HMRC Enquiry letters on Loans from EBT and other schemes

[jamesbond007]

I ask as surely these schemes were registered through DOTAS and so well known to HMRC...

PLC - Discovery assessment blocked by inclusion of DOTAS SRN number and information provided in tax return (Upper Tribunal)

The Upper Tribunal determined that the inclusion of the DOTAS SRN number and other information in the taxpayers' tax returns prevented HMRC from making a discovery assessment because an officer could reasonably have been expected from that information to have been aware of the tax understatement. The Upper Tribunal also considered the meaning of "discovery" and the qualities of the hypothetical officer. (HMRC v Charlton, Corfield & another [2012] UKFTT 770 (TCC).)

I am with you on this ... surely if the information was on the return they shouldnt be able to open a discovery assessment?

[Vallah]

I am with you on this ... surely if the information was on the return they shouldnt be able to open a discovery assessment?

Indeed.

[DonkeyRhubarb]

If there was a DOTAS SRN on the return then I don't see how HMRC could have any grounds for using discovery.

The early years of the BN66 scheme pre-dated DOTAS. Even though the scheme was fully disclosed on returns, HMRC used discovery in several hundred cases. They are arguing that an inspector could not have been expected to realise there was a potential under assessment from the wording provided. This will be appealed at tribunal.

[LandRover]

If there was a DOTAS SRN on the return then I don't see how HMRC could have any grounds for using discovery.

The early years of the BN66 scheme pre-dated DOTAS. Even though the scheme was fully disclosed on returns, HMRC used discovery in several hundred cases. They are arguing that an inspector could not have been expected to realise there was a potential under assessment from the wording provided. This will be appealed at tribunal.

Well I really hope the tribunal is successful especially if HMRC v Charlton, Corfield & another [2012] UKFTT 770 (TCC) is anything to go by. HMRC's usage of discovery is despicable at times and this ruling is now case law and hopefully of some comfort to many.

[Ravman]

Tax amounts

Am I correct in believing that HMRC have been charging interest on the amounts payable since 31st Jan 2010?. Not knowing how long this will take to resolve I am concerned that we will end up paying a lot more back if things dont go our way. I know its a crazy suggestion but would paying back some/all (if possible) of the amount stop the interest from accrueing and if HMRC lose this then would we not receive the amount back anyway? Any thoughts on this?

[Penguin]

I ask as surely these schemes were registered through DOTAS and so well known to HMRC...

PLC - Discovery assessment blocked by inclusion of DOTAS SRN number and information provided in tax return (Upper Tribunal)

The Upper Tribunal determined that the inclusion of the DOTAS SRN number and other information in the taxpayers' tax returns prevented HMRC from making a discovery assessment because an officer could reasonably have been expected from that information to have been aware of the tax understatement. The Upper Tribunal also considered the meaning of "discovery" and the qualities of the hypothetical officer. (HMRC v Charlton, Corfield & another [2012] UKFTT 770 (TCC).)

That's what I was trying to say a few pages back.

[Michael J Perry FCA]

HMRC and Talent Resource Management Limited

On this forum some people have asked what HMRC are doing with regard to the Talent pay scheme and the ex-employees who have Tax Return enquiries related to it. I just came across an update I sent to clients and instructing professional advisers on 30 January 2013.

Although not an EBT scheme, many of the 2008/09 assessments issued recently relate to Talent where the employment commenced after 5 April 2007. Investigation cases opened for 2006/07 on Talent have been with HMRC Specialist Investigations Office for sometime and it is they who will be issuing instructions for these latest assessments.

I reproduce the update below:

CODE OF PRACTICE 8 ENQUIRY UPDATE – TALENT RESOURCE MANAGEMENT LIMITED

A number of clients have requested an update on the current situation.

HMRC seem to be concentrating their efforts on ex-employees of the many and various EBT schemes (such as Cherrylon Marketing Limited, Edge Consulting Limited and many others) who did not take up the previous settlement opportunity.

As far as Talent Resource Management Limited and my many clients are concerned, Specialist Investigations office have not yet followed up any cases with their intended plan of action which they outlined to me verbally last year in some detail. I was advised that action could be expected early on in 2013.

We can only wait until HMRC formally state their next move in each individual case and/or use their wide powers to extend each investigation, make requests for further information or start issuing income tax and possibly NIC determinations together with a range of other possible far reaching actions available to them.

[DonkeyRhubarb]

Interest

Am I correct in believing that HMRC have been charging interest on the amounts payable since 31st Jan 2010?. Not knowing how long this will take to resolve I am concerned that we will end up paying a lot more back if things dont go our way. I know its a crazy suggestion but would paying back some/all (if possible) of the amount stop the interest from accrueing and if HMRC lose this then would we not receive the amount back anyway? Any thoughts on this?

If you want to stop interest accruing, you can get a Certificate of Tax Deposit

HMRC are currently charging 3% p.a. interest. The interest is simple (not compound) ie. no interest on interest.

[zaphrus]

I can provide a correct template to reply to HMRC for anyone that just wants to get the appeal right and decide what to do later.

I'm a lurker that's been caught by this - and am just looking at the best letter to send. Michael, I'd like to take you up on your offer, and if you are taking cases, I would like to discuss my case with you. Could you let me know how I can contact you?

Thanks

Mod Note: Mr Perry can be found on LinkedIn via Google.

[kishore2004]

Lawyer

Hello, I have also received the letter on loans and I am planning to appeal through a lawyer. If anyone in the forum is approaching through a lawyer, can they please send me the contact? Any help is much appreciated as I am broke with the amount mentioned in the letter. Thanks