HMRC Enquiry letters on Loans from EBT and other schemes

[cojak]

If you have generic questions regarding HMRC enquiries, this is the thread for you. If you have questions about your own enquiry or want to make contact with others who have used your loan scheme provider, look for the thread in this sub-forum.

The first thing to point out, however:
WE ARE NOT LAWYERS, ACCOUNTANTS OR TAX SPECIALISTS - research and find one that that's right for you

• Gather ALL of your documentation on the scheme, including ANY previous HMRC correspondence. Keep it safe.
• Contact your provider immediately, they will be the best source of information and support and will deal with HMRC on your behalf.
• If they don't exist Google the name of your provider - they may have changed their name and you might have missed the documentation. But now is definitely the time to get some independent advice from an accountant/tax firm.
• Be aware that you may need to appeal using Recorded Delivery within 30 days of receipt of your HMRC letter, follow the 3 bullets above to get advice on this aspect. At the very least reply stating that you disagree with the assessment. That puts the ball back in HMRC's court.
• Read EBT Overview
• Read Loans EBTS and other Trusts
• Read the BN66 thread.
• Learn about Closure Notices.
• Join No To Retrospective Tax (NTRT)

Here is a useful article in the Guardian regarding appeal letters. Tax error: Letter templates to challenge your tax demand

And here are examples of Appeal letters:
http://forums.contractoruk.com/hmrc-...ml#post1700318

http://forums.contractoruk.com/hmrc-...ml#post1705090

If you need PM access rights but don't want to post to get them then use the contact page linked to in the footer and send me a message and I will update your account for you. Here's the link:
http://forums.contractoruk.com/sendmessage.php

HMRC litigate these type of mass marketed schemes through a handful of test/lead cases.

Only those taxpayers selected as test cases will need full legal representation.

Will they select test cases for each variant of the scheme (by promoter)? Don't know.
Are all the schemes structurally similar enough that they will just lump them all together? Don't know.

The ideal scenario is where the promoter defends the scheme and appoints (pays for) legal representation.

Where that is not the case, for whatever reason, then taxpayers selected as test cases would be left to fend for themselves. This is not good for anyone else in the scheme whose fate also depends on the outcome.

Whether you use Michael, another advisor or do it yourselves, you are going to need as many people as possible contributing to a fighting fund to pay for decent representation if this goes to tribunal.

I've been giving some thought as to what I would do if I was in your position.

In order of preference:

1. If the scheme promoter is still around, and committed to defending the scheme at no cost to you, then I would stick with them. This seems like a no brainer to me.
2. If the promoter is charging clients to defend them, this is less clear cut. I would want an idea of how much it could cost. If it was reasonable then I'd still stick with them, even though I think it's an imposition having to pay when you've already forked out hefty fees to use the scheme.
3. If the promoter is referring people to a 3rd party like Tax Talk UK, then I'd probably go with this if the costs were reasonable.
4. Failing all of the above, I would probably go with Michael J Perry. He's taken the initiative and has already got some momentum going. The more people who join him the more the costs of any litigation can be pooled. This is what it's all about - strength/safety in numbers and having a decent fighting £fund.

I would also keep this thread going and urge you to stay in contact with each other.

I hope you never have to go as far as we have in the BN66 camp but you never know what stunts HMRC may pull further down the line.

I wish you all the best.

DR

Sounds like good advice. However there are other companies available for the last option such as Gilbert Tax who have been representing some people who have been using the TRM scheme for a couple of years already. I would also really recommend doing some due diligence on whoever you choose to represent you. I would be asking stuff like

• Why are they a good choice for your particular situation
• Have they done this before and what was the outcome
• If you engage them what are the long term costs of using them depending on how the situation plays out

Yes, you've decided to appeal and you've done it within 30 days. Some basic advice when dealing with HMRC:

1.Do not ignore HMRC correspondence.
2.Do everything via recorded delivery
3.Make sure you have an audit trail (so don't use the phone to negotiate or get smart recording calls etc)
4.You generally have 30 days to respond with info. Send after day 20 or so of 30. Prepare it earlier by all means but wait, just in case there are "developments". This will also give you time to change anything should you wish. There is no advantage to you if you send something earlier.
5.If they ask for something (either for you to do something like attend a meeting or send something) check that you actually have to do it, i.e it is mandatory. If you are under no legal obligation then don't - they won't be asking for your benefit
6.Research the 'system'. All of the HMRC investigation manuals and other procedures are online and available in black and white.
7.If you are unsure SEEK PROPER ADVICE FROM A PROFESSIONAL. At some stage this is going to have to happen anyway

This might all sound a bit crazy, but they are out to get you for whatever they can - they have targets to meet and will not think twice about screwing you over.

Have a look at http://www.tax-hell.co.uk/wp-content...to-know-v5.pdf

Use the time now to organise a plan with other people who were on your scheme.

