Tribunal and beyond

[starstruck]

Just to clarify for people with closed years, it is my understanding that FN (and APNs) cannot be applied to closed years.

[DealorNoDeal]

Just to clarify for people with closed years, it is my understanding that FN (and APNs) cannot be applied to closed years.

Correct.

And before anyone starts panicking about HMRC using Boyle to issue FNs. They can't, they're out of time. I wouldn't have mentioned it if this was still a possibility (don't want to give them any ideas!).

[webberg]

It's a condition for issuing an APN that there is an open enquiry.

Given the loss of the loan charge as a catch all (and subversion of the rule of law and denial of access to justice) I'm fully expecting the promised HMRC unit will be applying a creative approach to time limits in the near future.

If this is the case (and please do not panic because for all the anticipated HMRC bluster here, I am of the view that having been issued with a stern warning via the loan charge review of the limits of their powers, they should be wary of abusing that position again), then perhaps APNs may make an appearance.

An FN equally applies to open years only.

Boyle was a curate's egg of a case. The Judge came very close to saying it was fraud because the alleged foreign currency transactions could not be evidenced. As such he did not need to decide that the payments were anything other than a device to avoid tax.

The schemes involving loans in sterling are more difficult to analyse, technically being somewhat closer to the legislation and therefore requiring more subtlety and depth than the rather crude attempt we saw in Boyle to escape tax.

As such I think it would be relatively easy to distinguish Boyle from later cases and schemes and therefore the same would apply to defeating an FN.

[wilks]

[QUOTE=webberg;2712568]It's a condition for issuing an APN that there is an open enquiry.

Given the loss of the loan charge as a catch all (and subversion of the rule of law and denial of access to justice) I'm fully expecting the promised HMRC unit will be applying a creative approach to time limits in the near future.

If this is the case (and please do not panic because for all the anticipated HMRC bluster here, I am of the view that having been issued with a stern warning via the loan charge review of the limits of their powers, they should be wary of abusing that position again), then perhaps APNs may make an appearance.

__________

Sorry GW, re APNs are you saying HMRC may try and amend APN legislation so it can apply to closed years (currently applies to only open years that were DOTAS registered)? That would be a big stretch in my view as it would breach time limits.
Also what are the chances of HMRC trying to apply the 20 year DA on closed years where no disclosure was made i.e. deliberate conduct? I have seen several advisers say this would be very difficult given there was no law pre DR stating loans were income and therefore had to be disclosed. Perhaps HMRC will target closed years where the scheme was DOTAS registered but the individual did not include the DOTAS number on their return. If the scheme did not register for DOTAS then that is not the individual's problem. Also those that at least provided P11ds at the time could most certainly not be accused of deliberate behaviour.

[webberg]

Sorry GW, re APNs are you saying HMRC may try and amend APN legislation so it can apply to closed years (currently applies to only open years that were DOTAS registered)? That would be a big stretch in my view as it would breach time limits.

No, I'm not suggesting that. I'm suggesting that the promised HMRC unit will look to use existing time limits in new ways or perhaps even try to persuade Parliament that new time limits are justified.

Also what are the chances of HMRC trying to apply the 20 year DA on closed years where no disclosure was made i.e. deliberate conduct? I have seen several advisers say this would be very difficult given there was no law pre DR stating loans were income and therefore had to be disclosed.

I would agree that a 20 year limit would indeed be difficult to justify but these matters are tested regularly in the Tribunals and it would not be a surprise to see the attempt made.

Also those that at least provided P11ds at the time could most certainly not be accused of deliberate behaviour.

Here I disagree. You did NOT supply the P11D, your employer did. You were not legally obliged to make that return and you cannot claim that you caused it to be prepared or supplied. I would struggle to claim that an entry on a P11D, one that HMRC may well have not retained, is "full disclosure".

Please see above.

[DealorNoDeal]

Sorry GW, re APNs are you saying HMRC may try and amend APN legislation so it can apply to closed years (currently applies to only open years that were DOTAS registered)? That would be a big stretch in my view as it would breach time limits.
Also what are the chances of HMRC trying to apply the 20 year DA on closed years where no disclosure was made i.e. deliberate conduct? I have seen several advisers say this would be very difficult given there was no law pre DR stating loans were income and therefore had to be disclosed. Perhaps HMRC will target closed years where the scheme was DOTAS registered but the individual did not include the DOTAS number on their return. If the scheme did not register for DOTAS then that is not the individual's problem. Also those that at least provided P11ds at the time could most certainly not be accused of deliberate behaviour.

Is any of this really worth speculating and worrying about?

[wilks]

Please see above.

Ok thanks thats clear. Although P11ds were often used by HMRC to open enquiries and issue DAs.
I suspect HMRC will focus on their existing DOTAS non-disclosure powers for pre-DR closed years to issue APNs / open 20 year discovery where possible. This would be relatively easy where the scheme was DOTAS registered and the individual did not put the SRN on their return. However if the scheme was pre DOTAS or was not DOTAS registered and therefore had no SRN for an individual to put on their return surely HMRC would have no argument?

[wilks]

Is any of this really worth speculating and worrying about?

it is if you have closed pre-DR years. I would not be celebrating just yet.

[webberg]

Ok thanks thats clear. Although P11ds were often used by HMRC to open enquiries and issue DAs.

That is entirely incorrect I'm afraid. A P11D is a return made by an employer to HMRC. It cannot be used to open an enquiry on the employee or as a DA. The data therein may inform HMRC taht a scheme has been used but that's about it.

I suspect HMRC will focus on their existing DOTAS non-disclosure powers for pre-DR closed years to issue APNs / open 20 year discovery where possible.

Again a "20 year discovery" is in theory possible but very unlikely. (I've seen two in a 40+ year career). And again, no DOTAS number = no APN.

This would be relatively easy where the scheme was DOTAS registered and the individual did not put the SRN on their return. However if the scheme was pre DOTAS or was not DOTAS registered and therefore had no SRN for an individual to put on their return surely HMRC would have no argument?

The danger is that there are some schemes both pre and post 2010 that arguably should have been disclosed for DOTAS but were not. A case could be brought to make them disclosable - as we saw with the Hyrax scheme. If a scheme is "disclosable" then an APN can be issued - if other conditions are met - even though there was no original DOTAS disclosure.

As was said above however, you are speculating and if I may say so, using inaccurate assumptions and therefore spiraling towards the worst possible answer based on those incorrect assumptions.

I suggest a wait and see policy will bring you some peace.

[NotSoCompliant]

The danger is that there are some schemes both pre and post 2010 that arguably should have been disclosed for DOTAS but were not. A case could be brought to make them disclosable - as we saw with the Hyrax scheme. If a scheme is "disclosable" then an APN can be issued - if other conditions are met - even though there was no original DOTAS disclosure.

As was said above however, you are speculating and if I may say so, using inaccurate assumptions and therefore spiraling towards the worst possible answer based on those incorrect assumptions.

I suggest a wait and see policy will bring you some peace.

I understand the risks of speculating or making assumptions but do you have a general view of how HMRC may attempt to recover pre December 2010 closed years?