HMRC Enquiry letters on Loans from EBT and other schemes

[Patch123]

thanks, so why are HM Revenue not issuing demand letters ?, do we expect these in the next 1-3 months, some folk are saying could take years, what could take years ?, HM Revenue can quite easily issue a demand now, no ?, then it is for us to decide what to do next....a little confused where folk are getting the could take years from.... ......

By appealing you are effectively postponing any payment demands by HMRC. They may take one person from each scheme to a Tribunal and, if successful, they will be in a very strong legal position to enforce payment form all others using the scheme. Also in Court cases it is usual for the loser to pay all the fees.

One problem some people will have in defending the loans is if there was 0% interest applicable. HMRC can then class the loan as a benefit in kind which is obviously taxable. Some loans did have a commercial rate of interest applicable and will be tougher for HMRC to prosecute

It's a waiting game and we just have to hope a few Tribunals go our way

[vern19]

thanks, so why are HM Revenue not issuing demand letters ?, do we expect these in the next 1-3 months, some folk are saying could take years, what could take years ?, HM Revenue can quite easily issue a demand now, no ?, then it is for us to decide what to do next....a little confused where folk are getting the could take years from.... ......

HMRC do not have the full weight of the law behind them. As far as I'm aware anyone can ask for a Tribunal rather than pay HMRC for any demand but a lawyer may say you have a hopeless case and the best thing is to pay now rather than incur interest, penalties, legal fees etc.. If HMRC start winning cases then it may be better to just pay up. They may make a settlement offer. Let's wait and see. In the mean time just get on with your life.... Its only money :-)

[sl4]

Interest Only

HMRC can only apply interest to any determined outstanding amount. "Penalties and others" cannot be applied in the case of EBTs as all users have fully disclosed their positions via P11Ds and tax returns.

One test case may pick up the bill for legal representation (in the event of loss) but this will probably be funded by the supporting EBT users who have an interest in seeing case wins.

Therefore your only risk at the moment is an accruing interest, implying that appealing and waiting is the best strategy. Settling a tax year now cannot guarantee exemption from HMRC trawling previous years if they ultimately win.

Morals and ethics are not written into laws. Things are either legal or illegal. HMRC had to have the government introduce legislation in April 2011, back dated to the 9th of Dec 2010 to stop EBTs in their tracks. Prior to this they were toothless in preventing their operation as EBTs were LEGAL.

HMRC may not have liked their operation but could do nothing about them.

Anybody receiving benefits from a trust post 9th Dec 2010 were subject to the new legislation.

The most sensible mode of operation for the moment is appeal and prepare to fight a defence with a well funded group. There is little to lose from this course of action.

[vern19]

HMRC can only apply interest to any determined outstanding amount. "Penalties and others" cannot be applied in the case of EBTs as all users have fully disclosed their positions via P11Ds and tax returns.

One test case may pick up the bill for legal representation (in the event of loss) but this will probably be funded by the supporting EBT users who have an interest in seeing case wins.

Therefore your only risk at the moment is an accruing interest, implying that appealing and waiting is the best strategy. Settling a tax year now cannot guarantee exemption from HMRC trawling previous years if they ultimately win.

Morals and ethics are not written into laws. Things are either legal or illegal. HMRC had to have the government introduce legislation in April 2011, back dated to the 9th of Dec 2010 to stop EBTs in their tracks. Prior to this they were toothless in preventing their operation as EBTs were LEGAL.

HMRC may not have liked their operation but could do nothing about them.

Anybody receiving benefits from a trust post 9th Dec 2010 were subject to the new legislation.

The most sensible mode of operation for the moment is appeal and prepare to fight a defence with a well funded group. There is little to lose from this course of action.

Are you saying anyone receiving loans pre 9th Dec 2010 are sitting pretty?

[sl4]

Sitting pretty - not quite

Everyone taking benefits from a trust prior to 9th Dec 2010 should look closely at how the scheme operated. If implemented correctly there is a strong argument to the legality of its operation. Remember HMRC had to have the law changed to outlaw them.

Prior to Dec 2010, certain trust-based distributions were a recognised legal method of employees receiving benefits which were not classified as emoluments. Case law exists to back this up.

