September loan charge deadline - thoughts

[Iliketax]

Understandably I am concerned about the 2019 Loan Charge, however, after discussing with my accountant they feel that disclosure before the end of September 2019 might not be needed.

Is your accountant is independent from the promoter, etc? If so, why don't you chat it through your concerns with them? The words "feel" and "might" confuse me. If they haven't, ask them to get off the fence and explain in a letter (or email) why disclosure is or is not required. Without knowing that, how can you compare that to your view of the legislation? Once you find out, let us know.

If they are not independent of your promoter then find someone else.

Obviously, I am concerned about the potential penalty for non-disclosure. But having looked at the legislation myself (although not an expert) I feel that disclosure might be more detrimental given that it would indicate that I am agreeing that there is a liability - surely this would need to go in my tax return?

How does your view of the legislation tie in with what your accountant told you?

what confuses me is that the legislation states that there is a duty to provide loan charge information where there is a relevant step before 5 April 2019 and that Chapter 2 of Part 7A applies by reason of that step.

The legislation says a lot of things. For example, the fourth condition is a reporting condition where there is no tax charge. So disclosure does not always mean liability. But in the vast majority of cases, the disclosure of the loan is required because of the first condition and so there may well be a liability (subject to double tax relief, etc).

[webberg]

Let me preface with I am not a lawyer, nor an accountant. Neither am I but I have read the legislation.

I assume that your position is that the loans are taxable, assumingly not on the individual but some other third party? No, I think the loans are an individual liability based on the "Rangers" case.

Note your point that there is a no correlation (I think I said no cause and effect, i.e. it is not inevitable that disclosure results in liability) between disclosure and liability. Surely you can understand my point that disclosing the loans because there is a liability under Part 7A (that is incorrect. The loan charge arises under Sch 11 F(no 2) A 2017. This uses a definition of a relevant step that is found in Part 7A.) is an acceptance that as the "employee" I have a liability on the 5 April 2019 which needs to then be included in my tax return and tax paid. Think you'll find that a Part 7A liability falls on the emploiyer - as does the loan charge. You have just confirmed that there is penalty for incorrect returns and non-payment of tax.

I appreciate that you possibly have a large number of clients on here and that you want to keep your message consistent in such a public setting, however from a logical standpoint I do find what you are saying to be rather confusing. That being;

1. Write to HMRC to say that I do not have personal liability,
2. Disclose by the end of the month, under the condition (think you'll find that I said there is no causal link between disclosure and liability) that there is a liability under Part 7A on the employee, (to prevent a £9k penalty)
3. Disclose the loans in the tax return, assumingly with a note saying that I do not owe the tax. (Potentially opening myself up to penalty for an incorrect return/non-payment).

Again I do thank you for your input and I have taken on board what you have said. I will have to carefully review my options going forward, maybe it's my fault for trying to bring logic into it. Not at all, it's just that your logic is flawed by certain assumptions you have made.

Please see above.

This will be my final response.

[Concernedlc]

@Webberg

Thank you for your patience, I was not expecting such a thorough response.

@Iliketax

My accountant is independent, and I have had several conversations with them about this. It is only because they are taking a view which does not fit the "norm" that I was wondering if other contractors have had similar conversations.

I would say that my understanding is consistent with that of my advisors, however, as mentioned above it always feels strange when you are seemingly swimming against the tide.

Condition 4 - this changes the date from the 5th April 2019 to the 16 March 2016 and makes the relevant step occur on the 16 March 2016 rather than the 5 April 2019. I would imagine that this would apply if you have repaid your loan after 16 March 2016 but before the 5 April 2019 it is not that there is no tax charge, but rather no relevant benefit at 5 April 2019.

I don't really intend on keeping this alive much longer as it was merely to see if others have had similar conversations with their advisors.

[DealorNoDeal]

It is clear that I am going to have to argue this with HMRC...

Make sure you know what you're getting yourself in to

HMRC will fiercely resist anyone, who used a loan scheme, who argues that the LC doesn't apply to them.

If necessary, they'll take it all the way (FTT -> UTT -> Court of Appeal -> Supreme Court).

[CanPayButWouldRatherNot]

review or no review ... this deadline isnt going away

[overseas]

I'm also questioning the need to respond by Sept 30th. I have one closed year 2003 (I didn't use the scheme for long).
I got the loan charge letter even though I'm not British and I haven't lodged a uk tax return since 2003. What I find it hard to believe is that they would charge penalties for people like me. In my case it's tempting to ignore Sept 30th and wait until the LC review in November.
I know disclosure does not necessarily always mean liability, however I am concerned that any response I make will be used against me in future. Even if the LC is scrapped for old closed years, what is to stop hmrc using the info they gather again in future. I'm only small fry but that hasn't stopped them so far has it?

[Concernedlc]

Just as a summary, I have spoken to my accountant again.

They have commented that given the specific nature of the disclosure, especially relevant under Part 7A that acceptance of it being employment income allows HMRC to use s13

"13(1) The person liable for any tax on employment income under this Part is the taxable person mentioned in subsection (2) or (3).

13(2) If the tax is on general earnings, “the taxable person” is the person to whose employment the earnings relate.

13(3) If the tax is on specific employment income, “the taxable person” is the person in relation to whom the income is, by virtue of Part 6, 7 or 7A or any other enactment, to count as employment income."

Therefore if we disclose surely we are caught, I'd rather risk a 6k penalty than a penalty for submitting an incorrect return.

[lowpaidworker]

Hi

simple question. Probably been asked and answered already.

For 2009-10 and 10-11 I had an EBT. I was issued an APN back in 2015 which I agreed a TTP and settlement. I paid that off back in 2017.

My question is do I still declare the EBT loan amounts ?

thanks and apologies if this has been answered already

[webberg]

Hi

simple question. Probably been asked and answered already.

For 2009-10 and 10-11 I had an EBT. I was issued an APN back in 2015 which I agreed a TTP and settlement. I paid that off back in 2017.

My question is do I still declare the EBT loan amounts ?

thanks and apologies if this has been answered already

Yes you do.

APN is NOT settlement.

Loan charge is NOT settlement.

Settlement is you and HMRC agreeing a final liability and who is liable to pay it.

[webberg]

Just as a summary, I have spoken to my accountant again.

They have commented that given the specific nature of the disclosure, especially relevant under Part 7A that acceptance of it being employment income allows HMRC to use s13

"13(1) The person liable for any tax on employment income under this Part is the taxable person mentioned in subsection (2) or (3).

13(2) If the tax is on general earnings, “the taxable person” is the person to whose employment the earnings relate.

13(3) If the tax is on specific employment income, “the taxable person” is the person in relation to whom the income is, by virtue of Part 6, 7 or 7A or any other enactment, to count as employment income."

Therefore if we disclose surely we are caught, I'd rather risk a 6k penalty than a penalty for submitting an incorrect return.

See post #11 above.

Whilst I'm sure that you may find other accountants who take a different view, if you are happy that they are not connected with the scheme you used, have thought about the problem, have the expertise to deal with it, then why pay them money only to ignore their advice?