AML 2019 Loan Charge

[ShockedConfused]

In the same boat

Hi all

Thank you for all your great posts, all 86 pages of them, took a long time to get through them all.
AML/Carnegie Knox/SmartPAY/SP-MGT

I joined AML through smartpay first in mid 2015 , as the company as i was joining didn't accept sole trader, so colleague recommend an accountant who recommend AML, I was only in this role 3 months and then job changed and a forced lay off and got transferred over to the AML scheme, which was till late 2016, at this point i was not happy with them and they wanted to transfer me over to SP management. so i left.

i was sold on the scheme as a lot of you have spoken about not having to do the paper work and invoicing, not having to worry about expenses and they would take care of the tax side of things, made life sound a lot easier. little did i know i wish i had just gone as a ltd company at the start.
would have cut out a lot of worried nights.

I got my first letter from HMRC in Late 2016 showing concerns in smartpay.

i did my usual SA for 2016 and didnt worry. as they where not asking for anything more.

come 2018 jan had a letter from hmrc reviewing my years 2015-16. Once this had been review they asked if i wanted to have any other years coincided.

[stibbok]

Consultation

Got this in my inbox today:

Contractors asked to give evidence on Loan Charge 2019

Contractors caught by April’s disguised remuneration rules are being called by the Loan Charge All Party Parliamentary Group to come forward to give evidence of their experience.

Very tight deadline - Monday, hoping we can get LOADS of responses so they understand the impact.

[webberg]

I'm in a similar position with AML. I did actually engage to repay the loans (a process I started nearly 3y ago) as I have a clear clause in my loan contract (with KHT) that I can repay the loan by giving 2 business days notice).

Both AML/KHT repeatedly ignored this and fobbed me off and I have long email evidence that I have been in conversation for 3y and they had brushed me off on this.
Seems to me to be a clear breach of my contractual terms for loan repayment? Is there some way I can get them on breach of contract here and regard the loans voided (even if I have to pay loan charge to HMRC?) so that I don't essentially have to pay any more fees to AML/KHT

Is this something Big Group helps with if I joined?

Big Group is about settling/litigating the tax position.

However, in response to many requests, we now have a legal capability and we would certainly look at the situation and let you have our thoughts. If we could help, then we will subjecting to agreeing a fair fee.

[QUODM]

AML/KHT breaking terms of loan contract

I'm in a similar position with AML. I did actually engage to repay the loans (a process I started nearly 3y ago) as I have a clear clause in my loan contract (with KHT) that I can repay the loan by giving 2 business days notice).

Both AML/KHT repeatedly ignored this and fobbed me off and I have long email evidence that I have been in conversation for 3y and they had brushed me off on this.
Seems to me to be a clear breach of my contractual terms for loan repayment? Is there some way I can get them on breach of contract here and regard the loans voided (even if I have to pay loan charge to HMRC?) so that I don't essentially have to pay any more fees to AML/KHT

Is this something Big Group helps with if I joined?

[webberg]

Is it possible to pay off a percentage? I thought it was all or nothing?

I have no idea.

The ability to repay/write off a loan in part lies in the terms of the loan and relationship between lender and borrower.

My post was about the tax consequences, not the commercial or legal.

[Ltdoptions]

I'm assuming you mean to ask if a write off post or as part of a settlement attracts the write off charge in section 554C?

No it does not.

Part of the settlement terms say it does not apply.

However a write off PRIOR to agreement on settlement, especially now that the settlement may fall into the 2019/20 tax year, risks a confusing scenario and the (hopefully faint) possibility of paying tax on the write off AND the settlement.

You would have to hope that common sense says that if you are foolish enough to write off in 18/19 but settle in 19/20, then the earlier tax would be a credit against the settlement. However I just don't see that in legislation of HMRC statements and frankly, I don't trust HMRC.

Agreed. Even a 1% risk of them 'legitimately' double taxing is not worth it given their clear Maximise Revenues policy.

[Ltdoptions]

A loan write off is taxable.

Paying a tax charge on a write off will reduce the value of the "relevant event" for the purposes of the loan charge.

If therefore you wrote off say 90% of the loan, a wrote off charge is on that amount and the loan charge would capture 10% as the loan has not been repaid in money.

Is it possible to pay off a percentage? I thought it was all or nothing?

[webberg]

OK - is it different if your write-off request is on the bank of settlement with HMRC? I am hearing that some trustees will only agree write-offs if the individual has settled.

I'm assuming you mean to ask if a write off post or as part of a settlement attracts the write off charge in section 554C?

No it does not.

Part of the settlement terms say it does not apply.

However a write off PRIOR to agreement on settlement, especially now that the settlement may fall into the 2019/20 tax year, risks a confusing scenario and the (hopefully faint) possibility of paying tax on the write off AND the settlement.

You would have to hope that common sense says that if you are foolish enough to write off in 18/19 but settle in 19/20, then the earlier tax would be a credit against the settlement. However I just don't see that in legislation of HMRC statements and frankly, I don't trust HMRC.

[Dmac]

A loan write off is taxable.

Paying a tax charge on a write off will reduce the value of the "relevant event" for the purposes of the loan charge.

If therefore you wrote off say 90% of the loan, a wrote off charge is on that amount and the loan charge would capture 10% as the loan has not been repaid in money.

OK - is it different if your write-off request is on the bank of settlement with HMRC? I am hearing that some trustees will only agree write-offs if the individual has settled.

[webberg]

I have spoken to Knox House Trust Limited about releasing the loan(s). They said they would consider it, but I don't think this exonerates you from the loan charge. The release still may incur a "tax event".
Please correct me if I am wrong in my assumption.

A loan write off is taxable.

Paying a tax charge on a write off will reduce the value of the "relevant event" for the purposes of the loan charge.

If therefore you wrote off say 90% of the loan, a wrote off charge is on that amount and the loan charge would capture 10% as the loan has not been repaid in money.