demand for back taxes and interest ?

Cheers.

That is an excellent question that I have asked HMRC on a number of occasions - sadly without getting an answer.

The Technical Note said something like "years implicitly covered under a prior agreement, will not be subject to the DR charge" (I'm without access to that document right now so I have perhaps provided the gist rather than the words).

However HMRC officers say that their internal guidance does not recognise that.

I think it's one more area of this charge that can and should be challenged.

[bobajob]

However HMRC officers say that their internal guidance does not recognise that.

perhaps they don't know how to google

IANAL but for pre-2011 closed years where a settlement was agreed the intention is to update Finance Act 2011 Schedule 2 Paragraph 59 relief to make it crystal clear that these planned 2019 changes won't affect any CLSO settlement.

The relief is written in the HMRC manual here - tax compliance conditions - agreement between HMRC and you (to settle): https://www.gov.uk/hmrc-internal-man...anual/eim45935

And here's the planned legislation - last line of the PDF relates to connecting the relief to the outstanding loan charge: https://www.gov.uk/government/public...ed-legislation

Because 2019 loan charge legislation builds on Finance Act 2011 legislation which builds on ITEPA 2003 legislation...

HMRC look to be planning to honour the settlement agreements in place - presumably because otherwise they'll be another huge round of court cases. It's the same relief section you'd go under if you request to settle today: https://www.gov.uk/government/public...r-31-july-2015

That's the view of a random person on the internet of course, for anything else consult a professional.

[AnotherContractor]

perhaps they don't know how to google

IANAL but for pre-2011 closed years where a settlement was agreed the intention is to update Finance Act 2011 Schedule 2 Paragraph 59 relief to make it crystal clear that these planned 2019 changes won't affect any CLSO settlement.

The relief is written in the HMRC manual here - tax compliance conditions - agreement between HMRC and you (to settle): https://www.gov.uk/hmrc-internal-man...anual/eim45935

And here's the planned legislation - last line of the PDF relates to connecting the relief to the outstanding loan charge: https://www.gov.uk/government/public...ed-legislation

Because 2019 loan charge legislation builds on Finance Act 2011 legislation which builds on ITEPA 2003 legislation...

HMRC look to be planning to honour the settlement agreements in place - presumably because otherwise they'll be another huge round of court cases. It's the same relief section you'd go under if you request to settle today: https://www.gov.uk/government/public...r-31-july-2015

That's the view of a random person on the internet of course, for anything else consult a professional.

Interesting...so are the HMRC intending to target those who haven't settled by opening retrospective queries with the 2019 loan charge?

[webberg]

perhaps they don't know how to google

It's the view of a random person on the internet of course, for anything else consult a professional.

Point taken.

The legislation was withdrawn in the days before the Election.

It is to be hoped that the point is made clearer when we see it again and that the changes that may be required in order to fit the Rangers decision into the process, will not dilute what little protections do exist.

We also have the issue that the HMRC work on contractor schemes is being moved to Scotland and whilst that may help as there will be few preconceptions of what they need to do, it will inevitably lead to more misunderstandings.

[Iliketax]

It is to be hoped that the point is made clearer when we see it again

It was published a couple of weeks ago.

[rshome]

Hi

I received £160,000 in EBT loans over 3.5 years 2008-2011

Can I please ask,

What would be the loan charge be for this?
And if I settled with HMRC what would be the total tax and how long would I have to pay it back?

My brother said he would pay my loan charge if I was desperate, so I am wondering if I should take a risk and not settle and hope I don't get anything from HMRC. If I do, I have my brother to fall back on to pay the charge, as a last resort?

Thanks

[Delendog]

answer

Hi

I received £160,000 in EBT loans over 3.5 years 2008-2011

Can I please ask,

What would be the loan charge be for this?
And if I settled with HMRC what would be the total tax and how long would I have to pay it back?

My brother said he would pay my loan charge if I was desperate, so I am wondering if I should take a risk and not settle and hope I don't get anything from HMRC. If I do, I have my brother to fall back on to pay the charge, as a last resort?



Thanks

No one can answer this based on this information. For the settlement you need to add the value of the loans in each tax year to other income and then work out any interest due. For the LC it is value of all loans added to income in this tax year.