HMRC settlement Deadlines/delays and the LC

[Albert49]

Hi newbie here.

I submitted my details last September advising the figures to HMRC and radio silence since then! anyone else in the same boat?

Suggest you ring the CLSO2 HMRC number and confirm that they have your figures, if they say they do not you may need to provide evidence.

[MyxALot]

A little background.

I met the deadline last year and finally received my settlement pack in March. I queried the figures. It was fairly trivial but I felt that it was unfair to pay high rate tax when my total income that year was under the personal allowance. I was advised not to sign anything and wait for the modified figures.

I got a new letter saying it was my 'final chance to settle' yesterday. I had received no other letters since my query in March. With interest the new figure is larger than the original settlement and I also have a settlement schedule is terms that I am just unable to do. I find these letters very aggressive and threatening when the politicians are saying they are handling the loan charge 'sympathetically'.

I guess I am wondering whether there are others who are in this situation? I did call HMRC but it appears no one can actually discuss what terms are possible so I have sent an email into the abyss.
Is there anything to be done so I can know what the future looks like?

They're trying to force your hand into settling before the LC has a chance of being canned.

Classic sales technique. Don't buy their BS.

[Cath799]

Have you checked the calculation, or has someone checked it for you?
I am unclear what you mean by "I felt it was unfair to pay a high rate of tax when my total income for the year was under the personal allowance" Are you including the loan amounts for the year in your total income ? If you are then you should pay no tax for the year, if not, then as far as HMRC are concerned you should include it in your total taxable income for the year.

Yes indeed I was including the loan amounts. I essentially didn't work that year and HMRC did remove that amount but there was an increase in interest which more than replaced the tax removed so essentially I should not have queried the figures.

For what it is worth I have been using accountants but I can't say that it has helped either in the initial submission(I worked out and gave them the loan figures which they submitted) or in reducing how much I am required to pay. Nor does it seem that seem that there is any advantage in negotiation(though I know they are doing loads of us)

[Cath799]

They're trying to force your hand into settling before the LC has a chance of being canned.

Classic sales technique. Don't buy their BS.

One can hope. I also am rather reluctant to sign an agreement which states that I even if HMRC had the figures wrong or the law changes I cannot get a refund or change the agreement

[webberg]

One can hope. I also am rather reluctant to sign an agreement which states that I even if HMRC had the figures wrong or the law changes I cannot get a refund or change the agreement

Be very careful.

Your choice is settle or fight.

If you settle (i.e. accept HMRC's position even if you think it flawed) then you have a very fluid deadline which HMRC can - and have - used to withdraw the offer if they think you are not "serious".

You are correct that settlement means you can no longer benefit from a case won or change of law but equally you cannot be charged any extra (assuming you have been honest).

Once withdrawn, you are into "fight" mode.

The initial skirmish is with the loan charge. HMRC claim that you will be required to disclose loans outstanding and pay tax on them in January 2020.

To resist that HMRC claim, you need to have either chosen to believe that a "scheme to solve a scheme" works and that HMRC will accept that position - only likely after a long and bitter litigation - or you need to argue that the loan charge cannot apply to your circumstances. Again HMRC will not accept that the loan charge cannot apply and it will again produce a long and bitter debate that may well end in litigation.

Even if you win an argument on the loan charge or the law is removed, if you have years under enquiry, HMRC will continue to seek money from you once their enquiries have concluded.

Removing the loan charge will have no impact on that enquiry.

You therefore need a strategy to resist HMRC claims.

We have one - see the Big Group thread. We are aware that other advisers claim that a scheme to solve a scheme can also solve the underlying enquiry. I can only say that you should treat the claim with a suitable degree of caution and investigate it thoroughly including getting a second opinion from an unbiased source.

Not taking the settlement within the time permitted risks it being withdrawn. If that is your wish, then have a strategy other than "wait and see".

Especially however do not assume that the loan charge being removed is the end of the issue. If you are very fortunate and have no open enquiries, then the loan charge falling is a result.

Will the loan charge fall?

There are as many opinions as there are quills on a porcupine. Just bear in mind that you are in the hands of the politicians here and we all know how trustworthy they are.

[Cath799]

Be very careful.

Your choice is settle or fight.


There are as many opinions as there are quills on a porcupine. Just bear in mind that you are in the hands of the politicians here and we all know how trustworthy they are.

Hi
Thank you for your response.
First of all I am VERY keen to settle! And I will even sign away all rights to do so despite not being very happy about that. However my attempts so far have not been great.
When I received the HMRC letter last year I had not heard from them in 3 years. I hadn't worked in the UK for 4 years and was on early retirement. Indeed as I grappled with the French tax system I said to my husband 'At least UK tax is sorted'. How wrong could I be. The initial letter threw me into absolute panic. The 'help line' was only answered once in the many many times I tried to call it. Then it was by a man who said he wasn't at his desk and would call me back. Of course he didn't. All other times the help line auto disconnected!
So then I took to lurking on forums, finally chose a group, sweated over my records which luckily covered the period needed, sent those off to the accountant and my request to settle was submitted. I heard nothing until March. I quickly raised my legitimate query and heard NOTHING until early this week. It offered a 'final chance' and a settlement which would be extremely difficult to keep to and probably see me dependant on the state(something I have never been in my life) in old age.
So I phoned the 'help line' and I suppose at least now they answer. However I did not seem able to discuss options with the person at the end of the line. I asked for a 'technical call back'. Surprise, surprise I am still waiting. I have emailed both the accountants and HMRC in an attempt to see how I can progress the matter. I have a plan for what I think is a reasonable schedule of payments. I have no idea if it would be acceptable. So now I wait for an indeterminate time.
Unfortunately saying HMRC might think I am not 'serious' is not very comforting as I have little faith in either the politicians or justice.

