Overdrawn Capital Account Scheme (Aston Mae / Glen Mae / Procorre)

[DealorNoDeal]

I think that's a pragmatic approach. Anyone considering actually fighting against HMRC in an attempt to not pay tax needs to think very realistically about what the chances of success really are. I don't believe a single tax avoidance scheme has been successful going down that route. Yet.

And be prepared to fork out £thousands in fees to advisors/barristers etc.

I haven't heard of a single scheme going to tribunal and winning, so this really is a long shot.

[Fred Bloggs]

The 'loan' is any funds received via the overdrawn capital account, as it is a 'credit facility', paid into your personal account under the remit of "Business Development allowance". I also assume they include payments made to the expense account card that was issued to cover expenses when looking to introduce colleagues to Procorre. Sounds like you are willing to settle, so you need to appeal the amount and prove to HMRC what you actually did receive from Procorre and offer to settle the tax due on that, rather than the figure they have assumed.

I think that's a pragmatic approach. Anyone considering actually fighting against HMRC in an attempt to not pay tax needs to think very realistically about what the chances of success really are. I don't believe a single tax avoidance scheme has been successful going down that route. Yet.

[mightyspur]

I signed up with the Procorre LLP but not through my limited company so they had me as self-employed. I submitted a time sheet to Barclay Carter who invoiced the client. When the invoice was paid i submitted a drawings request to procorre. So the process was similar to others - the issue for me is that I only did 1 project for 44 days (Value £x) but HMRC are saying my "loan" was (£x times 4) - so i am really not sure where this number comes from - from reading your note the loan value would be the value that you received into your bank account (is that correct ?).

The 'loan' is any funds received via the overdrawn capital account, as it is a 'credit facility', paid into your personal account under the remit of "Business Development allowance". I also assume they include payments made to the expense account card that was issued to cover expenses when looking to introduce colleagues to Procorre. Sounds like you are willing to settle, so you need to appeal the amount and prove to HMRC what you actually did receive from Procorre and offer to settle the tax due on that, rather than the figure they have assumed.

[mightyspur]

I did post something webberg had posted (he is a principal at WTT) about the values seemingly high because they came in your 2019 return. Maybe read that again and then try to work out why yours is seemingly high.

I can only assume that srowell8 is saying he had no other of these type of schemes in the prior years and it is literally the 44 days he did via Procorre in this manner in 2019

[GregRickshaw]

So thats my issue - i would happily pay tax due on the amount i made but they have the "loan value" as 4x my actual income from the project I did with no backup for how this was arrived at. (i have a feeling they have taken the number of days I did (44) and extrapolated them over the 2 year period but i could be way out with that)

I did post something webberg had posted (he is a principal at WTT) about the values seemingly high because they came in your 2019 return. Maybe read that again and then try to work out why yours is seemingly high.

[srowell8]

Totally disagree, if I made that amount would of been nice, and I also paid 12.5K in 2019 as I declared the PS from Procorre which hasnt been taken in to account...we live we learn.....

So thats my issue - i would happily pay tax due on the amount i made but they have the "loan value" as 4x my actual income from the project I did with no backup for how this was arrived at. (i have a feeling they have taken the number of days I did (44) and extrapolated them over the 2 year period but i could be way out with that)

[srowell8]

Seems to me that your situation is a little different to the majority of people.

You seem to be suggesting that Procorre were effectively an agent for you, or you actually provided some work for them directly, is that correct? Most people on here were in an LLP with Procorre, but still operated through their Ltd company as a bare trustee providing services to the end client. We would bill the client and then transfer the full invoice amount to Procorre (minus the VAT) when the client paid.

Procorre would then pay a % of the funds to your business account (PSC allocation payment), funds to your personal account labelled as "Business Development fund" and allocate the remaining to the expenses card, which was supposedly to wine and dine others into signing up to Procorre and the expenses associated with that. The remaining 12-17% was taken by Procorre as their fee and to cover their taxes (according to them).

I believe HMRC are treating the Business Development fund payments and expense card payments/allocation as the "loan" as they were paid from the Overdrawn capital account/was a credit facility.

Those people who went through the acquisition, where Corre bought 96% of the Ltd company were provided a valuation by Procorre. HMRC are assuming this amount was the total balance of people's ODC account. For some, that may well be true, but for me it isn't even close as I was only signed up to Procorre for 9 months prior to going through the acquisition. On top of that amount they are classing as "income", they have also added up all the payments received in 2018/19 relating to the share earn out and expense card/business development allowance

Those people who didn't go through the acquisition and were with Procorre for a few years had paid some tax already at an inflated rate due to the Profit allocations Procorre announced (supposedly every 2 years, but I don't think it was that regular). These profit allocations often pushed the income of those people into the higher tax bracket so they paid more than they would of had they just paid themselves via dividends/salary etc. HMRC are seemingly ignoring these payments and saying tax is still due on the ODC payments received, effectively taxing people twice.

