Horizon exit opportunity (Non-Big Group discussion thread)

[Clairol]

From what I can see, a commercial loan between two companies will clear off the loans, so no comeback from HMRC on the individual? If you have closed years, I'd certainly think it's worth the gamble, as this 'opportunity' will only be available until the budget. For open years, it's less clear-cut as HMRC won't be doing anything until after the budget, where they have requests for these years to be closed as the loans have been paid back. Heads they win, tails we lose.

What is the relevance of the budget please?

[regron]

That's all very well. But how long are you supposed to keep records. I might have some info re loans in 2000/2002 but not complete figures, and not all schemes?

They will probably ask for you to consult your bank statements. Unfortunately, if you can't provide the exact figures, they will just estimate, as they have done with APN's.

[starstruck]

Is there a way to force and demand the Trustee to accept the current book value of the loan and pay it off now?

I don't think it would make any difference. As I understand it even loans already formally written off (e.g. due to depreciation) are still caught.

[FakeHorizon]

You have to supply the information to HMRC yourself. If you don't, it's a £300 penalty, which can then increase to £60 per day for not doing it. If you supply inaccurate info, there's another £3,000. HMRC will create a "digital tool" for you to supply the information.

To be fair to whoever you paid, this only came out yesterday morning and is still in draft.

HMRC has also been quite clever about this in that (i) if they know of the scheme already then they put a tick on their list of schemes, (ii) if one person reports a new scheme then they add that to the list and can try to find out who else has participated.

The new trustee won't provide details to HMRC of loans which have been paid back, so the onus would then be on the borrower to confess all, is what you're saying. Do HMRC then demand tax on the loan rendering the earlier repayment of the loan pointless. I'd ask the accountant I've already paid £1k to for their advice but that would be pointless as their sole aim is to generate revenue for themselves.

[starstruck]

The new trustee won't provide details to HMRC of loans which have been paid back, so the onus would then be on the borrower to confess all, is what you're saying. Do HMRC then demand tax on the loan rendering the earlier repayment of the loan pointless. I'd ask the accountant I've already paid £1k to for their advice but that would be pointless as their sole aim is to generate revenue for themselves.

Can you be sure of that? Trustees may be legally forced to disclose all loans ever made even if currently written off (that is my understanding of how it will work anyway). I thought you suggesting paying back the outstanding balance (current book value) as opposed to the original value. I think they would have to report the original amount. As far as I am aware you'd have to repay the original loan in full and never get it back to be truly in the clear. (but I'm not really in the know - just repeating what I've read)

[eek]

Can you be sure of that? Trustees may be legally forced to disclose all loans ever made even if currently written off (that is my understanding of how it will work anyway). I thought you suggesting paying back the outstanding balance (current book value) as opposed to the original value. I think they would have to report the original amount. As far as I am aware you'd have to repay the original loan in full and never get it back to be truly in the clear.

Surely that depends where the Trustee is? I think it would be very hard to get someone outside the UK and the EU to provide the information...

[Iliketax]

The new trustee won't provide details to HMRC of loans which have been paid back, so the onus would then be on the borrower to confess all, is what you're saying. Do HMRC then demand tax on the loan rendering the earlier repayment of the loan pointless. I'd ask the accountant I've already paid £1k to for their advice but that would be pointless as their sole aim is to generate revenue for themselves.

Yes, the draft legislation says the onus is on you to confess all. What obligations there may be on the trustee when the final legislation comes out is another matter. And whether a foreign trustee will bother to comply with whatever it says is another story.

We also don't know whether HMRC will "demand tax on the loan" or whether you will have to pay it via self-assessment or some other way yet. That's not been published (my guess is to look out for 22 November). My guess is that if the employer is no longer around you will have to self-assess it but who knows.

I don't know the details of your scheme. But it sounds like you have a loan where "it is reasonable to suppose that the main reason, or one of the main reasons, for the loan being made in that currency is that the loan currency is expected to depreciate as against sterling during the loan period". On that basis, only the sterling value of the loan repayment counts. So if you borrowed 10,000 ickies (worth £10,000) and repaid 10,000 ickies (when worth £1) then you have a £9,999 loan for the April 2019 loan charge. So by repaying £1 you save up to £0.47 in tax and NIC. If that is right (and the only thing you have to worry about) then it does not sound like it is worth paying the £1. But I don't know what your facts are.

[me206et]

What is the relevance of the budget please?

My understanding is that in the budget the rules will be changed so that the tax liability can be transferred to the employee, i.e. you, for collection. Something the judge in the Murray group case said they could not do. So stopping up a hole.

I am sure if I a wrong someone will correct me.

[FakeHorizon]

Can you be sure of that? Trustees may be legally forced to disclose all loans ever made even if currently written off (that is my understanding of how it will work anyway). I thought you suggesting paying back the outstanding balance (current book value) as opposed to the original value. I think they would have to report the original amount. As far as I am aware you'd have to repay the original loan in full and never get it back to be truly in the clear. (but I'm not really in the know - just repeating what I've read)

everything I've posted on this topic is straight from the horse's mouth. Or trough, as it appears to be. Not to say that won't change but I was informed by the trustee they will only supply HMRC with details of active loans come 2019.

for other points above, the new trustee will do everything they can to make the borrower pay back the full sterling value of the loan, ignoring the whole forex thing which was going on at the time.

[Iliketax]

the new trustee will do everything they can to make the borrower pay back the full sterling value of the loan, ignoring the whole forex thing which was going on at the time.

Sorry about being thick, but how can you repay more than you owe? So if it was 10,000 ickies (originally £10,000), and that is still now 10,000 ickies (now worth £1), how can you pay £10,000 to repay it? Surely that's a £1 repayment and a £9,999 something else?

And putting tax aside for now, what benefit are you getting from repaying £10,000? What future benefit are you expecting?