Sympathy for the Devil

[webberg]

Let's say your loans are already written off (both formally in writing plus the trust is gone also, so nobody that could ever demand money or be repaid).

You settle, including IHT. Something you are able to afford to do, plus you are not interested in a long (potentially costly and possibly futile) battle with HMRC.

Are there any of your dozen problems here? i.e. what more can HMRC come back for?

Yes.

Will HMRC believe that the loan no longer exists?
Will the DR charge assume that the loan has not been repaid and is still there to be taxed?
If the loan and trust have gone, is there an historic IHT liability waiting to be paid?

Just be aware that the disappearance of the trust does not mean that the loan has disappeared.

We are aware that some trusts claim to have "resolved" the loans and the trust, but I have no details on how that was achieved and as such no opinion on what problems it may have solved or created.

[BrownOwl]

Hi

A contract settlement is a legally binding agreement. In short...if you settle then it makes no difference to you what happens in any future. Perhaps some lawyer could fight it but I'm not one and not in a position to say (but id very much doubt theres much they could do). A settlement is that decision...whether to try to get peace of mind now or take the risk and see how pans out. Its why its a very hard choice to make for each individual and why no advisor should say you should def take either option, rather its a case of setting out the facts as known and the individual has to make the call. Its also why id say its extremely important to ensure that any settlement deeds that you sign cover everything you need them to.
Sorry that's a highly depressing answer!

Hi Phil,

Thanks for the reply.

It would be a disaster for me to pay up voluntarily and later find the 2019 legislation was a total sham or didn't apply to my situation.

I've had letters from HMRC over the past 12 years saying they "believe" I used a tax avoidance scheme but there's been nothing from a legal standpoint in all that time.

If HMRC are confident that 2019 will apply to my situation surely they wouldn't have a problem giving me the assurance of a refund if it's proven the charge didn't apply after all?

Do you offer a service to ensure the settlement deeds are arranged so I can get a refund if my situation or scheme is proven not to be caught by 2019 legislation?

[phil@pmtc]

hi

Hi Phil,

Thanks for the reply.

It would be a disaster for me to pay up voluntarily and later find the 2019 legislation was a total sham or didn't apply to my situation.

I've had letters from HMRC over the past 12 years saying they "believe" I used a tax avoidance scheme but there's been nothing from a legal standpoint in all that time.

If HMRC are confident that 2019 will apply to my situation surely they wouldn't have a problem giving me the assurance of a refund if it's proven the charge didn't apply after all?

Do you offer a service to ensure the settlement deeds are arranged so I can get a refund if my situation or scheme is proven not to be caught by 2019 legislation?

I'm happy to ask that as I can ask for anything to be included, plus your theory about 'why would they have a problem if so confident" is sound and based on common sense but...honestly id be amazed if they ran with it (its HMRC and common sense we are talking about).So unless they shock me and agree I cant offer a service promising such a thing. Id say the chances of them agreeing are extremely minimal to say the least.
Ill let you know if that changes though. As I say, I'm happy to ask as no harm I guess.
What you mention is the main query people have to ask themselves I guess...'do I want to the risk of letting it run and potentially having a great result or just accept a more certain one now'. Not for me or indeed anyone to say what the best answer is as purely down to the individual and their own perception of acceptable risk. Sorry that's not helpful but there's no definite correct answer. It wouldn't be helpful if I said what id do either as some of us are risk takers and some risk averse.

All that being said, keep an eye out for the thread ill be posting tomorrow regarding HMRC behaviours/the press. (Please don't get hopes up here - its nothing life changing and unlikely to change the above answer but it is vaguely linked).

Regards,
Phil

[starstruck]

Yes.

Will HMRC believe that the loan no longer exists?
Will the DR charge assume that the loan has not been repaid and is still there to be taxed?
If the loan and trust have gone, is there an historic IHT liability waiting to be paid?

Just be aware that the disappearance of the trust does not mean that the loan has disappeared.

We are aware that some trusts claim to have "resolved" the loans and the trust, but I have no details on how that was achieved and as such no opinion on what problems it may have solved or created.

So you think that if I settle the years in question, I am still going to have the loan charge applied on top. Is that your professional opinion?

Edit - Your comment actually quite angers me because, I spoke to Tom at WTT last year and he told me that "despite what people say on forums" settlement is an end to it.

[helen7]

Hi Phil,

Are you familier with the Montpellier IOM scheme? If so, do you have any insight you could share from the other side of the fence?

Since the retrospective legislation was introduced in 2008, do you think it would be viable to argue that interest payments for tax years 2002 onwards should only be due since the legislation was introduced?

In the event that I take corrective action and settle the tax dispute; what would happen if a subsiquent judicial review finds that the APN/FN were not valid and should not have been issued?

