Finance Bill 2017-18 V HMRC DR Settlement Terms

[ChimpMaster]

My exposure to this is only for a closed year and CLSO1 didn't apply to me (I didn't even know about it).
My exposure isn't as high as many and I don't want to wind anyone up. This is a tragedy for many (I think eek said there had even been suicides).

I'm not going to settle with CLSO2 because:
a. HMRC haven't actually told me about it.
b. I have no records for the period in question.
c. I'd rather give the money to charity.

If I've wound anyone up I apologise. But please, get advice, join BG, anything - just don't rely on this forum to offer solutions that fit your circumstances.

(a) and (b) are good points

For (a) I am also wondering how HMRC intend to tell people about the need to report in 2019. What will they do about people who have forgotten that they ever had loans? What will they do for the older, retired scheme users who no longer fill in tax returns?

The problem is that HMRC seem to have placed all the responsibility and onus on the individual to report in 2019, and have threatened penalties to those who don't (for whatever reason).

For (b) I've heard that it is within HMRC's jurisdiction to make up the numbers (they call it an estimate) and tax you accordingly. I believe they base this on your tax return for the years you used a scheme.

[ConfusedEasily]

HMRC cannot give special deals to just some people and not to others.

Technical Note for the Loan Charge form HMRC (10th August 2016) confirmed this:

If the above is not sufficient written confirmation, I am not sure then what else is.

HMRC cannot give special deals to just some people and not to others.

Nope, they can't give special deals. Correct. However, in the case of CLSO1 settlers your interpretation suggests that the deal is 'special' as it bypasses the 2019 loan charge. I imagine that explains why...

Technical Note for the Loan Charge form HMRC (10th August 2016) confirmed this:


The technical note did not make it into the final legislation.

If the above is not sufficient written confirmation, I am not sure then what else is


Look - I'm not a tax lawyer and your reading of it may be correct, I hope it is.

As I have said, it costs only a little amount to check. Or you can just wait...and...see....

[BrownOwl]

It’s not a level playing field either. BG have had to show their hand and HMRC seem to have reacted accordingly. Considering 2017 FB HMRC have payed a blinder imho. They seem to have covered almost all angles: employer ( end client) not liable explicitly stated which in a game of chess puts the BG resolution one move off being checkmated as I understand it. Maybe BG see it differently however and I guess it all needs to be tested in law but I only see one winner as it stands.

Good luck with your settlement I hope HMRC don't cover another angle and go back for those with unprotected years which aren't settled voluntarily. There's defintely only one winner in that circumstance as you've already admitted liability for the protected tax years. It might be a nice and quick little earner for them as they move another chess piece in which there's only one winner.

There's a new settlement opportunity which asks for voluntary payments on unprotected tax years. I'd also be wary of that as once you've admitted liability that can just keep coming back for more as they move their pieces in the game of chess.

There's only one winner with settlement opportunites in the long term, that's for sure.

[ChimpMaster]

Good luck with your settlement I hope HMRC don't cover another angle and go back for those with unprotected years which aren't settled voluntarily. There's defintely only one winner in that circumstance as you've already admitted liability for the protected tax years. It might be a nice and quick little earner for them as they move another chess piece in which there's only one winner.

There's a new settlement opportunity which asks for voluntary payments on unprotected tax years. I'd also be wary of that as once you've admitted liability that can just keep coming back for more as they move their pieces in the game of chess.

There's only one winner with settlement opportunites in the long term, that's for sure.

Clearly if you were to settle under CLSO2 for unprotected years, you would do so for all years in which you had received loans. Otherwise what would be the point of voluntary restitution.

And in that case, you don't leave anything for HMRC to come back for - on the loan scheme side I mean.

2019 will capture all closed years anyway unless (by the sounds of it) HMRC have given you full and final closure through previous settlement.

[BrownOwl]

Clearly if you were to settle under CLSO2 for unprotected years, you would do so for all years in which you had received loans. Otherwise what would be the point of voluntary restitution.

And in that case, you don't leave anything for HMRC to come back for - on the loan scheme side I mean.

2019 will capture all closed years anyway unless (by the sounds of it) HMRC have given you full and final closure through previous settlement.

Couldn't HMRC come back for the promoter fees, interest, penalties and NICs if the scheme lost in litigation after settling with the settlement opportunity?