Have a look at the Dextra and Sempra Metals cases vs HMRC to see where case law has been formed.

Finally, remember these letters are "Nudge, Nudge", soft policy designed to force behavioural change. It is of no surprise that they appeared before Christmas, this is a standard policy to turn up the heat. They have done this before.

see w ww.taxation.co.uk/taxation/Articles/2013/03/19/304511/nudge-nudge

I would recommend appealing and awaiting the outcome of the Rangers Big Tax case before making any decision about how to take your case forward.

Even in the event of a HMRC win, each scheme will still have to have its day in court to prove its legitimacy or not.

[porrker]

Everyone taking benefits from a trust prior to 9th Dec 2010 should look closely at how the scheme operated. If implemented correctly there is a strong argument to the legality of its operation. Remember HMRC had to have the law changed to outlaw them.

Prior to Dec 2010, certain trust-based distributions were a recognised legal method of employees receiving benefits which were not classified as emoluments. Case law exists to back this up.

Have a look at the Dextra and Sempra Metals cases vs HMRC to see where case law has been formed.

Finally, remember these letters are "Nudge, Nudge", soft policy designed to force behavioural change. It is of no surprise that they appeared before Christmas, this is a standard policy to turn up the heat. They have done this before.

see w ww.taxation.co.uk/taxation/Articles/2013/03/19/304511/nudge-nudge

I would recommend appealing and awaiting the outcome of the Rangers Big Tax case before making any decision about how to take your case forward.

Even in the event of a HMRC win, each scheme will still have to have its day in court to prove its legitimacy or not.

The Rangers case has very little to do with with Contractor EBT Schemes. HMRC are chasing corporation tax from Rangers FC. They have not targeted users of the Rangers EBT (Players and staff) as they are in the contractors EBT schemes. HMRC are claiming that the Rangers EBT structure was not setup correctly and therefore the contributions rangers made to the EBT was profit and therefore subject to Corporation Tax.

[cojak]

@ljstoPP (not stoop as some people seem to be reading).

Are you an employee of w ww.taxation.co.uk?

[ScottW]

Note

The Rangers case has very little to do with with Contractor EBT Schemes. HMRC are chasing corporation tax from Rangers FC. They have not targeted users of the Rangers EBT (Players and staff) as they are in the contractors EBT schemes. HMRC are claiming that the Rangers EBT structure was not setup correctly and therefore the contributions rangers made to the EBT was profit and therefore subject to Corporation Tax.

The Rangers case is (hopefully!) different from the way the vast majority of Contractors EBT's were run and will not set case law. Rangers issued 'side-letters' saying the Loans never had to be repaid. HMRC argue that this shows the Loans were a sham. To my knowledge no Contractor schemes issued these side letters.

[ffs]

The Rangers case is (hopefully!) different from the way the vast majority of Contractors EBT's were run and will not set case law. Rangers issued 'side-letters' saying the Loans never had to be repaid. HMRC argue that this shows the Loans were a sham. To my knowledge no Contractor schemes issued these side letters.

HMRC are being sneaky and underhanded with this case. There is no financial gain to the tax payer in taking Rangers to Court as the club went into liquidation over the debts at the time. However the Rangers EBT was poorly setup and administered so HMRC feels they are more likely to succeed and to set some precedence that EBTs are not valid tax planning schemes. If they win they will probably go after the footballers in a blaze of publicity and public outrage against over paid footballers. And only then will they come after the rest of us.

There is a long way to go yet and after the initial shock of receiving the letters, I am now quite calm and have faith in our legal system.

FFS

[antrant]

Notice of Assessment under Discovery - Keypay Solutions

Hi, I've just received a notice of assessment under discovery for 2010-11 tax year for a company I was with called Keypay Solutions Ltd (I think this might have been part of the 'Kinsella Facility' and was also the front end for IT-Contracts Finance).

Does anybody know if Keypay are still around and if there are any representative cases for this loan scheme yet through the tax tribunal? Or is it just one of the many loan schemes that await time in the tax tribunal

Also, which is the best template to use for my appeal? Does it need to be as a written letter as I am overseas now.

Thanks