HMRC don't seem to be doing much ...

[interestedparty]

I received overdrawn capital account payments over four years through an LLP - these were never defined as loans, but HMRC have been making inquiries for each of these years and issued an assessment on the first of these years four years ago - I appealed this immediately and the assessment was suspended. Since then I have received regular letters from HMRC, basically saying the same thing; that they believe that I may have been in receipt of payments that constitutes disguised remuneration. I have always provided full responses to these letters to the effect that the payments were not in the form of loans, and the iterations then continue: HMRC letter/my response. I don't understand why this situation never seems to move forward; are HMRC just fishing, in which case things will eventually just fizzle out, or are they just overstretched and haven't had time/resource to bring my case to a conclusion, and the resultant bill I'll be saddled with?

[eek]

I received overdrawn capital account payments over four years through an LLP - these were never defined as loans, but HMRC have been making inquiries for each of these years and issued an assessment on the first of these years four years ago - I appealed this immediately and the assessment was suspended. Since then I have received regular letters from HMRC, basically saying the same thing; that they believe that I may have been in receipt of payments that constitutes disguised remuneration. I have always provided full responses to these letters to the effect that the payments were not in the form of loans, and the iterations then continue: HMRC letter/my response. I don't understand why this situation never seems to move forward; are HMRC just fishing, in which case things will eventually just fizzle out, or are they just overstretched and haven't had time/resource to bring my case to a conclusion, and the resultant bill I'll be saddled with?

Nope - HMRC have triggered off a process.

if money is owed they can add interest to the money owed so they can now take all the time in the world.

One big issue I have with HMRC is that they don't need to rush into doing things because others do it for them.

[DealorNoDeal]

There's no time limit for when HMRC have to conclude an open enquiry or assessment.

As eek says, interest is clocking up* so they can happily sit on it for years (or decades!). There's no incentive for them to have any sense of urgency.

Will they just let it fall by the wayside? Possibly. It certainly wouldn't be the first time.

* bank base + 2.5% p.a. (currently 2.6% p.a.)

[BlasterBates]

You need to apply for a closure notice

https://www.gov.uk/tax-tribunal

You can apply for a ‘closure notice if HMRC opens an enquiry to check your tax return for ‘direct tax’ (for example Income Tax, Capital Gains Tax or Corporation Tax) and you want it to be closed.

The tribunal will decide when HMRC should close the enquiry.

[DealorNoDeal]

You need to apply for a closure notice

https://www.gov.uk/tax-tribunal

If you do this, then you have to be prepared that HMRC could issue a closure notice saying you owe the tax. You would then either have to pay the tax or appeal your case to a tribunal. You could represent yourself at tribunal (probably not a good idea), or you'd have to get legal representation (expensive). Cases I've heard of where a tax barrister has been involved have cost £6-figures.

Not many people request closure notices.

[eek]

One other factor to consider.

Were these loans post December 2010 or before then.

If after then they are / were probably caught by the loan charge if earlier the current Hoey case is probably important

But requesting a closure notice will require HMRC to make a decision and that will be a demand for payment

[interestedparty]

Thanks for the advice, yes, the payments were all received after 2010, so could fall into the loan charge net. This may be a vain hope, but I'm just hoping that providing a consistent, polite rebuttal to the HMRC letters will, at worst delay the inevitable, in which case my current lack of assets or income will either result in bankruptcy or an extremely long repayment plan with HMRC, or at best just fizzle out.

[TheDogsNads]

You need to apply for a closure notice

https://www.gov.uk/tax-tribunal

This. The 'do nothing and wait' for HMRC to make a move is not a good strategy. The Tribunal may find in your favour and order HMRC to issue a CN or may accept HMRC's POV they are still making enquiries. When appealling to the Tribunal you need to get your ducks lined up to argue indecision on HMRC's part is potentially racking up interest and therefore future insolvency.

If you do this, then you have to be prepared that HMRC could issue a closure notice saying you owe the tax. You would then either have to pay the tax or appeal your case to a tribunal. You could represent yourself at tribunal (probably not a good idea), or you'd have to get legal representation (expensive). Cases I've heard of where a tax barrister has been involved have cost £6-figures.

Not many people request closure notices.

Not this. Not good advice as per. Of course HMRC could issue a CN, that's the point of the exercise! You can present yourself at a Tribunal in which case they will fall over themselves to help you or, you can join a group who are in a similar fight.

Doing nothing isnt a good strategy.

[DealorNoDeal]

But requesting a closure notice will require HMRC to make a decision and that will be a demand for payment

Probably this^^^.

There are 3 possible outcomes if you ask HMRC for a Closure Notice:

1) they decline to issue one, saying they are still investigating and need more time (you could then apply to the tribunal to direct HMRC to issue one)
2) they issue one with no additional tax to pay (extremely unlikely)
3) they issue one with additional tax to pay, leaving you with two choices
(a) settle ie. pay the tax/nics/interest in full or agree a payment plan
OR
(b) appeal the CN and be prepared to take your case to tribunal