AML 2019 Loan Charge

[Loan Ranger]

Just to clarify my pay structure is: My company does work for company X through agency Y, my company invoices agency Y, agency Y pays my company, I send AML/SPM my timesheet, AML/SPM send my company bill, my company pays AML/SPM bill, AML/SPM pay me retainer (as self-employed) and loan, job done.

So, the money flows are:

Co X ---> Agency Y ---> MyCo

MyCo ---> AML/SPM

AML ---> Me (as self-employed sole trader)

AML ---> Me (loan)

Jesus.

[webberg]

The analysis above is one that we would generally agree with.

This type of scheme is however quite popular and is seen in many guises. Examination of the justification behind the flows of money and use of the contractor's own limited, reveals a number of elements that are claimed to exempt the process from the rules mentioned.

The strength or otherwise of those defences has not been tested in any Tribunal or Court. My personal opinion is that reliance upon a literal interpretation of the documents and legislation is, these days, unlikely to produce the claimed result.

We would agree however that the general thrust and intent of the rules introduced in 2010 is as described and that HMRC will almost certainly be running an argument on those lines.

Which would a Tribunal prefer?

Would it be one of the above or something else?

[Iliketax]

Which 2010 rules are you referring here please? The scheme is providing loans and is covered by DR loan charge....

The DR rules originally came in for loans made from 9 December 2010. You can find them here if you are keen: https://www.legislation.gov.uk/ukpga/2011/11/schedule/2

So if the facts are as the poster originally said:

Just to clarify my pay structure is: My company does work for company X through agency Y, my company invoices agency Y, agency Y pays my company, I send AML/SPM my timesheet, AML/SPM send my company bill, my company pays AML/SPM bill, AML/SPM pay me retainer (as self-employed) and loan, job done.

Then "my company" is "B", Pipjb (assuming he or she is a director of "my company") is "A", AML/SPB is "P" and P makes a payment (by way of a loan and retainer) to A which is a "relevant step". That's exactly what the disguised remuneration rules were designed to stop.

So that would mean "my company" would have to operate PAYE and NIC on all payments made by AML/SPM to Pipjb. There is also a horrible penalty provision (called s222) for Pipjb not reimbursing "my company" for the PAYE (that it didn't deduct from pay but was supposed to) quick enough. Based on those facts, the only way out is to say that there was no connection to his or her employment / directorship with "my company". But that does not sound likely.

If the facts are like that, the original DR rules would have created a tax charge on all the amounts paid. The April 2019 loan charge then taxes all the loans outstanding. There would be some double tax relief though.

On the GAAR point, there have been some GAAR Advisory Panel opinions on disguised remuneration and so this shows that this is something that HMRC takes very seriously: https://www.gov.uk/government/public...e-arrangements and https://www.gov.uk/government/public...g-gold-bullion

If this is your position, you should take independent professional tax advice.

[webberg]

[QUOTE=GUD;2556070]

OK. You are going to hate me for this...

Based on what you say, I think you may be in a substantially worse position than many.

Just to be clear:

1. On the basis that you are an employee/director of your company then, as you've described it, the payments by AML/SPM to you are within the employee disguised remuneration rules that have been around since December 2010. The fluff around self-employment does not come into it. Your company has an obligation to operate PAYE/NIC. When you take your independent tax advice you should make sure that it covers the GAAR (general anti-abuse rule) and its specific penalty regime. https://www.rossmartin.co.uk/penalti...gaar-penalties. GAAR penalties are up to 60% of the tax. Oh, there would also be employee's and employer's NIC.

Which 2010 rules are you referring here please? The scheme is providing loans and is covered by DR loan charge....

I'm sure Iliketax will be along to answer the specifics.

However the insertion of your own limited company into a scheme is generally not good news.

[webberg]

Could you please advise whether HMRC charged you interest and their calculations were fair reflection of tax and NI due to be paid? Were their calculations close to yours estimates and did you reach any settlement terms with HMRC?

The answer to the points here, which have been raised and answered before, are:

HMRC charges interest on overdue tax and will not negotiate on that.

The arithmetic in the calculation is usually accurate and can be challenged if not.

Whether the HMRC calculations match yours is irrelevant.

Settlement terms? if you mean some sort of discount to the tax figure, the answer is no. If you mean time to pay, then it depends on circumstances.

[GUD]

[QUOTE=Iliketax;2555529]

OK. You are going to hate me for this...

Based on what you say, I think you may be in a substantially worse position than many.

