HMRC loan charge refund rejected (obviously)

[exterminator111]

I received a letter from HMRC back in January 2020 stating "the loan charge should only apply to loans made on or after 9 December 2010, and were still outstanding at 5 April 2019" and invited me to apply for a refund.

I had loans from June 2008 to August 2010. I settled with HMRC in December 2018 after being blackmailed and had to pay the full amount of £40k.

I submitted a refund application under the basis that my loans were before 9 December 2010. Of course they rejected my application for a refund saying I was ineligible. They responded with the following for each of the tax years:
"We were able to recover the amounts because we had sent you a tax assessment before we agreed the settlement with you".

I am confused by this as the original letter stated the loan charge did not apply to loans made on or after 9 December 2010.

They have given me until 16 September 2020 to appeal stating my reasoning.

[DealorNoDeal]

That sounds contrary to the guidance.

https://www.gov.uk/guidance/apply-fo...nt-scheme-2020

Refunds apply where
a) the loans were made before 9 December 2010 (in your case ✔)
AND
b) you settled on or after 16 March 2016 and before 11 March 2020 (again, in your case ✔)

I would definitely ask for a review (appeal).

[regron]

Also goes on to say the year had to be unprotected, so no open enquiries which HMRC believe they have open.

• loans were made before 6 April 2016, and a reasonable disclosure of the use of the tax avoidance scheme use was made to HMRC and HMRC did not take action (for example, opening an enquiry into an Income Tax return)

[DealorNoDeal]

Also goes on to say the year had to be unprotected, so no open enquiries which HMRC believe they have open.

• loans were made before 6 April 2016, and a reasonable disclosure of the use of the tax avoidance scheme use was made to HMRC and HMRC did not take action (for example, opening an enquiry into an Income Tax return)

Doesn't that only apply for loans made after 9 Dec 2010?

[regron]

Here is the full text which suggests pre-2010



Individuals who have settled the amount due from their use of disguised remuneration and have paid in full or are paying it by instalments


If you reached settlement with us before the changes to the loan charge were announced, you may be due a refund or waiver of some, or all of the amount included in settlement.

HMRC will refund or waive certain voluntary payments (known as ‘voluntary restitution’) included in a settlement agreement reached since March 2016 (when the loan charge was announced) to prevent the loan charge from arising for any tax years where:

• the loan charge no longer applies (loans made before 9 December 2010)
• loans were made before 6 April 2016, the avoidance scheme use was disclosed to HMRC and HMRC did not take action (for example, opening an enquiry into an Income Tax return)

Changes to the loan charge legislation have now been enacted by Parliament. Find more information on voluntary restitution refunds

[exterminator111]

Thanks for the replies.

From:
https://www.gov.uk/guidance/apply-fo...nt-scheme-2020

I think this is the key bit:
"Voluntary payments of Income Tax and National Insurance contributions may be repaid or waived where they relate to certain loans made:

• before 9 December 2010 where HMRC did not have the power to recover the Income Tax or National Insurance contributions at the date the settlement agreement was made"

I guess this means where there wasn't an open tax enquiry for the years. I had open tax enquiries for 2008-2010 as they sent me the assessments within the four year period.

It's contradictory however as I wouldn't have settled if they didn't have valid open enquiries for the years in question - I would have had to pay nothing as they would be too late.

[DealorNoDeal]

It's contradictory however as I wouldn't have settled if they didn't have valid open enquiries for the years in question - I would have had to pay nothing as they would be too late.

Yes but, in that scenario, you would have had to pay the LC. It's only after they changed the LC, following the Morse review, that pre-2010 closed years were exempted from the charge.

Many people, with no open enquiries for pre-2010 years, did settle to avoid the LC because, in most cases, the LC worked out considerably more expensive than settling.

[eek]

Thanks for the replies.

From:
https://www.gov.uk/guidance/apply-fo...nt-scheme-2020

I think this is the key bit:
"Voluntary payments of Income Tax and National Insurance contributions may be repaid or waived where they relate to certain loans made:

• before 9 December 2010 where HMRC did not have the power to recover the Income Tax or National Insurance contributions at the date the settlement agreement was made"

I guess this means where there wasn't an open tax enquiry for the years. I had open tax enquiries for 2008-2010 as they sent me the assessments within the four year period.

It's contradictory however as I wouldn't have settled if they didn't have valid open enquiries for the years in question - I would have had to pay nothing as they would be too late.

So you had loans between 2008 and 2010 and have open tax years via enquiries for at least 2 of the 3 tax years involved?

If so I suspect you fail to meet the final part of this requirement - as HMRC did take action

• loans were made before 6 April 2016, the avoidance scheme use was disclosed to HMRC and HMRC did not take action (for example, opening an enquiry into an Income Tax return)

[DealorNoDeal]

If you have open enquiries, the reality is you would probably have to settle eventually anyway. Unless you bought CTDs, paid APNs or made payments on account, all you're doing by delaying settling is racking up more interest.

Yes, I know that there are advisors fighting HMRC but the chances of them winning are slim. And it could drag on for years, maybe even to the end of this decade.

So, put it all behind you, and move on with your life.

[regron]

If you have open enquiries, the reality is you would probably have to settle eventually anyway. Unless you bought CTDs, paid APNs or made payments on account, all you're doing by delaying settling is racking up more interest.

Yes, I know that there are advisors fighting HMRC but the chances of them winning are slim. And it could drag on for years, maybe even to the end of this decade.

So, put it all behind you, and move on with your life.

Hoey isn't doing too bad.... small drop in the ocean, but if fighting is your only option other than losing everything anyway, then I'll take it.
This is the issue, HMRC have managed to create such a divide in personal circumstances, it dillutes the fighting numbers whereby people have to make their own personal choices which is understandable, but furstrating.