Horizon exit opportunity (Non-Big Group discussion thread)

[FakeHorizon]

Does anyone on this thread *really* think that the 'Horizon exit' opportunity will work?
Does anyone think that HMRC is going to allow a half-baked idea, with no provenance, such as this succeed?
Have we not learnt that the promoters of such schemes/products do nothing but collect the fees and then vanish?
Guys FFS, get a grip. There is no opportunity here for anyone other than those who will collect the fees.

the Rangers case concluded that tax/paye should have been paid before amounts were transferred to the trust, this holds for every arrangement, is the premise. So all the borrower has to do is clear the loan and that is it done with. that's the offering in a nutshell. Will HMRC accept this, maybeez aye maybeez naw.

[Iliketax]

The position is that the new trustees have reinstated loans which were written off in 2010 (same person involved), to the original sterling-equivalent value.

Serious question. Imagine English law applies for the moment. How do they do that? And if they can do that, why doesn't HSBC do that to your mortgage? "Thanks very much for reducing your mortgage down from £100,000 to £5,000 in 2010 but we've decided to reinstate it and it is now back to £100,000. Please repay it now."

The answer is that they cannot unless (i) the loan agreement says it can or (ii) you have agreed. Now I have no idea what law your loan agreement says but the reality is that under English law you cannot "reinstate" a loan that was £5,000 (in current sterling value) and was written off back up to (say) £100,000. It's just not possible. Reinstate has no legal meaning. Normally loan agreements don't say this sort of thing (as its not really a loan if you can just owe a random amount at someone else's whim).

So it sounds like "reinstate" could be replaced by the word "pretend". If that is right (and I have no idea what the loan actually says) then you might want to Google "HMRC have sent me a COP 9 booklet" and then find someone who can help you handle the fraud investigation.

Anyway, the dogs want walking...
Just to be clear. If my thinking is right then what you would be pretending to do is on the very serious.

If I don't repay these loans, HMRC will be informed in 2019 they are still outstanding

I'm getting bored of saying, under current draft legislation you have to report the loans to HMRC because you had not repaid the principal by March 2016.

If I repay them now, using a borrowing facility being offered, I pay 7.5%.

So this "borrowing facility", who is the lender? I'm short of cash and would like to borrow under it as well. Are there any fees? Presumably anyone can borrow on these terms from the bank. If not (e.g. you have to have a dodgy loan) or if its not someone who lends to the public like a bank (and other conditions are satisfied) then you will have a PAYE/NIC liability on that new loan (regardless of whether it is repaid).

And how is that loan going to be repaid?

There is certainly an element of coercion here, probably a stronger word would be appropriate, but best left unsaid.

Er, yeah sure. You've borrowed from the Mafia? Just pay it back and ignore tax. Your legs are more important. Or take proper advice.

This is all backed by QC-opinion, naturally.

Now it gets interesting. Who is the QC? Do you have a copy of their instructions? What was actually asked? Do you have a copy of their opinion? What did they actually says? Is their opinion actually signed? Were you at the conference with the QC? If not, has the QC's clerk confirmed to you that it is real? When it was dated? When was the opinion given? Does it cover DOTAS (in particularly the financial hallmark and employment income hallmarks - as these sound particularly relevant)? Does it cover GAAR? Does it cover HMRC's likely reaction? Does it cover the Finance Bill that has just been published? Does it cover the draft Finance Bill?

I'm guessing that you will only be able to answer very few of these questions positively. OK, can you actually answer any of them positively? No? That to me that would be one of the hallmarks of someone trying to sell you something dodgy.

If I am still subject to the 2019 charge, no benefit at all to repaying loans

So you'd still owe money on the 'bridging' loan?

The advice I'm getting is contradicted by a lot of what you've said, but the choices are pay 5-7.5% and hope for the best or pay 20% tax.

But what is the worst that you will get hit by if (i) you still have to pay the tax on the full amount of the original loan (ii) you have to pay tax on the 'bridging loan', (iii) you are hit with IHT, (iv), you get a 60% GAAR penalty, (iv) you have to spend £100,000+ on lawyer's fees as HMRC launches a fraud investigation into what you have done over the last 20 years.

the Rangers case concluded that tax/paye should have been paid before amounts were transferred to the trust, this holds for every arrangement, is the premise.

Let's pretend for the moment that this premise is (i) actually relevant to you and (ii) not complete and utter bollocks.

The Murray Group case has no bearing whatsoever on the April 2019 loan charge in any way shape or form.

The loan is still there. The April 2019 loan charge will still apply as your loan is in a depreciating currency (assuming legislation comes in as per the current Finance Bill).

