AML 2019 Loan Charge

[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

[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.

[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]

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]

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.

[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!

[AdamIT]

IHT on AML Loan

Hey, I thought i had settled with AML when I paid back over 100k about 6 months...I recently received a letter from my tax advisor that they have taken the liberty of adding IHT on the duties payable on the assumptions that the loans will be written off.

Does anyone if this is right?

My advisor is not aware of how the trust [s] were termed so cannot comment if this is right, but has anyone gone through this? is this a losing battle or something that can be countered?

[Willo76]

SP management -Questa - Knox Trust

Hi, I'm new to this forum and prompted as I have apparently had my head buried in the sand.

I have been with SP management since 2015-on-going. Never heard of the loan charge and deadline dates. I received an email form Knox House Trust recently saying they are making me aware of the LC so that I can take appropriate action. They advise that they have engaged with a specialist firm who can assist me with notifying HMRC of my liability, submitting a tax return and paying any tax due. No company name was given in the email, just a phone number. On calling the number I asked the name and was advised they are called Questa. Reading previous posts this appears to be an alternative for PTS ??? They advised me that they can help by paying the loan charge - 45-45% of loan amount or replacing the loan with a "replacement loan offer", the latter costing £295. Their subsequent fee will be 15% of settlement figure agreed. I also have to provide them with passport scan, proof of address....

Now I've read this forum and others, I realise I've been an idiot. I've not received any HMRC correspondence advising I'm under investigation nor an APN but assume this is only a matter of time.

I'm still self emp' with good work prospects for years to come in my line. I need to get this monkey off my back but as I'm not legal nor financial I have no idea what to do other than follow some of your previous advice and contact tax acountancy. I appear to have missed some of the HMRC deadlines to potentially aggravate my situation.

My current accountant is part of the the Knox/spm/AML etc group - Carnegie Knox. As I am still contracting I also need to get out of this method of renumeration but not sure if another accountant would give me a wide berth as I may be "toxic".

Any advice please !!??

[webberg]

Hi, I'm new to this forum and prompted as I have apparently had my head buried in the sand.

I asked the name and was advised they are called Questa. Reading previous posts this appears to be an alternative for PTS ??? They advised me that they can help by paying the loan charge - 45-45% of loan amount or replacing the loan with a "replacement loan offer", the latter costing £295. Their subsequent fee will be 15% of settlement figure agreed.

I'm under investigation nor an APN but assume this is only a matter of time.

My current accountant is part of the the Knox/spm/AML etc group - Carnegie Knox. As I am still contracting I also need to get out of this method of renumeration but not sure if another accountant would give me a wide berth as I may be "toxic".

Any advice please !!??

At least now you head is in the sunlight you can see clearly. That is a good start.

I've never heard of Questa. The PTS outfit has historic connections with AML (and Carnegie Knox) but Questa is a new one. There is nothing obvious with that name registered as a company in UK or the IOM (the usual suspects). That said, with AML often nothing is too obvious and they are these days a more diverse organisation and as such it would not surprise me to see a connection.

Have you asked them?

The "loan to replace a loan" type arrangement is - in my opinion - not going to remove the loan charge. We know that schemes involving this type of structure were doing the rounds pre April 5th this year and that opinions as to their effectiveness were mixed but weighted towards the "will not work" end of the scale.

I suggest therefore that taking a loan to pay the tax from an unknown source is hardly sensible. The suggestion that a fee of 15% of any settlement value is also interesting. The deadline for registering for that has passed and a settlement later will almost invariably see HMRC try to ramp up the value. If I was getting paid a percentage of a value set by HMRC I would be in no hurry to reduce it!

An APN is not going to be issued. You have no open years and the scheme was not disclosed.

You need to give notice - NOW - and leave the scheme.

You then need to consider the future. You may have more years contracting ahead of you, but if you work in the public sector, the end client is making a decision about your IR35 status and from April 2020 this will extend to include private sector end clients.

If you are confident that you will remain outside IR35 then any number of firms will take you on. Look at the banners around this forum.

If you are not confident this will happen, then you need to consider an umbrella - a good one and not one promising take home rates achievable only by tax avoidance -and again many advertsie here.

You perhaps need to speak with an adviser regarding your past use of a scheme. Your settlement options are now scarce for the reasons above, but perhaps not over. The alternative is to fight on via the Tribunals.

We can offer a discussion on a number of the above points - as can others who can be found in these threads.

We are WTT Consulting. There is an adviser called Phil Manley who posts here who was at DSW but who I think may have left to go it alone. I'm sure a Google search will find him. I notice also that a new kid on the block has arrived in the form of Carloyn Walsh of CWC Solutions. I don't know here or the guy who owns that company and am therefore neutral in terms of recommending or not.

We can all be found with a simple search.

We offer a free initial call. I cannot speak for the others.

[Dmac]

Exit and get advice

The above is all sensible advice Willo. Exit the scheme as soon as you can, and maybe consider going the Ltd Co route, or with a reputable umbrella (NOT one using a loan scheme of any description).

And get professional tax advice now - I have used WTT but there are others. Use one experienced in the 2019 Loan Charge otherwise you will pay whilst they get up to speed on this very bespoke area.

I would personally NOT use your "scheme accountant" any longer - get a new one. Then join LCAG, who are very supportive.

Good luck - you are certainly not alone in this!