HMRC Enquiry letters on Loans from EBT and other schemes

[Michael J Perry FCA]

HMRC having a field day!

Here is a copy of my email alert to clients and instructing advisers:

SUBJECT: Disguised Remuneration Schemes under HMRC Enquiry:
‘’HM Revenue & Customs issue Section 29 TMA 1970 discovery assessments on dormant and current cases for 2008/09’’

• During the last two weeks HMRC have issued a spate of notices of assessment to Income Tax for the tax year 2008/09 under the discovery provisions of Section 29 Taxes Management Act 1970
• These ‘protective assessments’ cover HMRC’s position for ‘normal time limit’ assessments which expires on 5 April 2013 for 2008/09
• For further information about time limits go to: HM Revenue & Customs: Revenue & Customs Brief 16/10
• It is vital to lodge an appeal and postponement application within the prescribed period
• It is not clear where HMRC have obtained the figures for the assessment in most cases and they do not always specify which pay scheme the taxpayer was employed by in the period of assessment
• This follows the many recently opened HMRC enquiries for 2010/11 on various schemes and it is likely that these will eventually be referred to Specialist Investigations Office and for possible future litigation

If you or your client (in the case of instructing advisers) has received an enquiry notice or assessment they should contact us immediately for advice.

We reiterate our view that taxpayers who decide to deal with matters themselves or join with others and deal with these particular enquiries on a ‘global basis’ to save initial fees do so at their peril; may prejudice their case; and increase the amount of any penalties that may eventually be exigible.

All enquiries must be dealt with on an ‘individual basis’ directly with HMRC in a timely and strategic manner according to the specific facts, history and circumstances of the case.

Michael Perry is a fully qualified chartered accountant who was admitted to membership of the Institute in 1980 and is a member of the ICAEW’s Tax Faculty and the Tax Investigation Practitioners Group. For many years he has specialised in tax investigation work (particularly Code of Practice 8 ) and has a particular interest in disguised remuneration scheme cases. Also a consultant to several firms of chartered accountants and advises as a tax investigations expert to a number of leading law firms.

[Penguin]

Need to do something quickly

I am happy to get together with others to tackle this together, but I want to get my appeal in quickly as I received my letter a week ago! I was thinking I would just go the Cobham Murphy route, but I'm a bit concerned that as they have so many requests I wonder if they would get my "appeal" out in time.

With regard to the interest, is this going to be added from the date payment is due even if I appeal? Apologies if this has been asnwered already and I have missed it.

Also, as I said previously I did declare the loan amounts on my original tax return in 2008/9 following advice from Sanzar - did others do that?

I really don't know what to do except for write an appeal letter for now, but I want to get the wording right......

[EBTContractor]

I really don't know what to do except for write an appeal letter for now, but I want to get the wording right......

Me too!

I guess the appeal would be based around the fact that the loans are loans and the paperwork backs this up, like "The loan shall become due and payable one month after service of written demand by the Lender on the Borrower."

[david se london]

The chap I spoke to said appealing is just a matter of writing a letter stating the reasons for the appeal and ensuring you state how much of the additional amount you are appealing against. For me (as I imagine most people) is that it was a loan not a taxable income so I am appealing against the full amount. I have documentation regarding loan agreement and paying it off. I guess it doesn't have to be a long letter.

The more I think about this and re read the letter the more I agree with DonkeyRhubarbs opinion they are just trying it on.

Hi there

re documentation concerning the EBT loan agreement & paying it off - is this an 'Edge' EBT? If so I'd love to see a copy or quote from it as I was with Edge during 2008/9 but can't find a copy of the actual EBT agreement anywhere, only EBT reconciliation slips !

[shevlane]

Experience / Findings from Today...

Hi all,

I would like to bring you up-to-date with my experience / findings from today...

As a reminder I am in the Talent Resource Management, 2008/09 camp.

Yesterday I phoned Raingold and was referred to their 'in house' option, TaxTalkUK (see my full post here). I was not overly impressed by the principal consultant, Mark Boardman. He didn't seem that enthusiastic. In fact, I have followed his instructions (to e-mail his assistant to progress this & get the sign-up forms), but have heard nothing back. Has anyone else got any mileage here?