Just to be clear:

1. On the basis that you are an employee/director of your company then, as you've described it, the payments by AML/SPM to you are within the employee disguised remuneration rules that have been around since December 2010. The fluff around self-employment does not come into it. Your company has an obligation to operate PAYE/NIC. When you take your independent tax advice you should make sure that it covers the GAAR (general anti-abuse rule) and its specific penalty regime. https://www.rossmartin.co.uk/penalti...gaar-penalties. GAAR penalties are up to 60% of the tax. Oh, there would also be employee's and employer's NIC.

Which 2010 rules are you referring here please? The scheme is providing loans and is covered by DR loan charge....

[GUD]

HMRC are in a bit of a mess.

I settled with them on 26th April for my 18 months, paid in full.
I got no receipt of the 33k I sent them and today 1 month later I got the 2019 LC letter and oh, 13 days to reply.

Called them up, yes I had paid and yes they did receive the money, but they don't send out any confirmations and the 2019 LC charge is an automated letter and they apparently can't control it.
Stupid thing is this was sent a nearly a month after settlement.

grrrrrr, at least it is all clear now and had it confirmed.

And why the ^&%$ can't they print the UTR number alongside your NI number on EVERY single letter and not just "some" random letters. It seems it is a hidden code they don't want you to know, but insist you supply.
Out of all the correspondence I have with HMRC, my UTR appears on 1 out of 20 letters and that was a self assessment letter, nothing to do with my cases.

Could you please advise whether HMRC charged you interest and their calculations were fair reflection of tax and NI due to be paid? Were their calculations close to yours estimates and did you reach any settlement terms with HMRC?

[GreenMirror]

Despite being a loan victim(if victim is the right word. I feel it was a very bad mistake. I just don't think I should shoulder all the blame), I don't believe it is retrospective as it covers the amount of loan outstanding. Though it is amazing it took HMRC 18 years to close the loophole.

Remember that DTA(Montpelier-Huitson) went to ECHR and got thrown out. Retrospection is legal in the UK.

Not that HMRC needed retrospection to defeat DTA anyway.

[falling apart]

Has anyone sought legal advice to bring a judicial review to court to get this legislation halted or amended to 2017 onwards? Litigants can do this.

I too have written to my local mp to rouse support and would suggest people to keep doing it and sign the online petition in regards to the legislation. There is only around 500 signatures but it needs 100,000 to get a debate in parliament.

That is the end result, I've got fresh doubts about voting for Tory in the next election and will look to make this clear. Like many others I don't have the huge sums that will be owed and it's painful stress night and day.

Also, we need to start a campaign to get media coverage guys and take action on this. ?

I've actually spent time with a QC in the past week to discuss and basically, there is a potential challenge to the LC 2019 based on it being contrary to European Human Rights, however, there is apparently some debate over whether or not it is completely retrospective. If it were, then the challenge would likely succeed, but they are focusing the legislation on a specific area - filling in a technical gap where parliament has previously indicated they were going to act to stop or defeat a particular arrangement (unbeknownst to some of us...) - meaning that there is a chance it would be unlikely to be regarded as "abusive of human rights" by the European Court.

Unfortunately, I feel like this leaves me with no option but to register for settlement - but I'm still hoping to fight and still praying that there is an overturn on the decision. Surely someone, with even half a brain and a shred of human decency realises the gravity of changing a law with retrospective effect.

Some days I feel totally at a loss, and other days I think, no way is this going to happen - but whether I feel hopeful or despairing, I still keep coming back to how utterly and unbelievably f**ked (sorry, but there is no other way to say it!) this whole situation is!!!! it feels like a really, really bad joke or nightmare.

I'm drafting an email to my MP as we speak (although he is a Tory) - despite the fact that every time I "put myself out there" in relation to the matter, I feel more heartburn as I don't want more attention!! I kinda feel like given my position, that's only me being slightly paranoid and what have I got to lose? so I'll do it - send the letter to the MP, i've signed the petition - and I'll keep hoping and praying and thinking that at the end of the day, everything will surely be alright one way or another...

[Mrcurrey]

Dear all,

1) Contact your local mp email or phone.
2) Give them this link.
3) have them sign it if they see merit.

https://www.parliament.uk/edm/2017-19/1239

It's a tiny glimmer of hope. But I see and read alot of people worried to death yet not taking any action. Pull your socks up and snap out of the gloom. This is something VERY simple everyone can do.

Don't give up without a fight. Worst case for many is bankruptcy. It's not worth contemplating suicide over. Family is much more important and there is a life worth living. The love of a man woman or child is worth more than any money.