HMRC settlement Deadlines/delays and the LC

[dammit chloe]

If all your years are closed then you are making a "voluntary" settlement. I suppose in that case they might let you settle some years and not others. Are you thinking of doing this because doing it all under loan charge is more expensive?

Just about trying to manage things best I can in the precarious situation I am in.

[DavidD]

Not sure this is the best thread but wanted to let anyone who is interested know that I have been granted >8 years on my TTP arrangement. Now, I’m mulling it over as I think the LC May fall over (recognising there is still the underlying tax dispute) and I wonder if I can really afford the agreed monthly payments + lump sum.

[ChimpMaster]

Not sure this is the best thread but wanted to let anyone who is interested know that I have been granted >8 years on my TTP arrangement. Now, I’m mulling it over as I think the LC May fall over (recognising there is still the underlying tax dispute) and I wonder if I can really afford the agreed monthly payments + lump sum.

Open or closed years?

If closed, did HMRC change forward interest on your TTP arrangement? Because there have apparently been instances of them not charging interest on TTP if the years are closed.

[webberg]

Not sure this is the best thread but wanted to let anyone who is interested know that I have been granted >8 years on my TTP arrangement. Now, I’m mulling it over as I think the LC May fall over (recognising there is still the underlying tax dispute) and I wonder if I can really afford the agreed monthly payments + lump sum.

Think carefully.

Unless ALL of your years are closed (i.e. no enquiry), even if the loan charge fell away, you would remain liable to all years in which there is an unsettled enquiry.

[DavidD]

All my years are open.

My thinking, which may well be flawed, is this:

- I can’t see a material benefit of settling now, I am a higher rate tax payer in each of the years I have to pay and I am a higher rate tax payer last tax year (the year the loan charge is calculated).
- I am becoming more financially viable every day, so not settling right now allows me to get financially stronger for the day I do have to pay.
- The settlement ‘contract’ has a statement roughly to the effect that once I’ve signed it I will never try to get repaid, given the potential for LC to fail I do not want to sign this.
- If the LC does indeed ‘fall over’ I suspect that HMRC will initiate some sort of alternative or compromise, which may be beneficial (wishful thinking I’m sure). Of course they may well revert to the APN scenario.
- HMRC will need to institute TTP for the LC if they want to get the full amount of money they claim is due without bankrupting people.

Maybe I am missing something but I am struggling to see any substantial benefit of settling under the current terms? (recognising that it would be psychologically nice to draw a line!)

One quick question – does anyone know, very roughly, the amount of people who have a) settled, b) in the process of settling? And c) never even contacted HMRC about settling. The reason I ask is that HMRC have become much more efficient in dealing with me recently and I cynically think that this is because they are worried about the viability of the LC and want a quick settlement but also because they are only dealing with a small % of the people they expected?

[regron]

All my years are open.

My thinking, which may well be flawed, is this:

- I can’t see a material benefit of settling now, I am a higher rate tax payer in each of the years I have to pay and I am a higher rate tax payer last tax year (the year the loan charge is calculated).
- I am becoming more financially viable every day, so not settling right now allows me to get financially stronger for the day I do have to pay.
- The settlement ‘contract’ has a statement roughly to the effect that once I’ve signed it I will never try to get repaid, given the potential for LC to fail I do not want to sign this.
- If the LC does indeed ‘fall over’ I suspect that HMRC will initiate some sort of alternative or compromise, which may be beneficial (wishful thinking I’m sure). Of course they may well revert to the APN scenario.
- HMRC will need to institute TTP for the LC if they want to get the full amount of money they claim is due without bankrupting people.

Maybe I am missing something but I am struggling to see any substantial benefit of settling under the current terms? (recognising that it would be psychologically nice to draw a line!)

One quick question – does anyone know, very roughly, the amount of people who have a) settled, b) in the process of settling? And c) never even contacted HMRC about settling. The reason I ask is that HMRC have become much more efficient in dealing with me recently and I cynically think that this is because they are worried about the viability of the LC and want a quick settlement but also because they are only dealing with a small % of the people they expected?

With regards to your APN comment, they are still actively chasing these.

[webberg]

All my years are open.

