Penalties

[AnthonyB]

Is anyone aware of any penalties being levied against individuals that were found to be using umbrella schemes?

I used one, not fulling understanding the implications and have a trail of emails of me asking them to clarify all my appropriate tax was being paid - which they did. I was asked to declare loan amounts to HMRC which, on the advice of a tax adviser I did. The tax adviser also suggested I wait and see what HMRC do next / see what they ask for, he suggested penalties were highly unlikely given my situation and the fact I had complied. I am still waiting for HMRC to issue me with something to pay (at least 4yrs now).

Just recently someone suggested they spoke to another tax adviser who suggested they just pay up in full as if they did not they could recieve a penalty from HMRC 'STARTING' at 100% of the amount owed. Does anyone know any more about this, are these penalties actually being levied? Is that a likely scenario? Any information would be gratefully recieved.

Thanks!
AB

[eek]

Have you paid all the tax due on the loans?

if you haven't then don't be surprised given your delay in paying that HMRC may take a dim view and apply penalties...

[AnthonyB]

I was reassured a number of times in writing that I had paid all of my tax. I have not paid tax on those loans in addition to the 20% I have already paid Pembroke, on the advice of my tax advisor. The question remains, does anyone know of penalties being levied and what the criteria was?

[eek]

Is your tax advisor employed by HMRC, if not their opinion may not tally with HMRCs.

[AnthonyB]

I wasn't aware HMRC provided tax advisors to the general public. Do you have an answer to the question posted?

[eek]

my point was that any tax advisor may have views that differ from how HMRC see things>..

So going back a bit - what do you mean paid 20% to Pembroke? At the time you received the money or more recently to the administrators at Grant Thornton?

and equally did you include the loans on your initial tax return or in a correction. As that’s the type of thing that determines the level of penalties

and yes those questions are all relevant in working out what is going on..

[Superfly]

I would think the application of penalties would depend on whether you can demonstrate to HMRC that you were neither dishonest nor careless in reporting your income and that you took reasonable steps to seek professional advice in managing your tax affairs. Was the scheme recommended by an accountant? Have you got any of the promotional material which may have made false claims of professional approval or oversight? etc

[Fred Bloggs]

I was reassured a number of times in writing that I had paid all of my tax. I have not paid tax on those loans in addition to the 20% I have already paid Pembroke, on the advice of my tax advisor. The question remains, does anyone know of penalties being levied and what the criteria was?

It might help those here understand what's going on if you say who your tax advisor was/is and what you paid 20% of and why. There's tax advisors and there's tax advisors. Unfortunately not all of them are reputable.

[Fred Bloggs]

I would think the application of penalties would depend on whether you can demonstrate to HMRC that you were neither dishonest nor careless in reporting your income and that you took reasonable steps to seek professional advice in managing your tax affairs. Was the scheme recommended by an accountant? Have you got any of the promotional material which may have made false claims of professional approval or oversight? etc

All good points and it's likely an uphill battle on all of them. I think it would help understand if the OP names the tax advisors. Experience here hasn't been universally positive of them.

[AnthonyB]

I'm not sure whether it's the right thing to do or not to name tax advisors here. All my loans were disclosed but not until specifically requested as I don't normally declare loans to HMRC. The scheme was recommended by a broker. It was my tax advisors advice to declare everything and let them tell you what they think needs to happen next e.g. will they go after my employer for not paying the tax which they told me they had done, will they give me any 'credit' given that 20% of my salary was taken and I was told it was going towards my tax? It also doesn't fall under the Loan Charge (I've been told this by multiple advisors including WTT) as there was no third party involved. So there's lots to consider so unsurprisingly I don't really want to have to pay another 35%+ of my income on a year where I have already paid 20%.

The question still remains, has anyone seen penalties levied against people who worked with these relatively similar loan charge type schemes or are they just being asked to pay again for tax direct to HMRC?