can I contact HMRC to settle

[HMRC made Atlas Shrug]

If you've paid HMRC income tax on the loan amounts, how much extra can the IHT be?

So using very simple numbers:

When you joined the EBT you thought you would walk away with 85% of your earnings. So you're only down 15% in terms of fees and some tax.

Then HMRC come in with a sledge hammer and suddenly you're down another ~40% (assuming tax and NICs) of total earnings. So now you're down a total of 55%.

And then IHT?

Sounds like out of the 100% you earned, you won't be left with much more than, what, 20%?

To update.

As I said in a previous response my IHT works out to just over 14% of my loans total + interest.

I found this on the internet, it may be of more accurate help if you like spreadsheets.

It seems IHT is calculated as a flat rate 0.25% charge for each complete quarter.

[HMRC made Atlas Shrug]

HMRC in all likelihood did NOT offer to write off the loans. They are not part of the loan agreement and as such have no power to intervene.

More likely is that HMRC included in the agreement the ASSUMPTION that you would arrange for the loans to be released/written off within perhaps 90 days of the agreement to settle. Failure to do that - i.e. something YOU need to do - will generate potential further liabilities.

HMRC is acting in bad faith though - I agree.

They do not promise full and final settlement, but they use weasel words to give that impression.

The IHT office refuses to accept any analysis except their own, even where that gives a lie to the income tax position.

HMRC will refuse to confirm that the 2019 charge will not apply.

HMRC will refuse to say that a subsequent repayment and redistribution of the loan after 2019 will not attract tax.

Be very careful because a lot of people who thought they had settled will be receiving new demands soon.

"Be very careful . . . " Can't agree with you more if I tried. The problem is, how can law abiding citizens be careful of a mafia.

"I intend to have the loans written-off as part of the settlement".

This option HMRC offered, in my humble opinion when I took it it became part of the contractual agreement. The release of my loans is therefore part and parcel of the settlement agreement.

"They do not promise full and final settlement"

From painful personal experience I sadly have to agree however I hope we may still rely on what is written in HMRC's contracts.

"If you settle now, you only have to pay income tax on the sums you received in the form of loans."

Maybe my version of English is not the same as HMRC's.

[HMRC made Atlas Shrug]

Yep, which is why I said you dont need to bother about the interest when calculating the CTD.

The only time you would be bothered is if your CTD did not fully cover the disputed tax 'debt.' In that case interest would accrue on the difference between the CTD and total tax 'debt.'

If you hold a CTD of 100k or more, HMRC kindly give you a measeley amount of interest back but only upto 6 years.

MY apologies if this was already mentioned.

To be clear, you will be charged interest for the time you did not have a CTD.

HMRC start charging interest from the date they think you should have coughed up. They will only not charge interest for as you correctly said the amount in the CTD but also, only from the date you took out the CTD. HMRC will charge interest for the time prior to you taking out the CTD.

From my personal experience, I saved a lot in interest by taking out a CTD but I did not take it out early on and therefore got stung for interest prior to the CTD. Based on my personal experience I would take out a CTD. Not just to save on interest but also psychologically that money is then off my "can spend radar". My liability somehow felt less because I already had most in a CTD.

[HMRC made Atlas Shrug]

My Agency made me use Edge(???) about 10 years ago for about 6 months.
HMRC have never contacted me - I only heard about the Loan charge from a couple of colleagues

I have no documentation from that period.
The Agency has no documentation from that period.
My Bank has no ability to recover statements.
Edge has disappeared.

How the F*** am I meant to make a voluntary payment?
How the F*** am I mean to confirm any numbers HMRC come up with?

I feel for all of you. This is Crazy!!!!

If I was you I would dig people out of their graves to get hold of old bank/payment statements. I would also suggest going to the landfill and start digging for old paperwork.

I know none of this is of any help but I'm trying to show how important it is to get statements. In my case HMRC guestimated what I earned before contacting me and they (in my opinion) deliberately got it wrong by many many many many many many thousands in their favour, to shock me into bending over. To give you an idea, for some of the years my tax was more than I actually earned.

It is up to you to provide proof of what you really earned.

Don't accept your Bank's can't be *rsed to help response. They keep electronic records for many years, sometimes on archives from old systems. Keep digging and asking until you get to that one person willing to help. Also have a dig around on their online system, there normally are ways to pull off old statements/data. Just be warned, the Bank of Scotland's online reporting system (data?) is full of bugs. I found a number of discrepancies between what their online "batch" report reported compared to old paper statements I still had for the same time.

Good luck.

[HMRC made Atlas Shrug]

Oh yes, now it's clear:

Income Tax is due for years in which loans were paid, or other payments were made, where HMRC has an assessment in place or is still in time to make an assessment (referred to in this guidance as ‘protected years’). The tax is calculated at the rates and bands applicable in the year of the loan or payment.

To prevent future DR charges (including the loan charge) arising on loans or other payments made from funds paid into the DR scheme in years which are not protected, contractors must make a voluntary payment. This voluntary payment (referred to as voluntary restitution) is calculated at the rates and bands applicable in the year the loan or payment was made. Once a contractor enters into an agreement with HMRC to make voluntary restitution, it will become legally enforceable.