My thinking, which may well be flawed, is this:

- I can’t see a material benefit of settling now, I am a higher rate tax payer in each of the years I have to pay and I am a higher rate tax payer last tax year (the year the loan charge is calculated). You mean that the financial cost of a settlement and the likely loan charge demands are roughly the same? If so, remember that you WILL need to agree the open years at some time - the loan charge is NEVER agreement - and until that happens, interest continues to accumulate. This will only stop upon agreement.
- I am becoming more financially viable every day, so not settling right now allows me to get financially stronger for the day I do have to pay. The loan charge - if due - falls for payment in 170 days. Will that make a difference? If the LC falls then you can expect HMRC to renew their interest in open years and press hard for settlement, knowing that interest continues to rack up.
- The settlement ‘contract’ has a statement roughly to the effect that once I’ve signed it I will never try to get repaid, given the potential for LC to fail I do not want to sign this. Fair enough but the ONLY connection between settlement and LC is that if you settle the LC will not apply. If you do not settle HMRC will say that the LC applies, charge you the tax and then take their own sweet time over agreeing the open years, because each day that goes by increases the interest due. So even if the LC falls, you may still need to pay if HMRC can win a case.
- If the LC does indeed ‘fall over’ I suspect that HMRC will initiate some sort of alternative or compromise, which may be beneficial (wishful thinking I’m sure). Of course they may well revert to the APN scenario. Perhaps
- HMRC will need to institute TTP for the LC if they want to get the full amount of money they claim is due without bankrupting people. Why? The APN time to pay is limited to 12 months, no negotiation, no discussion. Non payment results in the usual threats and referral to Magistrates Court being the nuclear option. Why would an undefended LC be any different?


One quick question – does anyone know, very roughly, the amount of people who have a) settled, around 5,000 b) in the process of settling? around 19,000 And c) never even contacted HMRC about settling no idea. The reason I ask is that HMRC have become much more efficient in dealing with me recently and I cynically think that this is because they are worried about the viability of the LC and want a quick settlement but also because they are only dealing with a small % of the people they expected? Perhaps. More likely I think is that they know a good proportion have not settled and they are therefore planning some draconian action which they justify to MPs by saying "we gave people every opportunity but they ignored us, so on thier heads be it".

I'm tempted to say that the above reasoning is justifying doing nothing and having no strategy.

Remember the settlement, LC and agreement of final position are all separate matters.

If you settle, everything stops. You get no advantage from a case being won in Court (nor any disadvantage) and no LC.

If you do not settle, HMRC says the LC is due. To prevent that becoming due you need an argument backed by litigation (Tribunal and/or Judicial Review - separate so don't confuse them) but you may also face being forced to pay the charge before your day in Court.

If you have not settled and the LC falls due, whether paid or not, you need to agree the liability for each open year. If it turns out that the amount paid under the LC is more than the tax due on those years, the difference is NOT REFUNDABLE.

I suggest therefore (because this is our strategy) that doing nothing and hoping for the best is not sensible.

[Iliketax]

If you do not settle HMRC will say that the LC applies, charge you the tax and then take their own sweet time over agreeing the open years, because each day that goes by increases the interest due

Can you explain why the bit in bold is right?

If you've paid tax under the loan charge equal to the tax due under the open years (and, as you say, the "financial cost of a settlement and the likely loan charge demands are roughly the same") why would interest continue to accrue after the loan charge tax has been paid?

I completely understand that if not all the loan charge tax is actually paid (or if your comment that the "financial cost of a settlement and the likely loan charge demands are roughly the same" is not right) then interest would continue on the shortfall. But not otherwise.

What am I missing?

[webberg]

Can you explain why the bit in bold is right?

If you've paid tax under the loan charge equal to the tax due under the open years (and, as you say, the "financial cost of a settlement and the likely loan charge demands are roughly the same") why would interest continue to accrue after the loan charge tax has been paid?

I completely understand that if not all the loan charge tax is actually paid (or if your comment that the "financial cost of a settlement and the likely loan charge demands are roughly the same" is not right) then interest would continue on the shortfall. But not otherwise.

What am I missing?

Nothing. I assumed (but did not say) that the LC arises but is not paid.

Perhaps not collected because of a JR and some form of relief order.

[Iliketax]

Nothing. I assumed (but did not say) that the LC arises but is not paid

Yes, that would make a big difference.