Penalties Letter Received from HMRC

[Confusedetc]

I have been sorting this loan stuff with HMRC on my own now since 2019, initially going through the loan charge process and spreading the outstanding loan amounts accross 19/20/21 tax returns. (for loans 16-19)
They then asked me to go through the settlement 2020 process which was a year or so ago. I have been very open and honest with them and given them all info / bank statements etc they've asked for.

I have just received a letter from them threatening penalties for inaccuracies in tax returns relating to years ended 18/19/20.
"We believe that your tax returns contain inaccuracies as described below"
"The returns did not include amounts received relating to disguised remuneration scheme, but they should have"

They have given me just 1 week respond, and don't give anymore info than the above, no detail of the inaccuracies. No help on the phone either.
Am I within my right to request detail of supposed inaccuracies before giving a response ? it's a bit of a blow as I feel like I have given them everything and been really helpful and this worrying saga just going on and on and on...

The only thing I have realised it might be, with each payment the loan company did this thing where they paid £100 and then withdrew it again straight after, I did not put this into the tax return as there was no financial gain for me from it so didn't see it as being taxable. Seems unfair to tax me on this and possibly give me a penalty for it ? I did tell them about why I didn't include it in recent emails where they asked for my bank statements
I have just read the loan agreement and it says the below about the £100 thing:

"2 Agreement The Lender agrees to lend and the Borrower agrees to borrow an amount of £100 per month on the terms and conditions set out in this Agreement. The Borrower shall pay to the Lender the Repayment Amount on the Repayment Date.
3 Loan Advances The Lender shall make the first Loan Advance of £100 on the date of this agreement and thereafter shall advance the sum of £100 by way of further loan advances each month. Any Subsequent Loan Advances are made under the terms and conditions of this Agreement. Each Subsequent Loan Advance shall have the amount and date of the Subsequent Loan Advance recorded by the Lender in writing"

[Chevalier]

Unfortunately only HMRC can tell you what they are thinking!

There may be other explanations, such as

a) Did you elect to spread via the HMRC online form?
b) Do HMRC believe that you were involved in schemes in any other years ?

[GregRickshaw]

You should probably seek professional help to anything you don't understand.

The fact you have been open and honest has probably led them to the agreement of the £100 in and out again to be honest.
From my experience being open and honest really only gives you leverage around your TTP.

It doesn't sound like a vast amount of DR £100 a month in and out for 3 years but I have to point you to my first statement..

Many of us on here have been hit by various and different schemes but I have never seen that one. Hence we are probably not best placed to advise a good professional tax lawyer will be able to.

GL

[Fred Bloggs]

I quite agree with those answers. You can only tell them the truth. I think I would have one more go telling them the facts and saying that as far as you are honestly aware, there's nothing more to disclose. Then, if they continue to try bullying you, I don't think there's anything more you can do without outside expert assistance. Hope it works out for you.

[DealorNoDeal]

Just to be clear, as part of the LC, you spread the total of all the loans received equally on your tax returns for 2018/19, 2019/20 and 2020/21.
They're accusing of non-disclosure on the 2017/18, 2018/19 and 2019/20 returns?

Presumably, there were no loans disclosed on the 2017/18 return?

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I wonder if they've got into a muddle because you initially started down the LC route and now (ironically at their behest) you are settling?

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If it was me, I'd write back to them stating that you declared all DR loans on the 2018/19, 2019/20 and 2020/21 returns in full compliance with the LC. And that you therefore cannot understand how you could possibly be liable for any penalties.

And yes, you should request details of the supposed inaccuracies.

If you can't resolve this with them, it's the sort of thing you can take to your MP to intervene on your behalf.

[Chevalier]

I wonder if they've got into a muddle because you initially started down the LC route and now (ironically at their behest) you are settling?

The 2020 Settlement Terms require you to pay the loan charge first, so I don’t think that that’s the issue.

Another possibility is that the loan charge that you’ve paid doesn’t match (rightly or wrongly), the loan charge that HMRC was expecting.

Just to clarify, there wasn’t one “loan charge”, but in fact two different loan charges which depended very much on which “scheme” or “schemes” you’ve been in.

If the records don’t match, then this may have caused the issue?

[Confusedetc]

Thanks all for the replies, really appreciated.

[Confusedetc]

Unfortunately only HMRC can tell you what they are thinking!

There may be other explanations, such as

a) Did you elect to spread via the HMRC online form?
b) Do HMRC believe that you were involved in schemes in any other years ?

Yes that's the problem.

a) No not really, they sent me a letter in Jan 2020 'changes to the loan charge following the independent review' after sending me tax return requests in Dec 2019 asking me to do tax returns for 15-16 / 16-17 (as I never did them until they asked as I was not self employed but a contractor with umbrella) ...and so they asked me to do the loan charge process for outstanding loans.
b) well I have given them all the info on the loans and included in tax returns so there are no other years

[Confusedetc]

You should probably seek professional help to anything you don't understand.

The fact you have been open and honest has probably led them to the agreement of the £100 in and out again to be honest.
From my experience being open and honest really only gives you leverage around your TTP.

It doesn't sound like a vast amount of DR £100 a month in and out for 3 years but I have to point you to my first statement..

Many of us on here have been hit by various and different schemes but I have never seen that one. Hence we are probably not best placed to advise a good professional tax lawyer will be able to.

GL

I have tried to handle this by myself so far to avoid extra costs as I am expecting extra costs from HMRC, but yeh it's going to a point where I might need professional help soon. I am guessing most tax lawyers won't be experts or know about this stuff though as it's quite niche.

[Confusedetc]

I quite agree with those answers. You can only tell them the truth. I think I would have one more go telling them the facts and saying that as far as you are honestly aware, there's nothing more to disclose. Then, if they continue to try bullying you, I don't think there's anything more you can do without outside expert assistance. Hope it works out for you.

Cheers bud yeh I think that's going to be my approach ...and try to find out what the issue is so I can then see if I can deal with it myself or not.