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AML 2019 Loan Charge

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  • Iliketax
    replied
    Originally posted by QUODM View Post
    I assume this is a typo and you meant March 2019 as in just before the April 2019 deadline? (in this example we now mean an ear marking charge occurs (if paid today) in May 2018?
    Ooops. Yes, I meant March 2019.

    So if you repay today and the trustee earmarks it then the tax point is today.

    Originally posted by QUODM View Post
    I understand they will want to know but the legislation says what people will have to declare in terms of these loans and none of this is on it. How will they justify this extra info?

    Thanks
    The April 2019 loan charge legislation has specific reporting rules and you are right those questions are not in them. But as I have said, I would expect that HMRC to enquire into your 2018/19 tax return if you say you have repaid the loan as (for a contractor) that is an economically strange thing to do. When HMRC enquire into tax returns they can ask whatever questions that are relevant to try to get evidence that the tax return is correct. The ones I wrote down are just a few that I would expect them to want to ask.

    Leave a comment:


  • THISISWRONG
    replied
    Originally posted by WTFH View Post
    OK, so why did you leave out the other options?
    You've said:

    The article says:


    The article does not mention anything about moving the loan to other trustees. Can you explain how that would work?
    Are you suggesting that you pay back KHT £50k, then you ask them to launder that £50k from offshore to a UK based trust without incurring costs/taxes, then you coincidentally being involved in that trust because, for some reason, you think you have a right to the money?
    I'm really confused by what you want to do and how you think it would work. Have you spoken to any tax advisors about it, or where did you get the idea from?
    I left out the other options, because I felt they had been well covered in most other posts, but hardly anybody talking about repaying.

    Yes, I have spoken with tax advisors about repaying. As I understanding it (which I think the article confirms) repayment is an option, and in no way requires any laundering of money from offshore to onshore - no idea where that has come from.
    Perhaps this is more related to EBT planning, where the trust and trustees can be transferred like other companies.

    Leave a comment:


  • Loan Ranger
    replied
    Originally posted by mr_786 View Post
    Thanks for the PDF document. its very useful.

    I am slightly unsure about protected vs unprotected years. Lets say, I have loan taken in 2014/2015, 2015/2016 and 2016/2017. i then wait until LC19 and then declare all of my loan amounts. Then I pay the tax on the loan amount.. In my case, what are the protected & unprotected years.

    I dont have any investigations by HMRC for any years to date...
    For 2014/15, HMRC have 12 months after filing tax return to open an enquiry. They've missed this window.
    However, they then have 4 years after the end of the tax year (5/4/15) to raise a discovery assessment ie. they've got until 5/4/19.

    So, even if HMRC haven't investigated any of your years yet, they still have time to protect them.

    For the LC, you have to declare your loans between 6/4/19 and 30/9/19. If HMRC still haven't investigated by the time you declare, they would be out of time to protect 2014/15 but not for 2015/16 and 2016/17.

    Leave a comment:


  • Albert49
    replied
    Protected Years

    Mr_786, as per your earlier post:

    4. With settlement option, would HMRC charge interest on the tax liability?
    If you used a DR scheme you will need to pay late payment interest for any years where HMRC has an open enquiry into your tax affairs, is within time to open one,


    I believe all of your years are within the time for HMRC to open an enquiry and are therefore Protected (also known as 'Open' years), however the Loan charge makes no distinction between Protected (Open) and Non Protected (Closed) years, but is based simply on the sum of the loan amounts for all years. However it is not necessarily the end of the matter, HMRC can still keep these years open and chase you for NI and interest for these years at a later date.

    Settlement (CLSO2) , treats Protected (interest charged) and Unprotected (no interest charged ) years differently, it is the end of the matter, but it does include interest for Protected years and NI (if it was a self employed scheme).

    Leave a comment:


  • QUODM
    replied
    Repaying with cash

    Thanks for replies. I'm not on this forum every day so sorry for late reply.
    Cpl more Q on your points below sticking with the example of a loan taken out pre 2011 repaid in full (in cash/mortgage) now (2018) before April 2019

    Originally posted by Iliketax View Post
    Just to be clear that although the April 2019 loan charge does not apply, that does not stop any other charging provisions applying (like the normal disguised remuneration rules).
    ...
    Those DR rules couldn't now apply to an old loan out of scope for an enquiry (pre 2011)? You mean if you have an open investigation they try some other way though? But there is no other way other than an open investigation and they can't open an enquiry here if there is no loan charge can they? How?

    >>But you are suggesting that since the funds are 'earmarked' by trustee another charge will occur (not the loan charge). When will this occur?
    >> On April 2019 or when you first took the loan from the trust?
    Originally posted by Iliketax View Post

    Yes. When the trustee's actually do the earmarking (e.g. when they go "wow, we've got some cash from QUODM. We promised that we would look after it for her") that is itself a relevant step (s554B ITEPA).

    Again just to be clear, this earmarking tax charge is based on someone thinking about doing something in the future (even if they are not sure about what, when or how they will do it).


    As above, probably immediately after the loan is repaid (e.g. March 2009 if you want to make sure that the banking system doesn't do a TSB).
    I assume this is a typo and you meant March 2019 as in just before the April 2019 deadline? (in this example we now mean an ear marking charge occurs (if paid today) in May 2018?

