AML 2019 Loan Charge

[Willo76]

DOTAS

An APN can be issued only if the year is under enquiry AND the scheme was disclosed for DOTAS purposes.

Noting in your note indicates this is the case.

Hello Webberg, I would not know where to find a DOTAS.....

[webberg]

Hello Webberg, I would not know where to find a DOTAS.....

I'm not being unkind and I say with all respect that you need to invest a couple of days in getting up to speed with all of this.

DOTAS = disclosure of tax avoidance scheme.

In the period you were using the schemes, that was probably the obligation of the promoter.

The promoter tells HMRC about the scheme, gets a reference number (SRN) and tells each user that number to include on their tax return.

Check your tax returns.

[Willo76]

DOTAS

I'm not being unkind and I say with all respect that you need to invest a couple of days in getting up to speed with all of this.

DOTAS = disclosure of tax avoidance scheme.

In the period you were using the schemes, that was probably the obligation of the promoter.

The promoter tells HMRC about the scheme, gets a reference number (SRN) and tells each user that number to include on their tax return.

Check your tax returns.

Thanks webberg, I've been reading into DOTAS so thanks for the steer. I've been through my documents- SA & scheme contract and see absolutely no reference to the SRN. Not sure whether to be slightly relieved or very worried still...

[d70hef]

AML Settlement Questions

AML Loan Charge (please help with advice),

My situation with HMRC regarding loan charge started 1 year ago. I contacted them and completed a settlement pack, providing all of the amounts I received from the AML scheme over a 2.5 year period. My exposure was significant, and in an attempt to get the necessary funds available I released a significant amount of equity from my house.

1 year on I still have not settled with HMRC and they are extremely slow in responding. I have called the phone number at least 10 times over the last year, chasing them for updates which is probably stupid of me, but my aim has been to settle and forget about this whole situation. I have been dealing with HMRC direct rather than through my accountant. My issues:

1) I would like to re-distribute my earnings over the 3 tax years I was involved in the scheme. The amount of tax I am due to pay seems inflated because the accountant I employed during the time I was on the scheme, distributed my earnings in a tax efficient manner. This is no longer the case, now that I am required to pay tax on AML payments, and therefore I have asked HMRC if I can re-distribute earnings over the 3 tax years. Does anyone have experience of this, I have had no response from HMRC.
2) The latest settlement figure offered to me from HMRC in April this year includes a IHT payment of roughly £10k or (5%). The wording around this is very vague, and they even suggest I get in touch with my trust provider to determine whether IHT is applicable. I attempted to do this and was referred to a company called PTS Ltd but their advice was inconclusive (ie they are in discussions with HMRC as these schemes always are). I find this situation wholly unacceptable, in that HMRC are advising me to get in touch with the people who got me into this scheme in the first place to provide advice. It feels a bit like I am being asked to go back to the organisation that got me into this situation, rather than HMRC providing me any definitive advice. Again does anyone have experience with IHT and whether this is applicable.
3) Finally, the total figure I am being asked to pay as a percentage of the payments I received is as follows (Income tax = 39.89%, NI = 5.10%, Interest = 3.70%, IHT = 5.19%). The total bill is therefore 53.88% of the loan amount. Considering that the ‘loan charge’ legislation suggests that you pay the total of your loan as a lump sum received in 2018/2019 to the maximum value of 45%, it would seem HMRC are suggesting I should pay more through voluntary restitution. Again, I have asked this question to HMRC, would it not be in my interest to just accept the loan charge and pay 45%, which is £8.8% cheaper than their settlement offer. Does anyone else have experience of this? Does the loan charge negate the interest and IHT payment, thereby making it a lot cheaper?

Help appreciated.

[dangermaus]

Has anybody gotten to the stage where they have agreed settlement with HMRC and also managed to get their loans with Knox House Trust written off?

[webberg]

AML Loan Charge (please help with advice),

My situation with HMRC ...

. My issues:

1) I would like to re-distribute my earnings over the 3 tax years I was involved in the scheme ... therefore I have asked HMRC if I can re-distribute earnings over the 3 tax years. Does anyone have experience of this, I have had no response from HMRC. Not a hope I'm afraid. You cannot rewrite history.
2) The latest settlement figure offered to me from HMRC in April this year includes a IHT payment of roughly £10k or (5%). The wording around this is very vague, and they even suggest I get in touch with my trust provider to determine whether IHT is applicable. Nobody knows if IHT is due and if you elect not to have the loans written off, there is no immediate IHT charge. I find this situation wholly unacceptable, join the club
3) Finally, the total figure I am being asked to pay as a percentage of the payments I received is as follows (Income tax = 39.89%, NI = 5.10%, Interest = 3.70%, IHT = 5.19%). The total bill is therefore 53.88% of the loan amount. Considering that the ‘loan charge’ legislation suggests that you pay the total of your loan as a lump sum received in 2018/2019 to the maximum value of 45%, it would seem HMRC are suggesting I should pay more through voluntary restitution. Again, I have asked this question to HMRC, would it not be in my interest to just accept the loan charge and pay 45%, which is £8.8% cheaper than their settlement offer. Does anyone else have experience of this? Does the loan charge negate the interest and IHT payment, thereby making it a lot cheaper? No.

Help appreciated.

re the final point.

Paying the loan charge is NOT settling.

If you have years still under enquiry, you will have to agree those at some point and if they remain in time, you will be paying tax, NIC, interest etc on those.

So the reduction in the gross via the loan charge is temporary at best.

[stonehenge]

3) Finally, the total figure I am being asked to pay as a percentage of the payments I received is as follows (Income tax = 39.89%, NI = 5.10%, Interest = 3.70%, IHT = 5.19%). The total bill is therefore 53.88% of the loan amount.

Are you being charged NI because it was a self-employed scheme?

You could pay the loan charge but, if at some point in the future HMRC defeat the scheme in court, they can come back to you for the shortfall. As long as you are aware of this possibility then there's no harm in paying the charge instead of settling.

[webberg]

. As long as you are aware of this possibility then there's no harm in paying the charge instead of settling.

No.

The loan charge is not something to do "instead" of settling.

If you pay the loan charge, you MUST still agree the open years.

[stonehenge]

No.

The loan charge is not something to do "instead" of settling.

If you pay the loan charge, you MUST still agree the open years.

Maybe, eventually, whenever.

If you seriously believe that HMRC pursues all open cases through to closure, then you obviously don't know what I know.

[webberg]

Maybe, eventually, whenever.

If you seriously believe that HMRC pursues all open cases through to closure, then you obviously don't know what I know.

Clearly I don't.

Clearly all I know is what the legislation says.

If you can point me at any public statement or material that says I am wrong, I will gladly eat humble pie.