Closing opened years - is this possible?

[webberg]

So having worked out it is cheaper to settle closed years (no NI, no interest) than pay the loan charge. I'm wondering the following: the loan charge is not actually law yet, will HMRC stop settling decade old closed years once it becomes law? The risk being waiting for the loan charge to become law and then losing the chance to settle. Is there even time to settle now before the charge becomes law? Obviously the counter risk is you settle and the loan charge never happens or it doesn't include closed years; but both seem pretty unlikely to me.

The "settlement opportunity" is extra statutory. I cannot see HMRC stopping that until just before the 2019 charge applies.

It may be the legal case that the 2019 legislation is not law yet, but it's in draft and we are told is Government policy and almost all sensible tax advisers in this space are acting as though it will be law very soon.

There are a large number of potential problems in that legislation though and legal challenges will arise. Whether enough to make it unworkable, I don't know.

[Clairol]

The letter we had from HMRC makes it clear that they may well come looking for interest on closed years even if we pay the tax voluntarily on our closed years now.
But I guess they would say that.
So settlement is not really the end of it. Unless we volunteer to pay the interest on closed years now too.

Although that still leaves confusion over IHT and re-instated loans......

[webberg]

The letter we had from HMRC makes it clear that they may well come looking for interest on closed years even if we pay the tax voluntarily on our closed years now.
But I guess they would say that.
So settlement is not really the end of it. Unless we volunteer to pay the interest on closed years now too.

Although that still leaves confusion over IHT and re-instated loans......

There is no legal provision to charge interest on a voluntary payment.

Ask them under what law they are doing that.

Confusion over IHT is all at the feet of HMRC and will take some time to resolve.

There is absolutely no confusion at all over reinstated loans. You cannot use tax law to influence a loan agreement. Unless the loan agreement has provisions to permit that reinstatement, it cannot happen. Suggestions otherwise should be challenged, asking for the law that permits this action.

A law saying that the original loan value is reported for tax purposes or the basis of a tax assessment, is NOT a law saying that the lender, having reduced the outstanding balance, can unilaterally ignore that.

Suggestions to the contrary bring us into the COP9 world potentially and that is to be avoided.

[FakeHorizon]

HMRC are aware of the situation with the new trustees of Horizon etc offering a facility to clear loans, loans which had already been written off. They have to be in order to close investigations? Given the penalties promoters of new tax avoidance schemes will suffer, I cannot see that a firm in the UK would open themselves up to that, far less expose their clients to fraud allegations, all with full disclosure to HMRC? I've asked the question of the trustees anyway.

[eek]

HMRC are aware of the situation with the new trustees of Horizon etc offering a facility to clear loans, loans which had already been written off. They have to be in order to close investigations? Given the penalties promoters of new tax avoidance schemes will suffer, I cannot see that a firm in the UK would open themselves up to that, far less expose their clients to fraud allegations, all with full disclosure to HMRC? I've asked the question of the trustees anyway.

Are HMRC aware? That is an assumption that I suspect you cannot confirm.

[starstruck]

HMRC are aware of the situation with the new trustees of Horizon etc offering a facility to clear loans, loans which had already been written off. They have to be in order to close investigations? Given the penalties promoters of new tax avoidance schemes will suffer, I cannot see that a firm in the UK would open themselves up to that, far less expose their clients to fraud allegations, all with full disclosure to HMRC? I've asked the question of the trustees anyway.

Following your logic, once you've paid back all your loans to Horizon (at a cost of 5% or 7.5%) and cleared yourself of the 2019 loan charge. How are you planning to get that money back again? When comparing 20% vs 5% you must be assuming you are going to get all that money back from Horizon tax free somehow in the future. However that is done, it's essentially just another "scheme" which runs all the same risks that you are in now. In 5 years you might be back here saying "5% or 20%" and then in another 5 "5% or 20%". Do you not just want to put the whole mess behind you and be done with it all? The 20% option ends it all. The 5% just kicks it down the road.

[webberg]

HMRC are aware of the situation with the new trustees of Horizon etc offering a facility to clear loans, loans which had already been written off. They have to be in order to close investigations? Given the penalties promoters of new tax avoidance schemes will suffer, I cannot see that a firm in the UK would open themselves up to that, far less expose their clients to fraud allegations, all with full disclosure to HMRC? I've asked the question of the trustees anyway.

They may well be aware of what is on offer, but they have no power to move pre-emptively to stop it.

I do not see that HMRC would close their investigations at all. Why would they do that?

I can see them opening another investigation into how the repayment worked and whether it was itself part of a tax avoidance arrangement.

Venturis are in Bulgaria? Why would they worry about UK Enablers legislation?

The major interest holder of some of the names offering the arrangement is Venturis.

https://beta.companieshouse.gov.uk/c...ficant-control

I can see any number of ways in which the enablers legislation would be inapplicable or too slow to be effective.

[jbryce]

They may well be aware of what is on offer, but they have no power to move pre-emptively to stop it.

I do not see that HMRC would close their investigations at all. Why would they do that?

I can see them opening another investigation into how the repayment worked and whether it was itself part of a tax avoidance arrangement.

Venturis are in Bulgaria? Why would they worry about UK Enablers legislation?

The major interest holder of some of the names offering the arrangement is Venturis.

https://beta.companieshouse.gov.uk/c...ficant-control

I can see any number of ways in which the enablers legislation would be inapplicable or too slow to be effective.

Oddly - elements of Venturis have been connected to a major source of RBS recruitment - Lorien.

[FakeHorizon]

Following your logic, once you've paid back all your loans to Horizon (at a cost of 5% or 7.5%) and cleared yourself of the 2019 loan charge. How are you planning to get that money back again? When comparing 20% vs 5% you must be assuming you are going to get all that money back from Horizon tax free somehow in the future. However that is done, it's essentially just another "scheme" which runs all the same risks that you are in now. In 5 years you might be back here saying "5% or 20%" and then in another 5 "5% or 20%". Do you not just want to put the whole mess behind you and be done with it all? The 20% option ends it all. The 5% just kicks it down the road.

Do you think that the 20% option is that easy, given we're talking about earnings from the early 2000s? How many people are still contracting, how many are retired, no longer working, simply unable to finance tax payments 15 years on. Add in interest and it becomes 30% and more.

[FakeHorizon]

Are HMRC aware? That is an assumption that I suspect you cannot confirm.

if they aren't aware, I'm being lied to which would be a strange thing for an accountancy firm, regulated in the UK, to do. Now stop following me about.