EBT HELL: Assignment Solutions Isle Of Man / Premier Tax Strategies / DMS

[neil99]

Maybe I missed it somewhere in the thread, but have now learnt that a better settlement was agreed with Saleos which as I understand it would leave no future liability.
It is supposed to include IHT for getting the loans written off.

Got an email from HMRC yesterday with the settlement calculation / offer in it and a 2 week deadline to accept.
Have called and emailed HMRC to ask for my settlement calculation to be based on these Saleos terms and also been given a fee from Optimus for writing off the loans.

Has anyone else been down this route and gone ahead with it?

I think Matt / Saleos was working with HMRC to tighten up the settlement contract.

Have a look Big Group's analysis WTT Consulting | Tax Enquiry Specialists | London

[paul1315]

New offer

Now got the IHT included in a revised offer.
Have sent a few more questions back to HMRC and the trustees.

For those of us with relatively small loan amounts, why can't we pay the loans back and then have the amounts repaid as PAYE earnings?
Wouldn't that confirm them as loans, remove any interest and IHT charges, then create new liabilities under PAYE which would be less than current settlement offers.

[webberg]

Now got the IHT included in a revised offer.
Have sent a few more questions back to HMRC and the trustees.

For those of us with relatively small loan amounts, why can't we pay the loans back and then have the amounts repaid as PAYE earnings?
Wouldn't that confirm them as loans, remove any interest and IHT charges, then create new liabilities under PAYE which would be less than current settlement offers.

No.

The IHT "settlement" offered appears to be HMRC and you agreeing that the loans are now worthless and as such they are effectively a distribution and therefore subject to IHT. The payment to the trustee is a separate issue.

The basis of the HMRC position is that alleged loans are not loans at all but disguised income. As such repaying what might be in legal form a loan, but which might be income, will have no effect on the position.

Legally it's a nightmare.

If you repay the loan, the trustee is limited to what he/she can do with the funds. Most probably, repaying the contribution from the employer is not within their gift. Therefore the funds would go the beneficiary (and be taxed). You might therefore be taxed on the deemed income and again on the actual distribution.

Even if the loan is repaid and the trustee can refund the contribution to the original settlor (the agency), are they still around? if not, who is entitled?

Even if they are still around, they have received a refund of a contribution and if they claimed tax relief on that originally, would the refund be taxable? Does it matter if they are offshore in a low/no tax jurisdiction?

So ignoring any issues around ToAA that this creates, and assuming the alleged employer has the funds and can register a PAYE scheme, when they remit to you those funds, net of tax/NIC (at what rates? 2015 or when it was allegedly earned?) when is it taxed?

Employment income tends to be taxable when it is earned. There are some rules around creating delays where some salary etc is deferred via a scheme, but they tend to require employees to waive their entitlement in ADVANCE. Payment today of income earned several years ago creates an "interesting" problem.

So not quite as simple as you might think.

[LetsGoSailing]

The basis of the HMRC position is that alleged loans are not loans at all but disguised income. As such repaying what might be in legal form a loan, but which might be income, will have no effect on the position.

Would the same apply if one were able to get the provider to write off the loans as being unable to be repaid?

[webberg]

Would the same apply if one were able to get the provider to write off the loans as being unable to be repaid?

If you can convince the owner of the debt (the trustee) to agree that the loan is no longer collectible and therefore should be written off (fees?) then that triggers an IHT position.

That might be a charge or a bite out of your nil rate band, depending on circumstances.

HMRC's position is that the loans are just a fiction to disguise income and therefore it matters not what happens with them, the loan draw downs remain taxable income.

Obviously if Murray Group and other cases say that is an incorrect position (and we hope if that is the case, the Judge will say what he/she thinks is the correct position) then the full legal force of the loan agreement may come back into play.

[paul1315]

Rangers

Does this weeks verdict in the Rangers case have any bearing?

[DotasScandal]

Does this weeks verdict in the Rangers case have any bearing?

Here is one opinion

[paul1315]

That's a no then

Got a reply from HMRC to my questions over the latest SO.

It included this bit in response to my objections about the level of interest and IHT.

"Customers who participate in tax avoidance invariably do so with the aim of reducing the amount of tax they pay. It is the customer’s responsibility to consider the risks and the possible consequences before they decide to use a particular scheme to ensure it works as they intend. They must also accept the risk that HMRC may later successfully challenge the scheme, resulting in tax being due from the original due date.

The payment of interest on unpaid tax is imposed by statute and is mandatory. A taxpayer who has had the benefit of money that should have been used to pay tax should therefore pay interest on late payment. An interest charge is not a penalty it is simply due as compensation to the Treasury for lost income and ensures fairness and uniformity of treatment between taxpayers.

If you decide not to take up the settlement offer you can raise any objections to interest once the tax is determined and paid. We will then consider each objection on an individual basis in accordance with current interest guidance.”

As I've paid the APN you'd have thought my objections would now be considered, but it appears by considered they really mean that they'll quote paragraphs like the one above and say no.
But the bit that gets me most is "HMRC may later successfully challenge the scheme" - they've had 6 1/2 years to do that whilst interest at extortionate rates builds up - yesterday MP's complained that HMRC only answer 50% of phone calls which I thought was about double my experience, but they don't mention years of inactivity

They've also said that the 2 week deadline to decide will not be extended.

[DotasScandal]

As I've paid the APN you'd have thought my objections would now be considered...

Bless!
Did you think you would be rewarded for your compliance with clemency? That's not how thugs reason...
Once you've paid the APN, they have you by the balls and you're done!

[bandemelbs]

General question. Has anyone that was expecting an APN yet to actually receive said APN?

I received CLSO letter August 2014, however it doesn't reference which arrangement it related to.