How Settlement is Structured

[losingsleep]

Hi All,

I only contracted for a few months between 2017 and 2018 through my own limited company. I used an offshore/non-trust/employer/first party/"not caught" loan programme. I received a loan, a retainer equal to the tax free allowance, and was paid in dividends up to the allowable tax free amount.

After reading all of the helpful posts on here, it looks like, more likely than not, I probably could face liability (despite what the programme is telling me - "HMRC won't contact you" / "you aren't caught" etc).

Before and after my brief stint in contracting, I was and am a permanent employee, paying PAYE and NIC, so I am all paid up on that front.

The accountants on my limited company have been filed, corporation tax paid, VAT paid, and my limited company has been shut down. I should note that coproration tax paid was based on profits derived by taking my turnover less the amount that I paid the management company (for cost of sales), so the corporation tax was minimal. Dividends were taken to the 0% rate and declared on my 17/18 SA.

If I were to settle with HMRC, would I settle on behalf of my limited company (now shut down), and be able to arrive at liability as if I had paid limited company tax the traditional way (i.e., small salary, maximising dividends, paying NIC as appropriate). Or, as the only director / employee of the limited company, do the loans just automatically count as personal taxable income for either 2017/2018 if I settle or 2018/2019 if I take a loan charge? Am I able to take any deductions for expenses, etc. incurred while running the business, or is it literally just adding the loans to your SA and calculating the difference in tax and NIC (for both settlement and the loan charge).

If it's purely taxable income, my tax position is actually better (I think) if I take the loan charge (based on my dubious estimates). However, I DEFINITELY need TTP.

If you approach HMRC after disclosing loans before 30/9/19, does anyone know if they will be more flexible than the standard 12 months max for TTP (i.e., along the lines of settlement on a what you can absolutely afford basis), especially if you do so before it goes to DMB?

Also, does anyone know how the "loan question" will be worded on the 18/19 SA / online disclosure? I assume it will be broad, like "do you have a disguised remuneraiton loan" lol.

Thanks in advance - I know this is a highly untechnical explanation and set of questions, but I am not an accountant (so please be nice)!

[here4beer]

Hi All,

I only contracted for a few months between 2017 and 2018 through my own limited company. I used an offshore/non-trust/employer/first party/"not caught" loan programme. I received a loan, a retainer equal to the tax free allowance, and was paid in dividends up to the allowable tax free amount.

After reading all of the helpful posts on here, it looks like, more likely than not, I probably could face liability (despite what the programme is telling me - "HMRC won't contact you" / "you aren't caught" etc).

Before and after my brief stint in contracting, I was and am a permanent employee, paying PAYE and NIC, so I am all paid up on that front.

The accountants on my limited company have been filed, corporation tax paid, VAT paid, and my limited company has been shut down. I should note that coproration tax paid was based on profits derived by taking my turnover less the amount that I paid the management company (for cost of sales), so the corporation tax was minimal. Dividends were taken to the 0% rate and declared on my 17/18 SA.

If I were to settle with HMRC, would I settle on behalf of my limited company (now shut down), and be able to arrive at liability as if I had paid limited company tax the traditional way (i.e., small salary, maximising dividends, paying NIC as appropriate). Or, as the only director / employee of the limited company, do the loans just automatically count as personal taxable income for either 2017/2018 if I settle or 2018/2019 if I take a loan charge? Am I able to take any deductions for expenses, etc. incurred while running the business, or is it literally just adding the loans to your SA and calculating the difference in tax and NIC (for both settlement and the loan charge).

If it's purely taxable income, my tax position is actually better (I think) if I take the loan charge (based on my dubious estimates). However, I DEFINITELY need TTP.

If you approach HMRC after disclosing loans before 30/9/19, does anyone know if they will be more flexible than the standard 12 months max for TTP (i.e., along the lines of settlement on a what you can absolutely afford basis), especially if you do so before it goes to DMB?

Also, does anyone know how the "loan question" will be worded on the 18/19 SA / online disclosure? I assume it will be broad, like "do you have a disguised remuneraiton loan" lol.

Thanks in advance - I know this is a highly untechnical explanation and set of questions, but I am not an accountant (so please be nice)!

