IHT on EBT settlement

[woody1]

Something has always smelled wrong to me about WTT and similar companies.

Ambulance chasers but, unlike the ones that advertise on TV, minus the "no win, no fee" (which shows how confident they really are of winning).

Harsh?

[malvolio]

Ambulance chasers but, unlike the ones that advertise on TV, minus the "no win, no fee" (which shows how confident they really are of winning).

Harsh?

Not really. I don't believe WTT are promising they'll get any tax money back, they are looking at minimising the extras that HMRC are bolting on by clarifying the accuracy of HMRC's numbers and the point from which they are calculated. We have seen many instances where HMRC and the contractor flatly disagree on those fundamentals.

I do agree that the tax is due; on that there is no argument. It's the rest that is up for dispute.

[woody1]

I don't believe WTT are promising they'll get any tax money back...

I thought WTT were the ones running BIG GROUP* which is disputing that any tax is due (similar class action to Hoey et al)?

Isn't that what their few thousand members have been paying around 20 quid a month (plus litigation fees) for?
.
..
* looks like BG has been going about 8 years

https://forums.contractoruk.com/hmrc...big-group.html
.

[Dilbert]

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.

Yes but I have paid tax on it as though it was income. This was the agreement to settle. Now I'm being taxed a second time with IHT on a loan which wasn't a loan but was income....

I take your point on "extremely unlikely to succeed" though. This is my view too. It would help me cash flow wise to kick the can down the road a few years but WTT have been quite unclear as to what their costs will be - potentially negating the cash flow benefit I am looking for.

[Dilbert]

I thought WTT were the ones running BIG GROUP* which is disputing that any tax is due (similar class action to Hoey et al)?

Isn't that what their few thousand members have been paying around 20 quid a month (plus litigation fees) for?
.
..
* looks like BG has been going about 8 years

https://forums.contractoruk.com/hmrc...big-group.html
.

Yes I think they do/did run Big Group. I wasn't part of that. As I understand it that was to challenge the concept of taxing EBTs as income in general. I wasn't part of that and gave up the fight on that side a couple of years back and settled. I've no idea what has happened to Big Group since. This is a different group they are setting up I understand.

[eek]

Yes but I have paid tax on it as though it was income. This was the agreement to settle. Now I'm being taxed a second time with IHT on a loan which wasn't a loan but was income....

I take your point on "extremely unlikely to succeed" though. This is my view too. It would help me cash flow wise to kick the can down the road a few years but WTT have been quite unclear as to what their costs will be - potentially negating the cash flow benefit I am looking for.

HMRC’s claim is as dodgy as hell (if it’s income surely the EBT doesn’t exist) but they have been set a figure they need to recover that they haven’t got a hope in hell of doing so they are chasing every penny they can find.

The issue here is that HMRC very rarity look at the whole and each department (in this case trusts and IHT) won’t care about what other departments have done.

[woody1]

It would help me cash flow wise to kick the can down the road a few years...

You could ask HMRC for a (long) payment plan.

[Saleos]

HMRC’s claim is as dodgy as hell (if it’s income surely the EBT doesn’t exist) but they have been set a figure they need to recover that they haven’t got a hope in hell of doing so they are chasing every penny they can find.

The issue here is that HMRC very rarity look at the whole and each department (in this case trusts and IHT) won’t care about what other departments have done.

Eek - you really shouldn't pontificate on matters which you clearly don't understand with such a sense of authority. You might mislead even more poor souls into the arms of those you have promoted on here for years.

Re IHT you'd be right about the income point IF the income tax charge arose on the same event as that which gives rise (in HMRC's view) to the IHT charge. But it doesn't. The IT charge arose, HMRC say, when the loan was received (although strictly following RFC it would have been when the funds were contributed to the Trust) but the IHT charge arises several years later under, again they say, under s72 IHTA - an 'exit charge' - when those loans are written off. So the exemption that prevents a charge to both IHT and IT on the same event doesn't apply.

It is also completely wrong to suggest that just because HMRC treat the loans as income (whether under RFC, using s684(7A) or under Part 7A ITEPA 2003 (into which the LC falls) the trust "doesn't exist". Nothing in RFC supports that conclusion. Indeed quite the opposite. It "simply" held that what went in was earning so that how it came out didn't alter that. But it didn't mean that nothing which followed exists.

That isn't to say that there aren't arguments against the IHT. But realistically who has the funds to fight HMRC through the Courts given the inherent uncertainty of outcome? Certainly not the firm that has billed "litigation fees" for several years but never yet had a decision published against which they can attach their own name. Indeed with that firm having been sold, likely on the basis of 'GRF', it appears all those funds actually did was increase the value of Webberg's exit!

[woody1]

Indeed with that firm having been sold, likely on the basis of 'GRF', it appears all those funds actually did was increase the value of Webberg's exit!

Any idea when WTT was sold, and who bought it?

I wonder where this leaves the members of BIG GROUP who've been paying monthly subs, and contributing to the litigation fund, for the past 8 years?

[Saleos]

https://www.accountancytoday.co.uk/2...-stake-in-wtt/

WebberG no longer a person of significant control at Co's House.

AFAIK there is and never has been a "litigation fund". Sums were invoiced, with VAT. That is fee income. And appears very much to have been booked as such judging by their accounts.

If funds are held in a Litigation Association, or by Solicitors in ESCROW, there is no invoice (or VAT) until the engaged advisor does the work.

Any idea when WTT was sold, and who bought it?

I wonder where this leaves the members of BIG GROUP who've been paying monthly subs, and contributing to the litigation fund, for the past 8 years?