In the case of people not taking corrective action, do you have any insight into how agressive HMRC will be in pursuit of penalties? (and how often do they succeed?)

[phil@pmtc]

Hi Phil,

Are you familier with the Montpellier IOM scheme? If so, do you have any insight you could share from the other side of the fence?

Since the retrospective legislation was introduced in 2008, do you think it would be viable to argue that interest payments for tax years 2002 onwards should only be due since the legislation was introduced?

In the event that I take corrective action and settle the tax dispute; what would happen if a subsiquent judicial review finds that the APN/FN were not valid and should not have been issued?

In the case of people not taking corrective action, do you have any insight into how agressive HMRC will be in pursuit of penalties? (and how often do they succeed?)

Good Morning,

If you were to pay the APN/Take corrective action then i would expect you should be able to get a refund. It may not be straightforward mind as it would depend on why the APN/FN were found not to be valid so difficult to say with absolute certainty. If you are meaning once you have signed the settlement opportunity and paid, well then that's much more difficult as signing settlement deeds means you are forgoing any opportunity that a future finding may provide.

Interest - I do think that's a very viable argument and indeed morally how it should work but unfortunately that's already been tried and as far as i'm aware was unsuccessful. Doesn't mean we cant try again though.

Regarding penalties, from the ones i've seen HMRC apply the penalty instantly (day 1 after the deadline). In fact i saw a case where the person had actually paid the tax but didn't fill in the form to go with it....HMRC still applied a penalty which in that case was well into 6 figures. In the end we successfully argued and the penalty was removed but i think that shows their aggression level on these matters.

Regards,
Phil

[webberg]

So you think that if I settle the years in question, I am still going to have the loan charge applied on top. Is that your professional opinion?

Edit - Your comment actually quite angers me because, I spoke to Tom at WTT last year and he told me that "despite what people say on forums" settlement is an end to it.

Given that Tom is one of my people, I'll respond.

If you go for CLSO 2, then HMRC claim that the DR charge in 2019 will not apply.

That is not written into the legislation. Upon challenge HMRC claim that the "extensive double tax relief" provisions achieve this effect. I'm pretty sure that there are circumstances where that is not the case.

So, HMRC will say, with some force, that CLSO 2 is an end to liability and no more assessments or charges. This is undoubtedly what their script persuading people to go for settlement says and why Tom and I and all of my staff will say this.

I also think that looking at the thread, this is what Phil is saying. I think he says that he can ask if a later case proving no liability can amend the CLSO 2 position (no) or whether later liability created by e.g. the DR charge can be added (HMRC say no but the law is less clear).

[starstruck]

Given that Tom is one of my people, I'll respond.

If you go for CLSO 2, then HMRC claim that the DR charge in 2019 will not apply. r
That is not written into the legislation. Upon challenge HMRC claim that the "extensive double tax relief" provisions achieve this effect. I'm pretty sure that there are circumstances where that is not the case.

So, HMRC will say, with some force, that CLSO 2 is an end to liability and no more assessments or charges. This is undoubtedly what their script persuading people to go for settlement says and why Tom and I and all of my staff will say this.

I also think that looking at the thread, this is what Phil is saying. I think he says that he can ask if a later case proving no liability can amend the CLSO 2 position (no) or whether later liability created by e.g. the DR charge can be added (HMRC say no but the law is less clear).

... and it is exactly this that makes me so angry, you're basically saying you and all your staff will say one thing on the phone and then you'll muddy the waters on a public forum ... so who do I believe: Tom, that he can, for a fee, get me a watertight settlement contract that will bring a close to it all, or you, his boss, that is telling me that it's not at all watertight.

@Phil - can you get written into the settlement contract that the 2019 LC won't apply?

[webberg]

... and it is exactly this that makes me so angry, you're basically saying you and all your staff will say one thing on the phone and then you'll muddy the waters on a public forum ... so who do I believe: Tom, that he can, for a fee, get me a watertight settlement contract that will bring a close to it all, or you, his boss, that is telling me that it's not at all watertight.

@Phil - can you get written into the settlement contract that the 2019 LC won't apply?

I can assure you that Tom would have pointed out that in our opinion, the contract is not "final". I have heard that conversation many times and neither he, I or any of our staff will give you anything other than the "HMRC say final, we are of the view that it is not".

We say the same thing on the phone as we do here.

[starstruck]

I can assure you that Tom would have pointed out that in our opinion, the contract is not "final". I have heard that conversation many times and neither he, I or any of our staff will give you anything other than the "HMRC say final, we are of the view that it is not".

We say the same thing on the phone as we do here.

We'll have to agree to disagree on that one then.