Trust help line email help!

[Socialsarah73]

Stupid question but starting to panic and just want this mess to end - Do i still need to register if I have fully disclosed income on my Self assessment 2016/2017 and have paid tax due.

[animallover]

Stupid question but starting to panic and just want this mess to end - Do i still need to register if I have fully disclosed income on my Self assessment 2016/2017 and have paid tax due.

Do you have any 'outstanding' loans?

[Socialsarah73]

No declared loan (income) on my SA as only involved in 2016 through 2 umbrellas although subsequent to filing date recieved a pd11 stating loan was an employment loan and amount (suspect this was their way of trying getting round loan charge) and then a statement to say they applied 3% interest on my loan! I was not earning huge sums of money (think nurses, SW etc) and just worried especially if they ask for the loan to be repaid or HMRC ask for more money. Wished I had found this site in 2016!!

[Coresme2]

So I received the email and sent through my identity docs and updated my home address to get the outstanding “loan” amount. I went through the different screens, clicking the button to signify that I had read each. I ticked the box on the final screen saying I wasn’t going to pay and that I’d already paid HMRC some time ago to settle all years some time ago and that I wanted to purchase a deed of release. I was not aware that it would cost 5% of the outstanding loan amount as this is not mentioned anywhere.

Should I be worried at this point? Obviously, common sense wise they were loaning my own money back to me, so this is nonsense, but with the retrospective changes in the law, this makes me slightly uneasy as it has the whiff of a scam about it.

[webberg]

Why are you buying a deed of release?

Who wants to see that?

If you are settling, HMRC say that they do not need to see anything and are happy to take your word for it.

[Loan Ranger]

So I received the email and sent through my identity docs and updated my home address to get the outstanding “loan” amount. I went through the different screens, clicking the button to signify that I had read each. I ticked the box on the final screen saying I wasn’t going to pay and that I’d already paid HMRC some time ago to settle all years some time ago and that I wanted to purchase a deed of release. I was not aware that it would cost 5% of the outstanding loan amount as this is not mentioned anywhere.

Should I be worried at this point? Obviously, common sense wise they were loaning my own money back to me, so this is nonsense, but with the retrospective changes in the law, this makes me slightly uneasy as it has the whiff of a scam about it.

Has anyone queried why they are charging such an exorbitant fee for what is, on the face of it, just a bit of admin? What are you getting for this 5%, other than a bit of paper?

If they are making veiled threats of recalling the loans if you don't cough up, then that has more than just a whiff of scam about it. It's more like extortion.

[Dmac]

Why are you buying a deed of release?

Who wants to see that?

If you are settling, HMRC say that they do not need to see anything and are happy to take your word for it.

Explain please - take your word for what? That you have requested the trust to write-off / cancel the loan, or that they have confirmed they will do so? What exactly do you need to say in the settlement doc on this?

[webberg]

Settlement of the whole position you are in comes in two parts.

Despite claiming to be able to exit you from "tax avoidance" HMRC can in fact only agree with you the tax position. They cannot influence whether or not the loan is written off or recalled.

Most tax settlements will include IHT. That tax position is impacted by whether or not the loan is written off. In the settlement calculation you are advised that if the loan is written off within (usually) 30 days, then the IHT is £x. This is included in the settlement price.

If you go to the lender (or whoever holds the loan now) and show them the settlement agreement, most will agree to write the loan off and give you a letter saying that. In our experience, some charge a nominal fee and certainly no client has paid more than a couple of hundred pounds.

If the lender will not write the loan off, then the IHT drops out of the settlement (the rest goes ahead) and as and when the loan is dealt with, IHT (or more IHT) may arise.

Where the loan is written off, you do not need to provide any evidence other than your own word that you have done this. Certainly you do not need an expensive piece of paper.

Unfortunately it appears that some parties have identified a way to charge fees for this activity and I'm sure some people have paid.

The pressure to pay the fee for the "write off" is usually expressed as a threat to recall the loan or a threat to make a DOTAS disclosure which allows HMRC to raise a tax bill. In other words, more pressure to settle but this time from not from HMRC.

Clearly your decision as to whether to buy the piece of paper or not. All I'm saying is that HMRC has told us that they do not need to see that piece of paper.

[starstruck]

Settlement of the whole position you are in comes in two parts.

Despite claiming to be able to exit you from "tax avoidance" HMRC can in fact only agree with you the tax position. They cannot influence whether or not the loan is written off or recalled.

Most tax settlements will include IHT. That tax position is impacted by whether or not the loan is written off. In the settlement calculation you are advised that if the loan is written off within (usually) 30 days, then the IHT is £x. This is included in the settlement price.

If you go to the lender (or whoever holds the loan now) and show them the settlement agreement, most will agree to write the loan off and give you a letter saying that. In our experience, some charge a nominal fee and certainly no client has paid more than a couple of hundred pounds.

If the lender will not write the loan off, then the IHT drops out of the settlement (the rest goes ahead) and as and when the loan is dealt with, IHT (or more IHT) may arise.

Where the loan is written off, you do not need to provide any evidence other than your own word that you have done this. Certainly you do not need an expensive piece of paper.

Unfortunately it appears that some parties have identified a way to charge fees for this activity and I'm sure some people have paid.

The pressure to pay the fee for the "write off" is usually expressed as a threat to recall the loan or a threat to make a DOTAS disclosure which allows HMRC to raise a tax bill. In other words, more pressure to settle but this time from not from HMRC.

Clearly your decision as to whether to buy the piece of paper or not. All I'm saying is that HMRC has told us that they do not need to see that piece of paper.

Have you attempted a settlement yet for a client where their loans were written off by the trustees BEFORE settlement? What happens to IHT then? There's been load of talk about write-offs within 30 days but I have yet so see a discussion anywhere regarding settlement when loads are already written off (I know loads of people in this category).

[webberg]

Have you attempted a settlement yet for a client where their loans were written off by the trustees BEFORE settlement? What happens to IHT then? There's been load of talk about write-offs within 30 days but I have yet so see a discussion anywhere regarding settlement when loads are already written off (I know loads of people in this category).

No we have not agreed such a settlement but we expect to in the next 2 to 4 weeks.

This is a potentially very difficult issue as the majority of such instances are connected with Foreign currency loans.

In this situation, the documented position is that a promoter gets paid in sterling from end client/agency and agrees to advance a loan in $exotic to the contractor.

The contractor, who probably has no facility to exchange $exotic for £ asks the promoter and/or the broker to swap back to £ and gets paid in £.

The loan is held by the lender in $exotic and depreciates against the £ like a runaway train.

Sometime later the $exotic is now worth £5 and is either "repaid" or written off.

There was a case heard at FTT which had a similar set of facts. There, the Judge indicated his concerns that the exchange from £ to $exotic and back again never happened and that would call into doubt if a loan ever existed. He did not quite say it was a sham, but it was close.

I think therefore that a careful examination of the facts and how the meet/vary from documents is needed.

I'm not saying more here as (again) we and HMRC differ in our opinions as to the outcome.