IHT on EBT settlement

[Dilbert]

I had an Edge / Norla EBT and settled and had my loan written off a couple of years back. HMRC have written to me, via WTT, demanding IHT. WTT are proposing to put together a group to dispute that IHT is due and claim to have a strong argument. I've searched the forum and online to research this but can't find anything up-to-date. Has anybody joined this group and get a view? Any other legal firms mounting a challenge?

The WTT group is £1,000+ to join for the first phase which is a review of my situation and then an unknown amount (they won't give me an estimate) thereafter to take it tribunal.

Given what is happening with Kaye Adams where HMRC is wearing her down with appeal after appeal I'm wondering if I've really got the stomach for this and whether it is really good money after bad.

Views from someone in the know would be appreciated please. I have to make a decision fairly quickly on whether to join or not.

Thanks

[woody1]

...good money after bad.

^^This^^ (probably).

The advisors and lawyers will do alright though.

[Saleos]

History shows a track record of funds being raised for litigation but rather than being held in a separate ring fenced fund being billed as fees (with VAT added) and booked as income. Handy when you later sell your practice in a sector in which deals are typically based on gross recurring fees……less so for those who have been waiting at least 6 years for any of the long promised litigation to actually make it to open Court. DYOR.

[malvolio]

IHT has always been the monkey in the room; I remember it being raised when the whole question of EBTs and avoidance kicked off.

The original argument from several years ago is something like "given that EBTs are primarily a way to optimise pensions payments derived from taxed income contributions, it is not surprising that IHT is applicable since the EBT is part of your estate (unlike a pension fund, which isn't...)".

I have no idea where that argument has got to, but I suspect it is still in force

[woody1]

Has any contractor scheme/group ever beaten HMRC? Can't recall ever hearing of a single successful outcome.

Lots of companies/individuals have done very well out of it all though, from the original scheme sellers to the ambulance chasers, advisors and lawyers. This is a gift that has certainly kept on giving and giving and giving...

[malvolio]

Has any contractor scheme/group ever beaten HMRC? Can't recall ever hearing of a single successful outcome.

Lots of companies/individuals have done very well out of it all though, from the original scheme sellers to the ambulance chasers, advisors and lawyers. This is a gift that has certainly kept on giving and giving and giving...

PCG/IPSE had a couple of victories a while back - Arctic was the biggie, but there were others, including things that nobody noticed since they stopped stuff happening rather than fight it after the event. But we're not allowed to mention them...

HMRC don't do "beaten". They keep chipping away and if they do lose a case - like Arctic - they will try and bring in a new law to reverse the situation (one of PCG's other successes... S660 still doesn't apply to married couples).

[woody1]

PCG/IPSE had a couple of victories a while back - Arctic was the biggie, but there were others, including things that nobody noticed since they stopped stuff happening rather than fight it after the event. But we're not allowed to mention them...

HMRC don't do "beaten". They keep chipping away and if they do lose a case - like Arctic - they will try and bring in a new law to reverse the situation (one of PCG's other successes... S660 still doesn't apply to married couples).

Yes, I knew about wins in mainstream contracting (ltd cos) but I meant cases involving contractor tax schemes. I'm not aware of any successful challenges/litigation in this area.

[malvolio]

Yes, I knew about wins in mainstream contracting (ltd cos) but I meant cases involving contractor tax schemes. I'm not aware of any successful challenges/litigation in this area.

Fair enough. To be brutally honest, there are two issues - firstly the case against EBTs, mis-sold or not, has been pretty much settled, and HMRC are extending their reach for such things to be challenged and secondly, which is the real issue, a person's tax position is down to them to ensure they have paid all that is owed. Ignorance or taking bad advice on EBTs or anything else is not a defence. You can of course appeal over interest payments and penalties to get them minimised as best you can

The best anyone can hope for is to minimise the damage. What that damage is and how best to address it is down to the individual.

[woody1]

Anyone disagree with this?

• If you used a scheme (EBT, loan or whatever).
• HMRC will not accept anything less than you paying tax on the money as though it was income.
• Any attempt (challenge/litigation) to not pay full tax is extremely unlikely to succeed, and is almost certainly throwing good money after bad.

[jamesbrown]

Agree with the good money after bad sentiment. Something has always smelled wrong to me about WTT and similar companies.

YMMV.