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[Ozbird]

That is incorrect.

A loan written off prior to 5th April, WILL reduce the loan charge but only because it creates a charge of its own.

Hi Webberg, I have written evidence from HMRC stating that if I get the loan paid off before 5th April 2019 and do not settle then I will still have to pay the loan charge as well as the tax and interest due on the original loans. Happy to send this to you but not to publish on an open forum.

[webberg]

Hi Webberg, I have written evidence from HMRC stating that if I get the loan paid off before 5th April 2019 and do not settle then I will still have to pay the loan charge as well as the tax and interest due on the original loans. Happy to send this to you but not to publish on an open forum.

Are we talking about the same thing?

My post was about a loan being "written off", i.e. the lender agreeing to give up their rights and obligations against the borrower.

That is a taxable event by reason of section 554C ITEPA.

You are suggesting that the loan is "paid off", which is a transfer of real money (in order to meet the terms of para 3 Sch 11 F(No 2) A 2017, and that will exempt you from the loan charge.

Very different transactions.

[Ozbird]

Are we talking about the same thing?

My post was about a loan being "written off", i.e. the lender agreeing to give up their rights and obligations against the borrower.

That is a taxable event by reason of section 554C ITEPA.

You are suggesting that the loan is "paid off", which is a transfer of real money (in order to meet the terms of para 3 Sch 11 F(No 2) A 2017, and that will exempt you from the loan charge.

Very different transactions.

I'm talking about the loan being written off. I asked HMRC that specific question and their reply was that I would still have to pay the loan charge as well as tax on the year in question 05/06 plus interest. I think they are wrong. I know little about tax law but what they have told me this goes against what have seen posted on these forums.

[webberg]

I'm talking about the loan being written off. I asked HMRC that specific question and their reply was that I would still have to pay the loan charge as well as tax on the year in question 05/06 plus interest. I think they are wrong. I know little about tax law but what they have told me this goes against what have seen posted on these forums.

There are two points here.

A loan write off (removal of obligations with no money changing hands) is taxable - section 554C ITEPA. If HMRC has said something different, they are incorrect.

I suspect that the officer was following the latest propaganda fact sheet issued to them designed to scare and threaten enough to force settlement.

This is because a very strict and literal interpretation of law says that the write off charge applies AND the loan charge, even if the latter is reduced by the former. So a charge could arise, even if it was NIL.

Second a charge is going to arise in 2005/06 in due course. That might be anywhere from NIL to where it is now to a higher value, depending on circumstances.

The loan charge DOES NOT mean that the earlier liability or enquiry disappears.

[passerby]

maybe Ozbird is referring to slightly different situation (similar to mine)

All years closed, loans received more than a decade ago and all written off long time ago. (some while not UK resident)

In this case the loan charge applies as well.

[Otunbafis]

There are two points here.

A loan write off (removal of obligations with no money changing hands) is taxable - section 554C ITEPA. If HMRC has said something different, they are incorrect.

I suspect that the officer was following the latest propaganda fact sheet issued to them designed to scare and threaten enough to force settlement.

This is because a very strict and literal interpretation of law says that the write off charge applies AND the loan charge, even if the latter is reduced by the former. So a charge could arise, even if it was NIL.

Second a charge is going to arise in 2005/06 in due course. That might be anywhere from NIL to where it is now to a higher value, depending on circumstances.

The loan charge DOES NOT mean that the earlier liability or enquiry disappears.

Hi Webberg,

Where do you think I stand or my chances. I already sent all my details just to get the loan amount and see what they have to offer. Now I got a DOR/DOE agreements asking me to Print and Sign the doc and to leave the date at the top of page 1 blank, make a payment - section C says "The Repayment Amount is calculated as 5% of the Outstanding Amount being £1xx0.x0

I got a text message from them just now reminding me of submiting the doc/payment and it read does "Just a friendly, automated reminder. We haven't had your signed deeds or payment. If you haven't sent them yet, please get them to us by Friday. Then the trustees can sign before 5th of April. - DOR."

I can send you the doc all privately if you want me and get a better advise, I'm still not comfortable paying them as someone I know with another scheme got DOR/DOE free from trustee

Thanks and Looking forward to your reply

[webberg]

maybe Ozbird is referring to slightly different situation (similar to mine)

All years closed, loans received more than a decade ago and all written off long time ago. (some while not UK resident)

In this case the loan charge applies as well.

A loan written off, even if many years ago and regardless of the tax resident status of the borrower, does NOT remove the loan charge.

The amount brought into account for loan charge purposes is defined in the legislation as being the original sterling amount (or equivalent) less repayments made in money.

Other forms of reducing the legal obligation to repay money, are not recognised.

[contractDudeUK]

maybe Ozbird is referring to slightly different situation (similar to mine)

All years closed, loans received more than a decade ago and all written off long time ago. (some while not UK resident)

In this case the loan charge applies as well.

i wouldnt have though so.

in the same boat as you are, i have cleared everything with hmrc about 7 years ago.

[Ozbird]

maybe Ozbird is referring to slightly different situation (similar to mine)

All years closed, loans received more than a decade ago and all written off long time ago. (some while not UK resident)

In this case the loan charge applies as well.

I haven't had anything written off yet and I'm still considering options to write off or not. I was asking HMRC questions on different scenarios so I could establish the dates of the tax arising so I could work out which option was best. I have to consider the Oz situation that they may see the loan write off as liable to tax on my annual income here in Oz, but depending on the option I take the payment to HMRC may be considered in a different year and I therefore may not be given a credit in Oz from UK paid tax. Sucks doesn't it. tax in UK tax in Oz, settlement doesn't mean settlement, HMRC can come back and have another bite of the cherry, scumbag scheme promoters can call in the loan. All from something stupid that I was briefly involved in 14 years ago.

[webberg]

Hi Webberg,

Where do you think I stand or my chances.

I have no view as I've not examined or explored the process and have had no contact with THL.