HMRC Enquiry letters on Loans from EBT and other schemes

[meanttobeworking]

The settlement opportunity is open until 9th January 2015, would I be right to presume this means I wouldn't receive an APN or FN before that point?

[mrs t]

T

I imagine APN will follow after January if no settlement is reached. My question is...is the settlement only for:
1. The years for the ones we have already received assessments for?
2. Is the amounts to be settled the figures on those assessments...plus possible interest?
3. Is there also a possibility of being charged for inheritance tax as well? Would that only be on amount of full loan over inheritance tax threshold?
Can anybody clarify these points...thanks

[bstar1]

Dilemma's ...dilemma's...to settle or not to settle...

[paul1315]

Got my Settlement Opportunity letter

My letter arrived this morning.
I found the tone of the letter and Q&A very bullish - as if HMRC has never lost a case.

But what I found most extraordinary was the timescales this has all taken.
I only used a scheme (Assignment Solutions IOM), for a very short time in 2007 and from memory received just a single loan payment.
My tax return stated as much and that the company providing the loan had subsequently gone into administration.
The tax return for that year was filed in June 2007.
I got a COP8 letter in January 2009 which stated they "did not intend asking further questions at this time" (and never have done) and that "I will let you know if I find anything wrong".
I have had no further correspondence about this COP8 and intend calling them on Monday morning.

I assume the Settlement Opportunity letter relates to this enquiry but it doesn't even mention a particular tax year.

How can they take 5 and 1/2 years with no correspondence and then this? Is there no time limit after opening the COP8 (if so it looks like they just did that to give themselves an indefinite period to look into things - is that what is meant by "I am opening this enquiry to protect the interests of HMRC")?

[Crofty]

Contractor Loans Settlement Opportunity - Arrangements used up to 5 April 2011.

The letter recently sent out without prejudice by HMRC entitled "Contractor Loans Settlement Opportunity - Arrangements used up to 5 April 2011." shows exactly how HMRC see things playing out.

They have won cases where the tax avoidance schemes have involved some sort of contrived or artificial transaction such as loss making foreign exchange transactions or investments in films that lose money. However HMRC have lost and appealed and lost again against a scheme that made use of a straight forward EBT loans to employees. The loophole allowing this was closed from 5 April 2011, HMRC were and still are trying to apply this legislation retrospectively to EBT loans made in years prior to 5 April 2011.

Having failed to win a case against this type of scheme for years prior to 5 April 2011 this recent settlement opportunity looks like a final ditch attempt to extract at least something from the users of these schemes and if taken is legally binding. I expect HMRC to drop their pursuit after 9 January 2015 and focus on the years after 5 April 2011 where they stand a much better chance of success. If anyone takes this settlement then you won't be entitled to get back this money back when HMRC drop this.




HMRC applied in December 2012 to appeal the decision that the corporate entity which formerly housed Rangers had legitimately used the scheme between 2001 and 2010 to pay £47.65m to players and staff in tax-free loans. The arrangement was challenged in the first-tier tribunal by HMRC, which said it was illegal. However, Rangers disputed the bill and the tribunal held the payments were loans that can be repaid and, as such, were not taxable. That ruling has now been upheld by the upper-tier tribunal.

[doordarshini]

Any thoughts on future steps

My letter arrived this morning.
I found the tone of the letter and Q&A very bullish - as if HMRC has never lost a case.

But what I found most extraordinary was the timescales this has all taken.
I only used a scheme (Assignment Solutions IOM), for a very short time in 2007 and from memory received just a single loan payment.
My tax return stated as much and that the company providing the loan had subsequently gone into administration.
The tax return for that year was filed in June 2007.
I got a COP8 letter in January 2009 which stated they "did not intend asking further questions at this time" (and never have done) and that "I will let you know if I find anything wrong".
I have had no further correspondence about this COP8 and intend calling them on Monday morning.

I assume the Settlement Opportunity letter relates to this enquiry but it doesn't even mention a particular tax year.

How can they take 5 and 1/2 years with no correspondence and then this? Is there no time limit after opening the COP8 (if so it looks like they just did that to give themselves an indefinite period to look into things - is that what is meant by "I am opening this enquiry to protect the interests of HMRC")?

Any thoughts on future steps

[retrodeath]

My letter clearly states that this covers EBT schemes up to 2010/11, so I presume that means until they changed the law in 2010. I stopped using EBT after that and moved to an FX based scheme for 6 months before going back to ltd.

As above the letter is bullish. It explicitly refers to Boyle, transfer of assets and inheritance tax.

It refers to those that don't have the money because they lived on it. They say that they will look at time to pay for those in genuine hardship where appropriate. It says noting about terms of TTP. It does say that if you can't reach agreement with them then you'll be bundled with those who didn't try.

As per previous posts, I don't think they'll dare try and bankrupt people for money in dispute.

One thing though, the letter is quite clear about them considering the Boyle case to be similar enough for them to think they'll win. If they're that sure of the similarity wouldn't they be issuing FNs?

As for the post above about them dropping the EBT cases, I think with 16000 people this is the last thing they'll do. The money is still in dispute. They probably just won't prioritise these cases, so those with the money can kiss goodbye to it for the next 10 years.

[LordF]

Settlement letter

Hi guys

Yes, received my letter this morning too, re tax year to 5/4/2011. Same standard letter that other guys have received.

My loans for that year were £21.8k in total .... anyone got any idea how much they would ask for on that figure? (Tax plus interest)

[jbryce]

Why is anyone surprised?

APNs will be a real pain for HMRC, and they know it. The settlement letter is an attempt to minimise their pain by getting as many people as possible to settle before they have to resort to APNs.

They have cited Boyle - a total basket case scheme which bears little or no resemblance to to many contractor EBTs, but they fail to mention Rangers - which resembles a lot more. It is highly unlikely that they understand the details of the individual contractor related schemes and it is equally unlikely that they will survive a concerted and organised defence.

They can only attempt to apply Boyle (lost at an FTT), but it is not a slam dunk as each EBT would be fought on its merits.

So F*** off HMRC.

Having said that...HMRC want a way out of this and this is probably the best they can offer. If you are tempted to settle then note that you do not need a specialised accountant to act on your behalf. You can do it yourself.

[AztecPaul]

Had a letter

Same as others.

However I have correspondence in the past which clearly stated I was part of an approved HMRC scheme.

I left in 2007 from an EBT scheme.

If they want to challenge me good luck, because I will move for a judicial review relating to the matter that the scheme I entered into was approved by HMRC.

I may also look at instigating a breach of contract against HMRC.

The letter smacked of trying to scare people into paying in. In the supplementary booklet it stated that if there was no correspondence by the date of 9th January 2015 they would then look to make further investigations with regards to a tribunal hearing. So that suggests to me that this is a blanket attempt to claw back money and not based on looking at individual circumstances