AML 2019 Loan Charge

[Sargey]

That analysis does not sound "right".

Where the scheme involved your own limited company, settlement terms (7th November 2017) operate in one of two ways.

Either the loan value is treated as remuneration paid by Own Co and tax, em'ee NIC and em'er NIC is applied as though it was a normal salary payment. Yes that attracts em'er NIC but it also preserves the CT deduction claimed by the company and the em'er NIC is perhaps a deduction in the year it is paid.

Or, the settlement is based on your personal situation and if you pay tax that is strictly due from the company then the company owes you money. This is slightly less expensive initially as there is no em'er NIC. However the company may have to give up a CT deduction in the year the loan was made.

In our client group, where the company is still extant, we tend to go for the first and if the company is extinct, the latter. Not always as circumstances dictate otherwise sometimes.

Paying a settlement personally and adding 80% for the company is way outside anything we have seen.

I have received my settlement paperwork (the first part with options, not the contract) and I'm now very confused by reading this post. I don't seem to have any options regarding limited company or personal as you mention above. Is this just because I was on a different scheme or have I done something wrong?

Also, I am doing all this myself with HMRC, without any accountants/ solicitors advice. Would it be beneficial to get advice or is it a case of I'll have to pay what HMRC say anyway so no point in paying for advice?

Thank you in advance!

[here4beer]

PM me and I'll check.

I can't attach a picture/pdf by message. I'll email if that's OK?

FYI, I'm happy the figures make sense - but the difference between personal Vs complete is just much higher than i thought. Ta.

[webberg]

example numbers
...
My personal settlement didn't include any NIC - just PAYE. This was £40k ish, so possibly artificially low?
My complete company and personal settlement, (inc employee and employer NIC, etc etc) added almost another £35k ish.

I'm using WTT, and have the full break down. Maybe I've misunderstood. Either way, my total figure is a LOT bigger than my personal figure.

PM me and I'll check.

[here4beer]

That analysis does not sound "right".

Where the scheme involved your own limited company, settlement terms (7th November 2017) operate in one of two ways.

Either the loan value is treated as remuneration paid by Own Co and tax, em'ee NIC and em'er NIC is applied as though it was a normal salary payment. Yes that attracts em'er NIC but it also preserves the CT deduction claimed by the company and the em'er NIC is perhaps a deduction in the year it is paid.

Or, the settlement is based on your personal situation and if you pay tax that is strictly due from the company then the company owes you money. This is slightly less expensive initially as there is no em'er NIC. However the company may have to give up a CT deduction in the year the loan was made.

In our client group, where the company is still extant, we tend to go for the first and if the company is extinct, the latter. Not always as circumstances dictate otherwise sometimes.

Paying a settlement personally and adding 80% for the company is way outside anything we have seen.

example numbers
...
My personal settlement didn't include any NIC - just PAYE. This was £40k ish, so possibly artificially low?
My complete company and personal settlement, (inc employee and employer NIC, etc etc) added almost another £35k ish.

I'm using WTT, and have the full break down. Maybe I've misunderstood. Either way, my total figure is a LOT bigger than my personal figure.

[webberg]

I ******** wish.

You also have to settle your limited company too (ie, having the corp tax readjusted). So, if personal settlement is £X,xxx, my 'complete' settlement is actually £X,xxx+80%

Horrendous.


I don't regret the scheme, I regret coming forwards to settle. My colleagues are still rolling in cash, while I'm having to sell my family home.

That analysis does not sound "right".

Where the scheme involved your own limited company, settlement terms (7th November 2017) operate in one of two ways.

Either the loan value is treated as remuneration paid by Own Co and tax, em'ee NIC and em'er NIC is applied as though it was a normal salary payment. Yes that attracts em'er NIC but it also preserves the CT deduction claimed by the company and the em'er NIC is perhaps a deduction in the year it is paid.

Or, the settlement is based on your personal situation and if you pay tax that is strictly due from the company then the company owes you money. This is slightly less expensive initially as there is no em'er NIC. However the company may have to give up a CT deduction in the year the loan was made.

In our client group, where the company is still extant, we tend to go for the first and if the company is extinct, the latter. Not always as circumstances dictate otherwise sometimes.

Paying a settlement personally and adding 80% for the company is way outside anything we have seen.

[Iter]

AML 2019 Loan Charge

I ve heard this in a few cases and think it’s been discussed in previous discussions.... if you are talking about settlement that is different to how the loan charge would work..... I too have recently settled and concur about the limited stuff. On about 60 k loans I had to pay personal and company taxes of about 29k, dividends were factored in so this made a difference when they recalculated SA etc. That also included interest

[dangermaus]

I ******** wish.

You also have to settle your limited company too (ie, having the corp tax readjusted). So, if personal settlement is £X,xxx, my 'complete' settlement is actually £X,xxx+80%

Horrendous.


I don't regret the scheme, I regret coming forwards to settle. My colleagues are still rolling in cash, while I'm having to sell my family home.

Surely you can’t be made to pay corporation tax on the same money you are being taxed on as if it were salary?!

That money isn’t profit if it’s classed as been paid and taxed as salary so shouldn’t incur a corporation tax charge...

Did you get professional advice before arranging settlement?

[here4beer]

The loan charge is meant to be tax on ‘outstanding loans’ [emoji848] Would this not be the amounts in theory then that you personally received and shown on payslips?

I ******** wish.

You also have to settle your limited company too (ie, having the corp tax readjusted). So, if personal settlement is £X,xxx, my 'complete' settlement is actually £X,xxx+80%

Horrendous.


I don't regret the scheme, I regret coming forwards to settle. My colleagues are still rolling in cash, while I'm having to sell my family home.

[Iter]

The loan charge is meant to be tax on ‘outstanding loans’ [emoji848] Would this not be the amounts in theory then that you personally received and shown on payslips?

[dangermaus]

What you have is HMRC's dogma and alleged "analysis" of the situation.

In HMRC land, the correct amount you are taxable on is that sum invoiced by your agent/intermediary, to the end client for your time and services.

From that amount, you have paid a fee and because that is a fee for a tax avoidance scheme, it is not tax deductible.

Ergo, you are due to pay tax as if you had received the full amount invoiced.

That analysis is flawed (in my opinion).

Rangers said that the income taxable upon the individual was the amount that the individual was entitled to "FROM THE EMPLOYER".

Last time I looked, the end client was not the employer (and if HMRC think they are, they why have they not sent a PAYE assessment to them?)

The employer was either your company or SP or some other intermediary.

If it was your company, that entity never had free use of the gross invoiced amount and cannot therefore have promised it to you as remuneration.

If it was SP, then their legal entitlement was to a fee for substantially the whole of the invoiced sum. Therefore they could (arguably should) be liable to PAYE on that as de facto employer or as a party acting in place of an employer. (We have seen HMRC issue notices of liability to such entities).

If it was an intermediary, then perhaps the rules in s 44 ITEPA should be called into play.

Whichever way you cut this however, the point remains that the amount paid in fees was never yours.

Thanks for clarifying Webberg

In my settlement offer from HMRC it shows tax and NIC calculated based on sums received personally rather than on gross amounts paid the the schemes in question. It seems the terms offered in settlement are much more favourable than coming clean in a current tax return. Strange