    Originally posted by Iliketax View Post

    If I was HMRC (and I'm not) I would expect a letter to be sent to everyone who says they've repaid their loans enquiring in to their tax return, asking (i) are you sure that what you put on your tax return and loan report and complete, (ii) evidence that you have repaid the loan (e.g. something from the trustee), (iii) evidence you've repaid the loan in money (e.g. bank statement), (iv) evidence of where the cash came from (e.g. mortgage from a bank that you found yourself and on exactly the same terms as a member of the public at large could get vs loan on other terms), (v) what has happened to the cash after it has been repaid, (vi) what future benefits you or people linked with you might get in the future, (vi) copies of all documents or communications you had with the trustee discussing the repayment of the loan and what may happen to it in the future, (vii) what you have done about IHT (e.g. entry charge, ten year charge, exit charge), (viii) what advice you received in relation to IHT (from someone who is not an interested person), and (ix) the what advice you received in relation to any loans made in the requirement to correct period (from someone who is not an interested person).
    I understand they will want to know but the legislation says what people will have to declare in terms of these loans and none of this is on it. How will they justify this extra info?

    Thanks

    Leave a comment:


  • mr_786
    replied
    Good Stuff!!

    Originally posted by Loan Ranger View Post
    There is no interest with loan charge.

    Download the PDF. It covers interest, settlement etc.
    https://forums.contractoruk.com/hmrc...-guide-v5.html
    Thanks for the PDF document. its very useful.

    I am slightly unsure about protected vs unprotected years. Lets say, I have loan taken in 2014/2015, 2015/2016 and 2016/2017. i then wait until LC19 and then declare all of my loan amounts. Then I pay the tax on the loan amount.. In my case, what are the protected & unprotected years.

    I dont have any investigations by HMRC for any years to date...

    Leave a comment:


  • Loan Ranger
    replied
    Originally posted by mr_786 View Post
    Based on question 4, If I am going to be charged interest, then what is the point of going for settlement option. In my case, the tax liablity will be less if I wait until 2019 - given HMRC are going to charge interest regardless of settlement or loan charge..
    There is no interest with loan charge.

    Download the PDF. It covers interest, settlement etc.
    https://forums.contractoruk.com/hmrc...-guide-v5.html

    Leave a comment:


  • mr_786
    replied
    Twitter #2019LoanCharge

    For those, who use twitter, follow #2019LoanCharge and raise your voice there too..

    I have also contacted (via twitter) to my local MP...i think this is the only way, we can get a miracle done (if at all)..

    Leave a comment:


  • mr_786
    replied
    Settlement Or Loan Charge

    I had the below correspondence with HMRC directly: I asked 4 questions .


    1. Does this legislation impact loans taken before 2019?
    Yes. The 2019 loan charge will apply to disguised remuneration (DR) loans made on or after 6 April 1999 and still outstanding on 5 April 2019.

    2. If yes, how many years in the past, one will have to report loans?
    You will need to report all DR loans made on or after 6 April 1999.

    3. If one decides to settle it with HMRC before April 2019, how many years will be given to pay off the tax liability? Assuming no massive cash reserves...
    If you will have difficulty in paying the full amount on time, HMRC can help by spreading payments over a number of years. There are no defined minimum or maximum time periods for payment arrangements. We will:

    · take into account any changes in your circumstances and discuss options to make sure we manage your case in the best way
    · always take a realistic look at your income, assets and essential outgoings, alongside what you owe and any other debts
    · always consider how much you’re able to pay, and over what period
    · expect you to pay the outstanding amount in the fastest possible time

    To discuss your options, please contact us as soon as possible on 03000 534 226. We’ll talk with you about your circumstances and work with you to resolve your tax matters in the best way.

    4. With settlement option, would HMRC charge interest on the tax liability?
    Yes. If you used a DR scheme you will need to pay late payment interest for any years where HMRC has an open enquiry into your tax affairs, is within time to open one, or an assessment is in place. The terms of our Litigation and Settlement Strategy mean we are unable to waive interest or accept settlement for a lesser amount than is due under the law.

    Based on question 4, If I am going to be charged interest, then what is the point of going for settlement option. In my case, the tax liablity will be less if I wait until 2019 - given HMRC are going to charge interest regardless of settlement or loan charge..

    Can someone shed some light? Or Someone who has got any settlement figures back from HMRC? Did their calculations included interest?

    Also sounds like that they are prepared to sell your assets if needed....I feel sick seriously, never thought something like this can happen in UK ....
    Last edited by mr_786; 14 May 2018, 19:09.

    Leave a comment:


  • Vincenth1
    replied
    Daily Telegraph

    Originally posted by QCApproved View Post
    Good article in the Daily Telegraph about the pernicious, and clearly retrospective, delayed tax on hard working folk

    aka "The Loan Charge"
    Yes a good article
    "Immoral HMRC retrospective taxation of contractors"
    Stephen Lloyd's (Lib Dem MP for Eastbourne) parliamentary motion has cross-bench support from Labour & DUP MPs. His motion is that retrospectively taxing something that was technically allowed at the time is unfair and should not apply to those who entered into schemes before the Finance Bill gained royal assent last year.
    I like many others was led into the arrangement by my accountant.
    A tax consultant also believes that this is "taxing individuals retrospectively, which would be illegal and the protocol is that this should only be retrospective in exceptional circumstances."
    Although HMRC has the power to fine and recover any fees earned by enablers of tax avoidance, I haven't seen any sign of this ...
    I'm thinking of writing to Stephen ... Don't hold out much hope with my local MP ...

    Leave a comment:

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