They've already ripped up the certainty of unprotected years being outside taxation - what's to stop HMRC introducing a 2020 loan charge to tax people who haven't paid promoter fee tax, interest and NICs on the previous settlements?

There's only one winner in this game of chess.

[WestWorld]

I do. Settled means settled, and under clso1 that means all years in the scheme settled up to April 2011 and includes closed years. Once you settle for a scheme you are not affected by 2019 lc. That’s what settlement means and is why HMRC are offering settlement - a way out of 2019 otherwise why would they bother. Settlement is per scheme. Personally I was only on one and have settled it. If you were in more than one you’d need more than one settlement is my understanding. Settlement is income tax, ni, promoters fees everything except IHT. So I’m settled - financially and emotionally.

Do you know IHT will definitelybe coming along? Realise you want to put it all behind you but would like your insight. I want to come clean and pay up but need to know what the cost will be. I have contacted the trust and they say no IHT. I have only unprotected years so keeping quiet might be the best option.

[pimpernell]

Couldn't HMRC come back for the promoter fees, interest, penalties and NICs if the scheme lost in litigation after settling with the settlement opportunity?

They've already ripped up the certainty of unprotected years being outside taxation - what's to stop HMRC introducing a 2020 loan charge to tax people who haven't paid promoter fee tax, interest and NICs on the previous settlements?

There's only one winner in this game of chess.

No. Because a settlement is legally binding and covers all years to April 2011 for the scheme settled (for clso 1 settlements). The settlement terms include clauses that prevent HMRC re-visiting years where settlement is agreed for income tax and ni - a settlement is not just a one way street.

Equally should the scheme ever go to litigation in the future and HMRC were to lose, the settlement prevents you from asking for your money back - but what’s the chances of that??

[ConfusedEasily]

Dave's advice.

Me and pimpernell can bat this back and forwards until the cows return home.

Four of us paid for advice, as a group. Each of our cases was slightly different, but here's the advice 'Dave' got for his situation.

Dave has 5 years of closed scheme usage with an arguable tax liability of, say, 300K.
Dave has eighteen months of open year liability of about 90K. He settled under CLSO1 and paid the 90K. All with the same scheme.
Seeing the 2019 legislation, he seeks professional advice on how this may impact him. The advice is that, under the current legislation and given that the closed years in question are not referenced on his agreement with HMRC, he will be liable to declare the 2019 charge and may be subject to that charge. The wording of the settlement agreement is not tight enough to cover the closed years within the same scheme. They can't be reopened, but the legislation applies.
Dave's adviser then speaks to HMRC who confirm that he will need to pay a voluntary amount for the closed years to avoid the 2019 charge.

That's the advice, may be wrong - but given that under the alternate interpretation, HMRC would lose c300K in (arguably) uncollected taxes you can see why they may choose to interpret the law in their favour.

Seek your own advice.

[stonehenge]

Me and pimpernell can bat this back and forwards until the cows return home.

Four of us paid for advice, as a group. Each of our cases was slightly different, but here's the advice 'Dave' got for his situation.

Dave has 5 years of closed scheme usage with an arguable tax liability of, say, 300K.
Dave has eighteen months of open year liability of about 90K. He settled under CLSO1 and paid the 90K. All with the same scheme.
Seeing the 2019 legislation, he seeks professional advice on how this may impact him. The advice is that, under the current legislation and given that the closed years in question are not referenced on his agreement with HMRC, he will be liable to declare the 2019 charge and may be subject to that charge. The wording of the settlement agreement is not tight enough to cover the closed years within the same scheme. They can't be reopened, but the legislation applies.
Dave's adviser then speaks to HMRC who confirm that he will need to pay a voluntary amount for the closed years to avoid the 2019 charge.

That's the advice, may be wrong - but given that under the alternate interpretation, HMRC would lose c300K in (arguably) uncollected taxes you can see why they may choose to interpret the law in their favour.

Seek your own advice.

When Dave did CLSO1, did he tell HMRC about the 5 closed years?

[BrilloPad]

HMRC cannot give special deals to just some people and not to others.

Which is why they never do deals. They come to an arrangement where they no longer chase people!

DTA Suo Motu users had an arrangement with HMRC. That was never offered to others.

HMRc can do what they want, when they want.