If you run a limited company, you get f*cked twice, as I'm finding out. HMRC only have to ask companies house to reopen your company, and they will.

As other companies have vanished without a trace, maybe you'll get lucky and fall into that group. I'd settle personally, and just see what happens with out limited company. If i knew "personal settlement" was different to "complete settlement" I wouldn't have bothered settling at all. To me, the difference in cost is almost double.

And no, they won't work a reduced liability based on the tax efficient way of dividends and pensions etc. Again, horrendous cnuts. Which makes paying the tax even harder to mentally deal with.

I know TTP goes to 5 years, might even be 7 in special circumstances. It's with a nice level of 4.25% interest though, lovely lovely.

I heard rumours Trusts will have to tell HMRC about the loans, however some countries don't hold public records - so Trusts are already being moved to protect those who aren't settling with HMRC. I won't list the countries here.

[dammit chloe]

If you run a limited company, you get f*cked twice, as I'm finding out. HMRC only have to ask companies house to reopen your company, and they will.

As other companies have vanished without a trace, maybe you'll get lucky and fall into that group. I'd settle personally, and just see what happens with out limited company. If i knew "personal settlement" was different to "complete settlement" I wouldn't have bothered settling at all. To me, the difference in cost is almost double.

And no, they won't work a reduced liability based on the tax efficient way of dividends and pensions etc. Again, horrendous cnuts. Which makes paying the tax even harder to mentally deal with.

I know TTP goes to 5 years, might even be 7 in special circumstances. It's with a nice level of 4.25% interest though, lovely lovely.

I heard rumours Trusts will have to tell HMRC about the loans, however some countries don't hold public records - so Trusts are already being moved to protect those who aren't settling with HMRC. I won't list the countries here.

They are not rumours, the majority of trusts ( where HMRC has clout ) are legally bound to report loans by September I think, even ones that no longer exist.

[here4beer]

They are not rumours, the majority of trusts ( where HMRC has clout ) are legally bound to report loans by September I think, even ones that no longer exist.

Yeah I've heard it on here, but not read it anywhere else. And that assumes the Trust doesn't move to another country where public records aren't kept. Which is what is happening as we speak...

[wilks]

They are not rumours, the majority of trusts ( where HMRC has clout ) are legally bound to report loans by September I think, even ones that no longer exist.

Majority is a vast overstatement. There are trustees in the UK that will do so as they are reputable firms and obligated under law. There are some in IOM etc that will also do so. Some already have done so. Thats about it. I would say minority.

[EBTContractor]

If i knew "personal settlement" was different to "complete settlement" I wouldn't have bothered settling at all. To me, the difference in cost is almost double.

What's this personal and complete settlement stuff about?

[here4beer]

What's this personal and complete settlement stuff about?

If you're a limited company, and you declare the loan as income, you pay the personal tax. However this settlement wont then include your ltd company liability, as this was involved too. So in my case I'm looking at almost the same again to settle my company liability.

As the amount is so much more, if I was made aware at the beginning - I wouldn't have bothered settling. I'd have fought HMRC.

[EBTContractor]

If you're a limited company, and you declare the loan as income, you pay the personal tax. However this settlement wont then include your ltd company liability, as this was involved too. So in my case I'm looking at almost the same again to settle my company liability.

As the amount is so much more, if I was made aware at the beginning - I wouldn't have bothered settling. I'd have fought HMRC.

Oh right so double up. HMRC knows and doesn't tell people. ******* disgusting.

Personally I'm not settling. They can go swivel.

[hudson]

That's well out of order from hmrc.

Just when you think you've settled. You think hmrc are done with you and you can stand up straight and pull your trousers back up, they come knocking for another go.

They are truly taking the p*. They never tell you in one go how f* you are because then you may think you are better off fighting it rather than settling. Instead they screw you over slowly.

[jazzyg]

So is there Double Taxation on the same sums of money? Lets say for an arrangement that you received 100K of loans. Now when you settle this 100k will be treated as your income and added to your income for relevant FY and taxed including NICs (Employer + Employee)

If HMRC again tax the amount from Limited Company then does it not become double taxation?