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SP Management - HMRC claims

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    SP Management - HMRC claims

    Hello All - hoping to get some advice or find out if anyone is receiving the same claims from HMRC.

    To summarize;

    In October 2015 I approached a new accountant and the accountant advised me I could continue with the standard Ltd. Company approach or use SP Management to minimize my taxation (SPM also put payments through the my Ltd company so it all seemed above board to me). I was assured that this was a scheme that involved consultancy payments (loans were never once mentioned over the 3 years I used them) and it was indeed very much legal and was a standard ‘loophole’ which would remain open for a couple more years. In fact I was assured that it had about 3-5 years before HMRC closed the loophole but not to be concerned as I could return to the standard Ltd. Company process at that time.

    I signed up at the end of October 2015 with SP Management and they confirmed the below;
    “We have negotiated a commission from SP Management which we deduct from your fees. Therefore the quarterly payment to us will be £150 plus VAT. The Vat payments will be 1.25% of your income. So if you earn £400 per day , you will pay £5 per day VAT.” i.e. SPM were also paying fees to my accountant and they had a formal agreement.

    I then used SP Management for the next three years without concern.

    In fact, In December 2017 HMRC (just over a year since starting with SPM) HMRC contacted me saying they were investigating my self-assessment for the tax year 2015-16. My accountant and myself provided all the relevant details and declared my use of SP Management consulting fees from October 2018-2016. I never heard from HMRC again. No action was taken. So, I continued to use SP Management for the next two years.

    Only in September of 2019 did I decide to cease using SP Management when I heard about loan schemes being chased by HMRC and when I called SPM for clarity they were very vague so I cancelled my agreement and went back to using standard Ltd. Process.

    HMRC have sent me three letters in March claiming disguised remuneration, without any explanation of if this is SP Management they have issue with or any other reasoning for the claim.

    <mod snip>

    So, I have asked my accountant to contact HMRC with the below questions;
    1. Is this due to my use of SP Management – which as far as I was aware and informed originally is not a loan scheme and so within the regulations law?
    1. The calculations are not clear at all – how, on an income total of £<mod snip> are HMRC trying to charge a total of £<mod snip> – 79% of the income total on top or what has already been contributed?
    1. If this is due to SP Management, are HMRC intending to pursue payments for the following 2 years I used SP Management and will they total 79% of those 2 years as well <mod snip>
    1. If the case is that they intend to charge 79% for all three years I would appreciate the total value of the claims against me – <mod snip> as, obviously, this is a figure that is not possible for me to pay and they are already charging a 43% tax on my current income due to IR35) so any payments back for regressive tax are going to be far more than my actual income.
    1. I signed the agreement with SP Management in October in October 2015 – the government has stated Below is an excerpt from the ICAS website stating that ‘The Government also accepts the recommendation that loans taken out between 9 December 2010 and 5 April 2016 inclusive, will be out of the scope of the Loan Charge if the user of the scheme disclosed full details of their avoidance scheme on their tax return, and HMRC failed to take action to protect its position, for example, by opening an enquiry.’ If these payments from SP Management were indeed loans (which was never disclosed to me) does the fact I signed the possible loan agreement before April 2016 negate the claim against me? https://www.icas.com/professional-re...ncy-profession
    1. I was previously investigated in December of 2017 and no action was taken. I began using SP Management in October of 2015 the scheme was part of my 2016/17 tax returns and was declared during that HMRC investigation that we provided all the required information indeed HMRC did not contact me in any way to confirm if there were any issues at all with the investigation – I heard nothing from them after we provided the required information.
    As HMRC did not raise any questions about my use of SP Management at the end of 2015 and up until April 2016, when they completed their investigation in 2018… does the government guidelines negate HMRCs claim i.e. we declared the use of SP Management back in the beginning of 2018… and HMRC did not contact me or yourselves to challenge that and failed to ‘protect its position’. I can categorically state that if HMRC had contacted me and stated that the scheme was not appropriate I would have ceased and desisted at the beginning of 2018 – and not continued for a further two years that could leave me liable for 79% of my income for those two years (perhaps <mod snip - lots>)."

    I am also considering if my accountant has some liability here - some form of Duty Of Care that I can seek compensation under if HMRC pursue this case against me and win?

    Has anybody experienced the same issues or can someone point me toward any advice on this forum please? I am in contact with LCAG at the moment but there is not a lot of feedback through them currently.

    Any information is much appreciated

    Last edited by cojak; 19 April 2021, 09:36. Reason: Removed horrendous amount of personal info.

    Not to answer the question, but "In fact I was assured that it had about 3-5 years before HMRC closed the loophole", that's a flag to run away very quickly. These types of schemes have been going for years. There's lots of post on this very page. Look for other support groups/ tax experts, etc.


      Not to comment really on your situation regarding use or not of loans but it certainly appears your accountant persuaded you to sign up for a tax avoidance scheme. Aside from all your issues regarding the scheme you used, do you still have all the written correspondence from your accountant persuading you to join the scheme? Are you sure you were actually persuaded to join this dodgy scheme based on "loop holes" in tax law? Or were you a willing user? Do you know if the accountant is professionally qualified and registered with one of the professional bodies such as ICAEW? Not all of them are. Assuming for a moment that the accountant is registered with one of the professional bodies - I think you should make an exploratory phone call to them explaining you think you may have a complaint about one of their members ethics and business practices and see where it goes. Good luck.
      Public Service Posting by the BBC - Bloggs Bulls**t Corp.
      Officially CUK certified - Thick as f**k.


        Not just income tax avoidance but VAT avoidance.

        oh boy - I really hope you have the ability to pay what HMRC claim is owed because they really can come and claim whatever they want
        merely at clientco for the entertainment


          Originally posted by eek View Post
          Not just income tax avoidance but VAT avoidance.

          oh boy - I really hope you have the ability to pay what HMRC claim is owed because they really can come and claim whatever they want
          I dare not think about the VAT, that's in a different league. I suspect that if the OP really was persuaded to join a dodgy income tax scheme by a registered professional along with the VAT angles too, multiple routes of redress may appear. Doesn't help with the (probable) loans mind. I am guessing the "accountant" actually is not a member of a professional body though, so it may be a dead end anyway.
          Public Service Posting by the BBC - Bloggs Bulls**t Corp.
          Officially CUK certified - Thick as f**k.