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AML 2019 Loan Charge

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    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...

    Comment


      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

      Comment


        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).

        Comment


          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.

          Comment


            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.

            Comment


              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.

              Comment


                Originally posted by QUODM View Post
                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?
                So let's say that the loan was made in 2008 and no enquiry was done and there was no deliberate concealment, etc. So HMRC can't enquire into the original loan.

                You now repay the loan and the trustee earmarks the cash for you (or some linked to you). That is a new thing that has happened, the earmarking. That's what creates the new employment income tax charge, that's what HMRC can look at afresh.

                Getting a bit tax techy, as I mentioned, the relief in s554R would not apply because it is you repaying the loan. But I'm not sure whether you are going a deeper level of techy tax here - if you are you'd also want to look at the transitional rules in para 57 Schedule 2 FA 2011.

                Comment


                  Originally posted by THISISWRONG View Post
                  Perhaps this is more related to EBT planning, where the trust and trustees can be transferred like other companies.
                  This is what I've been querying you on - how will you convince an IOM trust to transfer their business to some other trust? What incentive is there for them to do that?
                  …Maybe we ain’t that young anymore

                  Comment


                    Originally posted by Iliketax View Post
                    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.
                    I think you can blummin bank on it.

                    Repaying the loan would cost over twice as much as paying the tax, so why on earth would anyone do that unless they had an ulterior motive.

                    Comment


                      AML Loan Repayment SCHEME

                      Originally posted by WalterWhite View Post
                      Would be good if an AML user could get details of the loan repayment solution and let us see what they propose
                      So! I called Vanquish. Terrible conversation with a dodgy salesman who told me that their repayment option was via a "third party" who they could not name. Who would REPAY the loan to Knox House, who would in turn wipe the loan off their books as repaid. But where does the money go? It was my salary afterall? Well it's a fake repayment. The earner for them is the 5% of the loan total value that you pay in order to have this fraud committed.

                      I cant believe that AML are promoting this as an option to clients (ex clients) already caught up in the previous EBT scheme and penalties! I emailed AML to express the same and they havent yet replied.

                      As an aside, I asked AML to send me their records of the income tax sums that I'm under investigation for (since 2009 or whenever it was that HMRC started back taxing the scheme), and their figures dont match HMRCs. I've also asked them to send me the loan amounts and respective tax periods... still waiting on that.
                      Its a shambles!!!

                      The settlement option via PTS just seems like a tactic to have contractors offer up (declare) what they are liable for, thus removing the effort for HMRC when it comes to applying the loan charge. Suggest people affected join the Loan Charge Action Group, get Tweeting and lobby their MPs. We need everyone impacted to start shouting about this restrospective tax :-(

                      Comment

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