HMRC Enquiry letters on Loans from EBT and other schemes

[ads1980]

I applaud your offer to help but we are probably talking thousands of contractors here, across many variants of the scheme, who are affected.

Also, I think the first port of call for anyone should be the promoter who sold them the scheme. Only they will know the precise details of the tax structure and any legal opinion underpinning it.

Yes I think you are correct. You must speak to the original provider. I am happy that the provider I used at the time (and stopped using in 2010) have been very helpful so far.
Not all the schemes will be the same so I dont see how one person can cover them all.

[DonkeyRhubarb]

Yes I think you are correct. You must speak to the original provider. I am happy that the provider I used at the time (and stopped using in 2010) have been very helpful so far.
Not all the schemes will be the same so I dont see how one person can cover them all.

Any appeal wordings given in this thread are really only for people who can't track down or get hold of their provider before the 30-day deadline.

At the end of the day, lodging a generic appeal is better than lodging no appeal.

[Vthomson]

Appeal letter for trm 2008/2009 camp

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

Hi Shevlane

Could you please let me know what appeal
Letter you are Sending as I am in the same TRM 2008 09
Camp and got letter few days back

[KnightRider]

PCG Newsletter

HMRC s29 discovery assessments

[DonkeyRhubarb]

Good advice from the PCG in previous post. (Not sure I'd mention the Murray Holdings case though, as there is no need to go into detail in the initial appeal)

[cojak]

I've pulled the PCG text until I discover whether it is in the public domain or membership information.

Edit:
OK it's public domain, but please remember that it's considered rude to just copy and paste that amount of text from another website, so I've just added the link.

[porrker]

Good advice from the PCG in previous post. (Not sure I'd mention the Murray Holdings case though, as there is no need to go into detail in the initial appeal)

It's worth noting that the Murray Holdings case will not necessarily set precedence on EBT's. The reason why HMRC have investigated this EBT'S is because of the way the players employment contracts where worded. The employment contracts stated payment schedule and sums. This is a no no when setting up loans from a trust. Hence why HMRC are stating the loans are disguised renumeration and want the PAYE and NIC.

As long as your EBT loan agreement and employment contracts are separate and the they do not state a loan payment schedule and amounts of coin precedence is already set.

[bluerover]

TRM Appeal

Vthomsen in answer to your question to shevlane (I am in the same TRM 2008/2009 boat). I am inclined to use the text below:

"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."

[The above was posted by dannyc09 provided by TaxTalkUK.]

[And include the additional text (probably after the above suggested by DonkeyRhubarb):]

"The postponement application should ensure that any amendments to payments on account and surcharges etc are taken into account."

At the moment this seems for my circumstances the best way forward. The other letters posted seem to be particular to other companies and as has been said getting the appeal in is the first important step.

Other thoughts from TRM people on the above?

[administrator]

Just posted a guide on the main site about this:
Contractors' Questions: How to handle tax enquiry on loans from an EBT? :: Contractor UK

Written by Cobham Murphy.

[akkaraju]

Avoid "Consultant"

Edge have now contacted me and informed the following complete with appeal letter text:

Their view on this is that in the first instance HMRC don’t have a leg to stand on, this view supported by KPMG, their tax advisors having not won a single ‘like-for like’ case.

In the first instance they have advised to send the letter (below) and should HMRC come knocking with further demands they will ‘consider’ appointing KPMG to fight further claims – all in all the person I spoke to appeared supremely confident this was nothing more than a fishing trip on the good ship ‘empty vessel’

Letter (this can be used by others, amended where required)

Dear xxxxx

I am writing to formally notify my appeal against an additional tax liability of £xxxxxxx assessed for the tax reporting period 2008/2009 which has arisen from an outstanding beneficial loan balance.

During the 2008/2009 tax period, I was employed by Edge Consulting Limited in the capacity of a xxxxx Consultant. My services were outsourced to an end client for an arranged fee and I was remunerated by way of an agreed salary. At this time, profit that Edge Consulting Limited generated from the outsourcing of its employees was settled into an employee benefit trust of which its employees and I as such an employee, became beneficiaries. The employees were then able to periodically request funds from the trust, this was a request made to the trustees who, at their discretion, would advance funds to the employee from the trust. The funds were paid to the employees as a loan, these loans did not attract an interest rate and were therefore regarded as beneficial to the employee. The loans have always been treated as beneficial by Edge Consulting Limited and my P11D documents support this. Furthermore, these loans all remain outstanding and can be recalled by the trustees at any time.

In consideration of the above, the outstanding EBT loan values should not be treated as income and only the relevant benefit-in-kind tax should apply. This benefit-in-kind denoted in the P11Ds should have been collected through subsequent adjustments of my PAYE tax code.

I trust this should prove sufficient at this stage.

Yours sincerely,

A word of caution to leave out the word "Consultant", on the job title. Instead, edge advised me to use developer or engineer.