I signed up with the Procorre LLP but not through my limited company so they had me as self-employed. I submitted a time sheet to Barclay Carter who invoiced the client. When the invoice was paid i submitted a drawings request to procorre. So the process was similar to others - the issue for me is that I only did 1 project for 44 days (Value £x) but HMRC are saying my "loan" was (£x times 4) - so i am really not sure where this number comes from - from reading your note the loan value would be the value that you received into your bank account (is that correct ?).

[frontmen242]

Thank you - do you disagree with the number they have asked you to pay ?

Totally disagree, if I made that amount would of been nice, and I also paid 12.5K in 2019 as I declared the PS from Procorre which hasnt been taken in to account...we live we learn.....

[mightyspur]

Hi everyone.

Im new to this forum and have taken some time to read the posts from the last few months. I was unfortuante enough to have been involved with Procorre between 2016-2018 although it was only on a handful of projects in this time period.

I was in a position that I needed to form a ltd company to take up work at short notice and was it was suggested to use procorre by numerous other contractors on the same project (procorre operated a cash for referrals scheme) I would say 1 in 2 contractors on the project used Procorre in that period. After a few phone conversations with a delightful lady who answered all of my queries I was up and runing in no time. They provided A registered business address, all the correct insurances and a registered accountant at short notice.

I was naive at the time in thinking that this scheme was different to others (for example Aston Mae). When the topic arose with other contractors it was always accepted that Procorre was above board. I was even told by other users that Procorre was setup by people who worked for HMRC so they know all the angles (alarm bells ringing)!

I filed a DS01 for the ltd company to be struck off in 2019 but it was put on hold as expected and have since received a Regulation 80 determination and section 8 declartion from HMRC as well as an outstanding NIC sum.

As some other users of this forum have mentioned I also did not take up the Offer from Procorre to buy out the Ltd company as I had zero confidence in them by that stage. They seemed so professional for a long time and I had regular invites to corparate events received some decent financial advice with regards to mortgages and was also promised further work via there extensive networks if required.

As of now for now I am looking for a way forward and I am grateful for any advice or information from people in a similar position.

You basically have 2 options:

1. Accept HMRCs findings and settle the tax they are saying is due
2. Appeal against HMRCs findings and fight the premise you were involved in any scheme, or arrange to settle on a lesser amount that you believe to be correct

If you opt for option #2 you can either go it alone and hope Procorre provide you with good enough advice, or reach out to a specialist tax advisor (WTT Group seem to be the go to company and are representing quite a few people involved with Procorre) and have them help, but that will obviously cost you significantly more in the short-term, but may save you more in the long term.

[mightyspur]

So the work i did for Procorre was outside of the limited company and the paid me directly not through the business.

Seems to me that your situation is a little different to the majority of people.

You seem to be suggesting that Procorre were effectively an agent for you, or you actually provided some work for them directly, is that correct? Most people on here were in an LLP with Procorre, but still operated through their Ltd company as a bare trustee providing services to the end client. We would bill the client and then transfer the full invoice amount to Procorre (minus the VAT) when the client paid.

Procorre would then pay a % of the funds to your business account (PSC allocation payment), funds to your personal account labelled as "Business Development fund" and allocate the remaining to the expenses card, which was supposedly to wine and dine others into signing up to Procorre and the expenses associated with that. The remaining 12-17% was taken by Procorre as their fee and to cover their taxes (according to them).

I believe HMRC are treating the Business Development fund payments and expense card payments/allocation as the "loan" as they were paid from the Overdrawn capital account/was a credit facility.

Those people who went through the acquisition, where Corre bought 96% of the Ltd company were provided a valuation by Procorre. HMRC are assuming this amount was the total balance of people's ODC account. For some, that may well be true, but for me it isn't even close as I was only signed up to Procorre for 9 months prior to going through the acquisition. On top of that amount they are classing as "income", they have also added up all the payments received in 2018/19 relating to the share earn out and expense card/business development allowance

Those people who didn't go through the acquisition and were with Procorre for a few years had paid some tax already at an inflated rate due to the Profit allocations Procorre announced (supposedly every 2 years, but I don't think it was that regular). These profit allocations often pushed the income of those people into the higher tax bracket so they paid more than they would of had they just paid themselves via dividends/salary etc. HMRC are seemingly ignoring these payments and saying tax is still due on the ODC payments received, effectively taxing people twice.