[webberg]

In terms of settlement, an accountant or adviser is not able to negotiate. The terms are "take it or leave it". If you have been offered a better "deal" by an accountant, then ask them to base their fee on the saving.

[DavidD]

As much as I recognise this is a medieval tax raising process with dysfunctional collection. I cannot see how you can be made to settle when the figures are not correct or the terms are not properly clarified. If you are showing willing to settle and have provided all your paperwork transparently the onus to get the contract correct and complete should be on the other party (HMRC).

The figures in my own settlement pack were incorrect, I wrote a letter noting that I was keen to be part of the settlement process but could they correct the figures. I’m still waiting, but if in the meantime, I receive a letter stating it’s my last chance to settle I will refuse and tough it out.

Furthermore, the settlement pack (which I don’t have with me) talks about agreeing in the contract that I will ‘no longer avoid tax’ or words to that effect (Again, I will need to clarify this with HMRC – what exactly do they consider included – ISAs?, Pensions, Gifts?

HMRC need to recognise that this is a settlement process and they can’t just attempt to beat you down because they are under prepared, resourced etc.
This is probably naïve but I think pressurising people to settle when the contract and figures are not known to be correct is a step too far (as noted earlier in the thread this is a classic sales dirty trick known as the “ticking bomb”)

[BrilloPad]

I cannot see how you can be made to settle when the figures are not correct or the terms are not properly clarified.

HMRC need to recognise that this is a settlement process and they can’t just attempt to beat you down because they are under prepared, resourced etc.

This is probably naïve but I think pressurising people to settle when the contract and figures are not known to be correct is a step too far

I think you miss just how powerful HMRC are. They can virtually do what they want when they want. To challenge in specific cases takes years and very deep pockets.

I strongly advise getting an adviser.

[webberg]

As much as I recognise this is a medieval tax raising process with dysfunctional collection. I cannot see how you can be made to settle when the figures are not correct or the terms are not properly clarified. If you are showing willing to settle and have provided all your paperwork transparently the onus to get the contract correct and complete should be on the other party (HMRC).

The figures in my own settlement pack were incorrect, I wrote a letter noting that I was keen to be part of the settlement process but could they correct the figures. I’m still waiting, but if in the meantime, I receive a letter stating it’s my last chance to settle I will refuse and tough it out.

Furthermore, the settlement pack (which I don’t have with me) talks about agreeing in the contract that I will ‘no longer avoid tax’ or words to that effect (Again, I will need to clarify this with HMRC – what exactly do they consider included – ISAs?, Pensions, Gifts?

HMRC need to recognise that this is a settlement process and they can’t just attempt to beat you down because they are under prepared, resourced etc.
This is probably naïve but I think pressurising people to settle when the contract and figures are not known to be correct is a step too far (as noted earlier in the thread this is a classic sales dirty trick known as the “ticking bomb”)

Your sentiment is correct in the theoretical world of reasonable people but is sadly misinformed in the real world of HMRC "maximising revenue".

The problem begins with the word "settlement".

What you are offering HMRC is NOT settlement. Instead you are offering to pay tax based on HMRC's interpretation of the situation.

That interpretation may not be correct. If you think it is not, then you are under no obligation at all to reach settlement.

If you think it is incorrect, you can fight the enquiries and/or the loan charge, via a Tribunal. Your choice.

If you do accept the settlement process (voluntary), then you also accept that it is non statutory and that HMRC can - and very often does - operate it in a manner that is inconsistent and arbitrary. they have the power to withdraw the settlement pretty much at their own discretion.

HMRC is often accused of using their power to bully and coerce. Sometimes this is blatantly true and if it involves our clients we have routes to address this.

In the majority of instances however you have to realise that the people you deal with in HMRC probably know little about tax and instead work off a script. Go off script and the immediate consequence is delay and longer consequence, perhaps an accusation of not complying.

Also they have more work than they can cope with. Get a calculation and challenge it and the immediate consequence is that you go to the back of the queue. The longer consequence may be that you get timed out.

That's not a deliberate policy but rather a result of poor planning, poor quality of staff in HMRC, poor execution of the script and HMRC wanting to use the people currently on "settlement" elsewhere (probably IR35 status enquiry).

So by all means claim the moral high ground and look down upon those scrabbling in the mud to try to inch the process forward, but be sure you understand that the consequences of keeping your feet dry and your morals intact, may be missing out.