Late payment interest is due for protected years. No late payment interest will be payable on voluntary restitution.


Assuming you were a 40% tax payer in all those years, and don't have any Open years, then you might as well wait for the 2019 loan charge. That's how I read it anyway, i.e. there is no financial benefit to making a voluntary payment now.

Keep in mind if you settle HMRC will still come after you for IHT if you release your loan. I'm not sure what will happen if you settle and don't release your loan for the 2019 charge.

One way to save on interest is to take out a CTD. The interest does add up quickly.

[HMRC made Atlas Shrug]

Firstly ... I doubt anyone would have been a 40% taxpayer whilst on a scheme. I would imagine all received minimal salary and then loans.

Secondly ... loan charge includes NI (and who knows what else as it isn't clear) and settlement doesn't.

*If* the settlement is *truly* settlement then I believe it is meaningfully less money for people with closed years.

Although why settle when loan charge is still unclear?

HMRC see the loans as if you earned the income in the tax year you received the loan. You may not have been in the higher tax brackets (different to today's) then but HMRC "goes back in time".

E.g. Let's say you earned £10,000 for the year 2007 and got taxed at the lower rate of that year. HMRC now add the £10,000 in loans to that year's income making your income £20,000 for 2007. This new income pushes you into the higher tax brackets of 2007.

HMRC does consider tax you already paid in 2007 on the original £10,000 income. What they do is use/fill the tax brackets from the lower first, to the higher brackets until all your new income is taxed.

[HMRC made Atlas Shrug]

Not really.

Call them. If you genuinely have had nothing, then you have nothing to fear.

I do not beleive in conspiracy theories that say HMRC will make up an enquiry opener.

Please be careful about suggesting people call HMRC. I called them at the start of my nightmare and it turned into an interrogation trying to get me to admit things. I can't remember the specifics but I remember I was stressed and felt violated when I put the phone down. If it was not that I read articles beforehand warning people about speaking to HMRC in person, I would not have known to avoid their traps.

Based on my own experience, I suggest calling only to get a contact name and address/e-mail then end the conversation. I suggest not getting into a discussion on the phone because you may say something that is wrong (make a mistake) but HMRC will have it on record as fact. You may think you got lucky by getting a friendly person that is going to help you, they don't exist in HMRC. Those snakes are trained to trap people.

I suggest people do all communications with HMRC via e-mail or letter so they have time to consider what they say. This way they also have a record of what was actually said.

[webberg]

Well that's a pile of posts.

I'd agree with the general gist of the above if not some of the detail.

In particular, HMRC has very definitely NOT recharacterised your loans as income.

The chain of events according to the Supreme Court is

1. Employer to you as taxable salary
2. You to trust/lender as contribution
3. Trust/lender to you as loan

The event at 1 is taxable (income tax).
The event at 2 is not taxable immediately but is an IHT event
The event at 3 is not taxable immediately but may become an IHT event.


HMRC's analysis on IHT is deeply flawed in my opinion. It ignores the above events as defined by the Court and instead claims that the employer made the contribution.

There is a world of difference between a trust started by a third party of which you are beneficiary and one started by you of which you are a beneficiary. That's a distinction HMRC's IHT office refuses to accept. (We've asked them face to face).

[EBTContractor]

To update.

As I said in a previous response my IHT works out to just over 14% of my loans total + interest.

I found this on the internet, it may be of more accurate help if you like spreadsheets.

It seems IHT is calculated as a flat rate 0.25% charge for each complete quarter.

So you got taxed 14% of anything/your loans over £325k?

[HMRC made Atlas Shrug]

Well that's a pile of posts.

I'd agree with the general gist of the above if not some of the detail.

In particular, HMRC has very definitely NOT recharacterised your loans as income.

The chain of events according to the Supreme Court is

1. Employer to you as taxable salary
2. You to trust/lender as contribution
3. Trust/lender to you as loan

The event at 1 is taxable (income tax).
The event at 2 is not taxable immediately but is an IHT event
The event at 3 is not taxable immediately but may become an IHT event.


HMRC's analysis on IHT is deeply flawed in my opinion. It ignores the above events as defined by the Court and instead claims that the employer made the contribution.

There is a world of difference between a trust started by a third party of which you are beneficiary and one started by you of which you are a beneficiary. That's a distinction HMRC's IHT office refuses to accept. (We've asked them face to face).

"HMRC has very definitely NOT recharacterised your loans as income."

You see this is why people like you get paid the big money. Good thing you know how to speak "Greek" to translate.

HMRC say in their documents I received the money as income and HMRC taxed me PAYE on the income. I guess I'm too stupid to understand how the same money can be called income (PAYE) and loan (IHT).

Point 1, yep I got this point. Settled and handed over PAYE on the income I received.

Point 2 and 3.

Keep in mind I do not know what I'm talking about, please keep it simple so I can keep up. I worked, I got paid and I've now paid PAYE on the income.

How can point 2 or 3 apply when I never made contributions to a trust? What am I missing ?

Is it not a case of what trust and what loans ? For there to have been loans, surely there should be a record of me receiving the loans in addition to my income ? Is it not for HMRC to proof I actually received the loans because all I have are records of me receiving the income HMRC PAYEed me on.