Back in the dark days of last winter, HMRC extended the deadline by which all settlements would have to be "AGREED" if the loan charge was to be avoided.
The rule was that applications to settle had to be made before 5th April 2019 and final agreement reached by 31st August 2019.
HMRC officers have told Parliament that where taxpayers have or are making a genuine attempt to settle, they would not be disadvantaged (presumably by the loan charge).
Since then (probably before then), HMRC has struggled in pretty much every aspect of this process.
Applications for settlement have been lost or HMRC has denied receipt. The error rate in calculations remains shockingly high. Speaking to anybody in HMRC who appears to know what they are doing is a lottery. Responses to letters and emails are taking months to arrive. Settlements that are agreed are not resulting in a final acceptance letter, often vital if the lender is going to write off loans.
There is no realistic hope that HMRC will have processed all applications to agreement stage by their own deadline.
What happens then?
Nobody knows.
We are dealing with a modest number of settlement cases. We have around 70% of those in a situation where numbers are agreed but we do not have the final acceptance letter and as such we cannot advise clients to start making payments under an agreed time to pay. We have 30% of cases where the numbers are not yet agreed.
We have asked HMRC what happens at the month end to all of these. They don't know.
We have asked HMRC why they are still encouraging people to apply for settlement even though the deadline is so close? They cannot or will not say.
We have therefore had to put together some practical guidelines for clients. These are summarised here. These may or may not apply to you. If you are using an agent to help you here, please ignore these and speak to the agent.
1. If the settlement is not agreed - receipt of acceptance letter - by 31st August, a disclosure for loan charge purposes is sensible to prevent possible penalties arising.
2. We will then debate the interaction between settlement and loan charge should that remain the situation by the time the 2018/19 SATR is due (31st January 2020)
3. If the settlement pack is ready aside from final HMRC signature, make an approach to the lender if it is your choice to have the loans written off. They may refuse, but at least you have an audit trail.
4. Write to HMRC to explain why you have taken these actions (delay in settlement).
5. Continue sending reminders to HMRC settlement teams
As I said, your own agent may have different ideas and it makes no sense to pay them for those and then use an anonymous forum poster's views to do something else.
happy to take questions here but cannot promise to know the answers.
The rule was that applications to settle had to be made before 5th April 2019 and final agreement reached by 31st August 2019.
HMRC officers have told Parliament that where taxpayers have or are making a genuine attempt to settle, they would not be disadvantaged (presumably by the loan charge).
Since then (probably before then), HMRC has struggled in pretty much every aspect of this process.
Applications for settlement have been lost or HMRC has denied receipt. The error rate in calculations remains shockingly high. Speaking to anybody in HMRC who appears to know what they are doing is a lottery. Responses to letters and emails are taking months to arrive. Settlements that are agreed are not resulting in a final acceptance letter, often vital if the lender is going to write off loans.
There is no realistic hope that HMRC will have processed all applications to agreement stage by their own deadline.
What happens then?
Nobody knows.
We are dealing with a modest number of settlement cases. We have around 70% of those in a situation where numbers are agreed but we do not have the final acceptance letter and as such we cannot advise clients to start making payments under an agreed time to pay. We have 30% of cases where the numbers are not yet agreed.
We have asked HMRC what happens at the month end to all of these. They don't know.
We have asked HMRC why they are still encouraging people to apply for settlement even though the deadline is so close? They cannot or will not say.
We have therefore had to put together some practical guidelines for clients. These are summarised here. These may or may not apply to you. If you are using an agent to help you here, please ignore these and speak to the agent.
1. If the settlement is not agreed - receipt of acceptance letter - by 31st August, a disclosure for loan charge purposes is sensible to prevent possible penalties arising.
2. We will then debate the interaction between settlement and loan charge should that remain the situation by the time the 2018/19 SATR is due (31st January 2020)
3. If the settlement pack is ready aside from final HMRC signature, make an approach to the lender if it is your choice to have the loans written off. They may refuse, but at least you have an audit trail.
4. Write to HMRC to explain why you have taken these actions (delay in settlement).
5. Continue sending reminders to HMRC settlement teams
As I said, your own agent may have different ideas and it makes no sense to pay them for those and then use an anonymous forum poster's views to do something else.
happy to take questions here but cannot promise to know the answers.
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