...

As has been pointed out many times, you need to do your own research on this, consult with the scheme provider where possible and take responsibility for the decisions you make.

We are not recommending you undertake the services of any tax specialist in particular, or even that you will need one - only you can individually make that decision as you know your circumstances more than any other.

The forum is here to support your quest for knowledge, understanding and the sharing of information. We hope that it provides support for you during this time.

Please do share your experience with us about any service you have received to help others make the right choices in the future.

Admin

And for the avoidance of doubt:
The comments in response to this thread are for general guidance purposes only. Neither ContractorUK nor the contributors accept liability for any direct or indirect loss arising from any reliance placed on the replies.

[JimBobTwoTeeth]

ACCOUNTANTS OR TAX SPECIALISTS - Recommendation

Can anyone recommend an Accountant or Tax Specialist who has experience of dealing with EBT's & particularly employee loans (post Dec 2010).

Please PM me or recommend here (I believe this is ok in the forum rules mod?).

[cojak]

Vendors providing advice or recommendations from established posters will be fine.

Adverts or posts from zero (new) posters won't be...

[sal626]

The enquiries HMRC are opening at the moment are merely protective in nature. They are not interested in individuals per se. As with BN66, they will be looking for a way to snare everyone in these loan type schemes in one fell swoop.

The only time you will know that they are serious about doing anything is if they start issuing Closure Notices to users of the scheme. Until then, enquiries mean nothing. (Thanks DonkeyRhubarb.)

Some people seem to have gotten enquiry letters before and after christmas. They say we are going to look into the scheme. These are generally for the tax year 2010-2011, for which the enquiry window closed jan 2013.

In last few weeks people have been receiving notices or discovery "tax reassessments" for the tax year 2008-2009, for which the "normal" time limit for HMRC to issue a "tax reassessment" expires in April 2013.

My question is, is the discovery tax reassessment different to a closure notice?

In any case, anyone who receives a letter should be appealing it....as EBTs are still working thier way through the courts, and HMRC have not had much sucess trying to prove that loans from EBTs are income on which PAYE is due.

[DonkeyRhubarb]

Discovery is used by HMRC to open a late enquiry beyond the 12-month window.

A Closure Notice is a different beast altogether. It:

• amends your tax return with what HMRC think you should have paid
• gives you 20 days to pay up or lodge an appeal, or face a penalty/distraint/court action

[Vallah]

Discovery is used by HMRC to open a late enquiry beyond the 12-month window.

A Closure Notice is a different beast altogether. It:

• amends your tax return with what HMRC think you should have paid
• gives you 20 days to pay up or lodge an appeal, or face a penalty/distraint/court action

Victory for the taxpayers in the Charlton case as the UT confirms that HMRC's discovery assessments were unlawful - RPC Tax Take

The above case makes it very likely that the discovery notices are unlawful in any case. HMRC are acting outside their powers, and are trying to scare people into paying up.

[bluerover]

Notice of Assessment - 2008/2009

I have received a Tax re-assessment from HMRC for the year 2008/2009 made under the provisions of Section 29 Taxes Management Act 1970.
During that particular year I was on an EBT scheme whuch I believe was a legitimate arrangement.
I was wondering how I stand regarding this demand from HMRC.
Thanks in advance for any help/advice.

I have on Friday received a similar letter based on 2008/2009 tax year. I was through Talent Resource Management (Also known as Payscheme Plus, Cherrylon & Redding Capital Finance).

There is no trace of this company and have found out they wound up voluntarily in 2010. So I am left either fighting it (and not knowing how without support from the company I used) or paying it the bill? It interesting the wording used in the letter saying the payments received as loans but they believe they relate to professional work and so are taxable. Doesn't sound like they are convinced what they are asking for...

I know it could come back and bite me and am a wiser person now and thankfully I only used it for a year and moved to a limited company, but something niggles me how its worded its almost like it is trying to scare me into paying rather than contesting it.

Anyone else through Talent Resource at this time and had one of these letters?

[cojak]

I didn't think that TRM was an EBT, but you can find more on this thread.

Talent Resource Management

[bluerover]

I didn't think that TRM was an EBT, but you can find more on this thread.

Talent Resource Management

Thanks Cojak. Glad I only used them for a short time...and realise how naive I was to use this sort of scheme.

[DonkeyRhubarb]

It interesting the wording used in the letter saying the payments received as loans but they believe they relate to professional work and so are taxable. Doesn't sound like they are convinced what they are asking for...

They can believe anything they like. The only opinion that matters is a court of law.

If they were in a strong position they would issue Closure Notices.

but something niggles me how its worded its almost like it is trying to scare me into paying rather than contesting it.

Yep, they want you to think you're screwed so you may as well throw the towel in now.