HMRC Enquiry letters on Loans from EBT and other schemes

[FairnesstoAll]

Letter Received from HMRC

There are now a bewildering number of threads on this and related subjects.

First Tier Tax Tribunal decisions are expected soon which could affect the future conduct of many loan related pay scheme cases.

Now may be a particularly good time to at least consider a Voluntary Settlement for those who wish to start putting these matters to rest.

Please PM me if you have questions although I can only deal with them in general terms at this stage.

Hi Michael,
Would it be possible to obtain a copy of the Appeal Template? I have just received a letter from HMRC regarding TRM myself.

Many Thanks

[convict]

Hi Michael,
Would it be possible to obtain a copy of the Appeal Template? I have just received a letter from HMRC regarding TRM myself.

Many Thanks

TRM is out of time for normal discovery. Do you mean Cherrylon? Check your PM

[vern19]

TRM is out of time for normal discovery. Do you mean Cherrylon? Check your PM

I thought HMRC had 4 years to issue standard discovery or 6 years if they can show negligence and 20 years if the discovery relates to tax avoidance. I hope I'm wrong. Do you think they will not go back further than 08/09?

[convict]

I thought HMRC had 4 years to issue standard discovery or 6 years if they can show negligence and 20 years if the discovery relates to tax avoidance. I hope I'm wrong. Do you think they will not go back further than 08/09?

There's no evidence to show negligence or wilful omission of information to support 6 or 20 year discoveries. There's guidance out there and even some case stuff to back up 4/6/20 year arguments.

negligence test (6yrs):
Blyth v Birmingham Waterworks Company - Wikipedia, the free encyclopedia

referred to in:
http://www.financeandtaxtribunals.go...49/TC02825.pdf

"Negligence is the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do. The defendants might have been liable for negligence, if, unintentionally, they omitted to do that which a reasonable person would have done, or did that which a person taking reasonable precautions would not have done."

Deliberate (20 yrs)

"A taxpayer who carefully considers the position and intentionally files his return adopting a tax position that he considers is correct, but, ultimately, is shown not to be, has not brought about the under-assessment ‘deliberately’."

The onus is on HMRC to defend the position they take regarding discovery assessments.

[vern19]

There's no evidence to show negligence or wilful omission of information to support 6 or 20 year discoveries. There's guidance out there and even some case stuff to back up 4/6/20 year arguments.

negligence test (6yrs):
Blyth v Birmingham Waterworks Company - Wikipedia, the free encyclopedia

referred to in:
http://www.financeandtaxtribunals.go...49/TC02825.pdf

"Negligence is the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do. The defendants might have been liable for negligence, if, unintentionally, they omitted to do that which a reasonable person would have done, or did that which a person taking reasonable precautions would not have done."

Deliberate (20 yrs)

"A taxpayer who carefully considers the position and intentionally files his return adopting a tax position that he considers is correct, but, ultimately, is shown not to be, has not brought about the under-assessment ‘deliberately’."

The onus is on HMRC to defend the position they take regarding discovery assessments.

Interesting. Please check your PM

[stt106]

Exact tax amount to be paid to hmrc

Hi all, I'm new here and in the same boat...

Was just rereading the letter from hmrc and found something odd about the tax hmrc asks me to pay. In the tax calculation sheet attached, on the middle top summary section, it lists Income Tax overpaid (declared) £X, and Total Income Tax due (revised) £Y, Difference £Z = £X + £ Y. This doesn't make mathematical sense as I think the difference should be Y - X rather than Y + X. Also, tax overpaid means they owe me rather than I need to pay them, am I missing something or hmrc got this wrong?
Can someone please give some advice? Maybe double check the amount on your letter.

[convict]

Hi all, I'm new here and in the same boat...

Was just rereading the letter from hmrc and found something odd about the tax hmrc asks me to pay. In the tax calculation sheet attached, on the middle top summary section, it lists Income Tax overpaid (declared) £X, and Total Income Tax due (revised) £Y, Difference £Z = £X + £ Y. This doesn't make mathematical sense as I think the difference should be Y - X rather than Y + X. Also, tax overpaid means they owe me rather than I need to pay them, am I missing something or hmrc got this wrong?
Can someone please give some advice? Maybe double check the amount on your letter.

Take a step back. Are you agreeing that you owe tax (i.e. the amount is taxable income) and their calculation is wrong? Or are you still of the opinion that there is no taxable income and the amount should be zero?

The position you take for any appeal letter will be based on the above. As for the calculation, it's a guesstimate and is roughly aligned to the quality of paper it is written on. It all comes down to whether HMRC have the loan info from the provider.

If you want to know your own position, take what you have been paid as salary. Add the total loan amount for the tax year to that amount. Put that total amount into a tax calculator such as Salary Calculator 2013, UK Tax Calculator 2013 , Listentotaxman PAYE income tax calculator, payslip, how much tax will i pay, national insurance, tax free allowances student loan repayment..

Take what you have already paid in tax/ni (as per your latest letter) away from the deductions figure shown on the website to get a realistic exposure figure.

[stt106]

seems to be no choice

Take a step back. Are you agreeing that you owe tax (i.e. the amount is taxable income) and their calculation is wrong? Or are you still of the opinion that there is no taxable income and the amount should be zero?

The position you take for any appeal letter will be based on the above. As for the calculation, it's a guesstimate and is roughly aligned to the quality of paper it is written on. It all comes down to whether HMRC have the loan info from the provider.

If you want to know your own position, take what you have been paid as salary. Add the total loan amount for the tax year to that amount. Put that total amount into a tax calculator such as Salary Calculator 2013, UK Tax Calculator 2013 , Listentotaxman PAYE income tax calculator, payslip, how much tax will i pay, national insurance, tax free allowances student loan repayment..

Take what you have already paid in tax/ni (as per your latest letter) away from the deductions figure shown on the website to get a realistic exposure figure.

well I certainly don't agree that I should pay whatever tax they want me to pay now after three years and I think it 'was' sort of legal back to 2010/2011 that this part of my income wasn't taxable. BUT, hmrc is like the government (who makes the law!) so I don't think there is much choice here. Appealing doesn't seem to be able to fix this in the long term though it may delay the inevitable AND they may even charge interest for this delay.

I don't want to be sound hopeless but this seems to be going on for a while now and nobody had reported a successful appeal. In fact I know wonder what happened to those whose payment is well overdue by now? What happened to their appeal? Has anyone got any information to share on the appeal result (either success or failure)?

[stt106]

If appeal, will HMRC add subcharge and start charging interest or not?

Hi All,

This question is probably silly but I am not entirely sure that whether hmrc will add subcharge AND start charging interest on the amount they think is due if we appeal?
I know they will do this if we don't appeal within 30 days and don't pay the due amount, but somehow they said they will continue charging interest despite we appeal on the letter.

Please can someone shed some light on this?
Thanks.

[cojak]

Read up on the Certificate of Tax Deposit (CTD) scheme.

HM Revenue & Customs: The Certificate of Tax Deposit scheme