So to 'shop around', I phoned Castlemaine (mentioned here) and Cobham Murphy (mentioned here). Castlemaine is a dead-end, as they are only engaged by Horizon to defend Horizon contractors (nobody else). Cobham Murphy have told the receptionist not to put people through, due to the volume of enquiries at the moment. They tell you to send one e-mail to Morag Collins @ Cobham Murphy (who is supposed to get back to you), and another to Contractor Helpdesk. So far I have only got a generic response from Contractor Helpdesk, which effectively tries to get you to send a form to HMRC to nominate them as an advisor. Why aren't people willing to talk on this... surely they should be happy to get business?

From my several enquiries over the past couple of days, there are a couple of common themes coming through:

1. The first initial letter is a simple letter stating in writing that you wish to appeal the assessment. This will stop any automated interest being applied, etc, until this is resolved. We have 30 days to submit this, so no hurry. It is better to get it right.
2. Be careful about what you reveal. Only reveal what you have to at each stage. Unless something specific is being asked for, don't volunteer it. HMRC have a weak case and are 'phishing' for information in the hope that somebody might spill the beans & reveal something that might strengthen their case.
3. Lastly, the strongest point being made is that the best source of help are the ones who designed the scheme. The first question everyone asks is "have you got in touch with the creators of the scheme?". They know the workings/intentions/rationale behind it, and generally design it so that it can survive a HMRC investigation (wrt tax laws at that time). Does anyone have any ideas about how we might go about this for TRM/Raingold?

At the moment, to progress this, I think we need to find a good tax advisor to represent us and to find a suitable template to use for the initial response.

If anyone has any further leads on these, please send them through...

- shevlane

[mdg]

Sanzar 08/09 - how to find out more details from the scheme designers

I've been through this thread. Very interesting and helpful. Thanks

Also received a demand from HMRC today. Was in Sanzar 08/09. Same situation as others, but an additional point that I haven't seen on this thread that might be interesting: The loan amounts in my HMRC letter are more than twice the actual loan amounts I received - so they seem to have poorer information for Sanzar than TRM. Clearly as the numbers are too high, the demanded tax is also shockingly high.

Will also appeal with a similar letter to those suggested here but would also like to get in touch with the Sanzar creators as they can help with the defense as we need it.

Has anyone been able to find them or get in contact with them? Would appreciate any useful contact details.

Thanks

[Ravman]

HMRC enquiries

I am a new user and I too have received the same TRM 08/09 HMRC letter as most of you have. The info posted so far has been very useful. If anyone has a template re the appeal letter that would most appreciated. I will continue to monitor for best way forward and am happy to join a group to collectively appeal this. Thanks

[GoneSouth]

Quick question

Hello all, long time lurker here. Been following the BN66 debacle for a very long time and joined the NTRT campaign. Best of luck with it all!!

A quick shout out to DonkeyRhubarb, Cojak et al. You folks are doing a fantastic job and your help here with EBT related topics is greatly appreciated.

I was with Edge/Norla for a number of years until Dec 2010 and at the end of last year received the letter stating that HMRC were opening an enquiry into my 2009/10 return.

I have since emigratted and given the 30 day turn around on the demand letters for 08/09 was worried that I might have one of those somewhere in transit and wasting time getting to me.

I was curious to know if anybody had received both letters (enquiry 09/10 and demand 08/09)?

Good luck all.

[dannyc09]

"I have received a template from someone at TaxTalk:

I wish to appeal against the 2008/09 Assessment recently issued.

I disagree that the amount assessed constitutes taxable income and I do not agree the figure issued.

I wish to apply for a full postponement of the tax demanded pending further clarification."


My only concern at the moment is that I have NOT received an assessment yet. I've only had a letter advising me that I will be asked to sign up for Self Assessment. My thining is that the wording of this letter does not apply to me at this stage and that I should wait until I receive anything else.

[aexport]

Not arrived yet but expecting Notice of Reassessment for 08/09

Having logged into HMRC Self Assessment Portal yesterday if appears that I too will be receiving a reassessment notice for tax year 2008/09, although it's yet to arrive in the post.

Amount owing from reassessment is roughly amount of loans through EBT for (08/09 * 40%) + penalty fee + 3% interest.

Checking HMRC website their timeframes for issuing these notices are shown below, hence the 4 years are about to expire for 08/09.
"The new limits from 1 April 2010 for Capital Gains Tax, Corporation Tax, Income Tax, and PAYE are:
Normal time limit - four years
Careless behaviour - six years
Deliberate behaviour - 20 years
from the end of the relevant tax period"

I will contact my scheme provider and post more info when I understand their approach if applicable.