The current disguised remuneration rules (i.e. not the Finance Bill) do give relief from double tax. So if tax was actualy paid on the original payment into trust and then lent on to you then there will be no tax to pay under the April 2019 loan charge. It doesn't matter who pays this tax: you, the EBT, the employer, your mum, whoever. But it does matter that the tax was actually paid. It also gives relief from double tax if you have reached a settlement agreement with HMRC. But the tax must have been paid (or, as an aside, you must have reached agreement with HMRC how you will discharge the tax - e.g. a timetable for paying it off monthly).

In some cases there is a fiction that the PAYE regulations have that mean that PAYE that is not actually paid by an employer is treated as being paid. But that is a fiction for a very limited purpose. And that limited purpose does not include s544Z5(4)(b)(i) ITEPA 2003 which says that the earlier tax liability "has been paid in full".

So all the borrower has to do is clear the loan and that is it done with. that's the offering in a nutshell. Will HMRC accept this, maybeez aye maybeez naw.

The way you have described it, of course HMRC is not going to accept it. There is no chance in hell of them accepting it. They will be laughing out loud at the thought of someone even thinking that HMRC will accept that (hello T).

[Iliketax]

Does anyone on this thread *really* think that the 'Horizon exit' opportunity will work?
Does anyone think that HMRC is going to allow a half-baked idea, with no provenance, such as this succeed?
Have we not learnt that the promoters of such schemes/products do nothing but collect the fees and then vanish?
Guys FFS, get a grip. There is no opportunity here for anyone other than those who will collect the fees.

Completely agree.

[eek]

the Rangers case concluded that tax/paye should have been paid before amounts were transferred to the trust, this holds for every arrangement, is the premise. So all the borrower has to do is clear the loan and that is it done with. that's the offering in a nutshell. Will HMRC accept this, maybeez aye maybeez naw.

Definitely naw as we already know Hmrc are trying to add a retrospective bit to ensure the tax charge is transferred to the employee.

Equally this closure opportunity does offer you something - The chance to give someone money resulting in HMRC seeing 2 loans with 2 lots of tax to be paid.

[stonehenge]

Two points:

1) HMRC are going to be immediately suspicious of anyone who claims their loans have been repaid.

2) HMRC will almost certainly ask for proof that repayment took place. Unless you can show money leaving your bank account, HMRC are going to be doubly suspicious.

Think very carefully before getting involved in any arrangement to try and circumvent the 2019 charge.

[me206et]

Two points:

1) HMRC are going to be immediately suspicious of anyone who claims their loans have been repaid.

2) HMRC will almost certainly ask for proof that repayment took place. Unless you can show money leaving your bank account, HMRC are going to be doubly suspicious.

Think very carefully before getting involved in any arrangement to try and circumvent the 2019 charge.

I think I would agree with these sentiments, plus even if it works for the moment, you have now moved something that was over 15 years old to a current position, thus allowing HRMC another 20 years to try and get you.

As regards to clearing the loan, getting it written off after 2019. The trust cannot reinstate it back to the original. If you replay it either depreciated or not the money should go back into the EBT. This is in your name and for your benefit, so they surely have to give it back to you as they will now be in credit. Having already been taxed on it HRMC cannot, should not, be able to tax you again.

[me206et]

Now it gets interesting. Who is the QC? Do you have a copy of their instructions? What was actually asked? Do you have a copy of their opinion? What did they actually says? Is their opinion actually signed? Were you at the conference with the QC? If not, has the QC's clerk confirmed to you that it is real? When it was dated? When was the opinion given? Does it cover DOTAS (in particularly the financial hallmark and employment income hallmarks - as these sound particularly relevant)? Does it cover GAAR? Does it cover HMRC's likely reaction? Does it cover the Finance Bill that has just been published? Does it cover the draft Finance Bill?

As for this.

1. I think it was just a phone call with a QC, and only part of that was disclosed.
2. The scheme had a QC "Approval","guarantee" whatever you want to call it before, and look where that got us.
3. Even schemes that HRMC new about, appeared to have investigated, decided to do nothing about, are now being brought into this.

[FakeHorizon]

Serious question. Imagine English law applies for the moment. How do they do that? And if they can do that, why doesn't HSBC do that to your mortgage? "Thanks very much for reducing your mortgage down from £100,000 to £5,000 in 2010 but we've decided to reinstate it and it is now back to £100,000. Please repay it now."

The answer is that they cannot unless (i) the loan agreement says it can or (ii) you have agreed. Now I have no idea what law your loan agreement says but the reality is that under English law you cannot "reinstate" a loan that was £5,000 (in current sterling value) and was written off back up to (say) £100,000. It's just not possible. Reinstate has no legal meaning. Normally loan agreements don't say this sort of thing (as its not really a loan if you can just owe a random amount at someone else's whim).

So it sounds like "reinstate" could be replaced by the word "pretend". If that is right (and I have no idea what the loan actually says) then you might want to Google "HMRC have sent me a COP 9 booklet" and then find someone who can help you handle the fraud investigation.

Anyway, the dogs want walking...
Just to be clear. If my thinking is right then what you would be pretending to do is on the very serious.



I'm getting bored of saying, under current draft legislation you have to report the loans to HMRC because you had not repaid the principal by March 2016.



So this "borrowing facility", who is the lender? I'm short of cash and would like to borrow under it as well. Are there any fees? Presumably anyone can borrow on these terms from the bank. If not (e.g. you have to have a dodgy loan) or if its not someone who lends to the public like a bank (and other conditions are satisfied) then you will have a PAYE/NIC liability on that new loan (regardless of whether it is repaid).

And how is that loan going to be repaid?



Er, yeah sure. You've borrowed from the Mafia? Just pay it back and ignore tax. Your legs are more important. Or take proper advice.



Now it gets interesting. Who is the QC? Do you have a copy of their instructions? What was actually asked? Do you have a copy of their opinion? What did they actually says? Is their opinion actually signed? Were you at the conference with the QC? If not, has the QC's clerk confirmed to you that it is real? When it was dated? When was the opinion given? Does it cover DOTAS (in particularly the financial hallmark and employment income hallmarks - as these sound particularly relevant)? Does it cover GAAR? Does it cover HMRC's likely reaction? Does it cover the Finance Bill that has just been published? Does it cover the draft Finance Bill?

I'm guessing that you will only be able to answer very few of these questions positively. OK, can you actually answer any of them positively? No? That to me that would be one of the hallmarks of someone trying to sell you something dodgy.



So you'd still owe money on the 'bridging' loan?



But what is the worst that you will get hit by if (i) you still have to pay the tax on the full amount of the original loan (ii) you have to pay tax on the 'bridging loan', (iii) you are hit with IHT, (iv), you get a 60% GAAR penalty, (iv) you have to spend £100,000+ on lawyer's fees as HMRC launches a fraud investigation into what you have done over the last 20 years.



Let's pretend for the moment that this premise is (i) actually relevant to you and (ii) not complete and utter bollocks.

The Murray Group case has no bearing whatsoever on the April 2019 loan charge in any way shape or form.

The loan is still there. The April 2019 loan charge will still apply as your loan is in a depreciating currency (assuming legislation comes in as per the current Finance Bill).

The current disguised remuneration rules (i.e. not the Finance Bill) do give relief from double tax. So if tax was actualy paid on the original payment into trust and then lent on to you then there will be no tax to pay under the April 2019 loan charge. It doesn't matter who pays this tax: you, the EBT, the employer, your mum, whoever. But it does matter that the tax was actually paid. It also gives relief from double tax if you have reached a settlement agreement with HMRC. But the tax must have been paid (or, as an aside, you must have reached agreement with HMRC how you will discharge the tax - e.g. a timetable for paying it off monthly).

In some cases there is a fiction that the PAYE regulations have that mean that PAYE that is not actually paid by an employer is treated as being paid. But that is a fiction for a very limited purpose. And that limited purpose does not include s544Z5(4)(b)(i) ITEPA 2003 which says that the earlier tax liability "has been paid in full".



The way you have described it, of course HMRC is not going to accept it. There is no chance in hell of them accepting it. They will be laughing out loud at the thought of someone even thinking that HMRC will accept that (hello T).

I'm not here to defend the offerings made by a trustee in bulgaria, who will obviously not incur the wrath of HMRC. It is what it is, I can pay 5% to clear the loans from the trustees books and see what happens in 2019, or I can contact HMRC and pay 20% on what are closed years for me. I appreciate all you've posted, but I cannot see how my repaying a loan will lead to fraud charges unless the trustees are openly aiding and abetting such fraud. HMRC do not recognise currency depreciation mechanisms so the trustees have reinstated/created/pulled out of a hat new loans for the full amounts. Either clear them or don't, the choice is there.

[stonehenge]

Ask yourself this. How big a deal is the 2019 charge for the Government and HMRC?

Then ask yourself what HMRC's response is likely to be to anyone who tries to dodge it.

Red rag, bull?

[FakeHorizon]

Definitely naw as we already know Hmrc are trying to add a retrospective bit to ensure the tax charge is transferred to the employee.

Equally this closure opportunity does offer you something - The chance to give someone money resulting in HMRC seeing 2 loans with 2 lots of tax to be paid.

are you saying the advice I've paid for is worthless and will only get me into more bother if I agree finance with a company to pay off a loan to another company, why would HMRC be involved? I've not actually done this, yet. What I've done so far is cleared a smallish loan for an open year from my own funds to test the water. I was advised HMRC would close the investigation. Obviously that never happened and I have to wait till november. I'll post from jail after that if I can