HMRC Enquiry letters on Loans from EBT and other schemes

[dangerouswhensober]

Timing depends on a number of features including the value at stake, the volume of potential schemes at stake, how many people are impacted, etc. For cases where there is some urgency, there may be a date within a couple of months of the end of the August recess. Otherwise expect 9 to 12 months.

Politics comes into this unfortunately. In this case two key events. First is that an election is due next year. Gidiot Osborne will want to show a success of his policies if only to position himself for a punt at leader eventually. Therefore a hearing and decision pre Christmas allows him to book the results. Second, HMRC may wish to have a couple of similar cases heard at lower tiers before the CofA hearing. In that case, a hearing date a bit later is indicated.

If I was running a sweepstake, I would have the appeal in Court in December and a decision in February.

One favourable feature here is that Court of Appeal will only rarely allow new legal argument to be introduced. Therefore if it is accepted that the Tribunal has analysed the facts correctly AND applied an interpretation that is not unreasonable, then the odds are in favour of taxpayer. If that happens though expect an appeal to Supreme Court.

Thanks again for another knowledgeable answer.

But could you clarify two aspects:

(1) "HMRC may wish to have a couple of similar cases heard at lower tiers before the CofA hearing" - Does this really mean that HMRC will go forward to the FTT with cases involving EBT schemes similar to the Rangers EBT scheme, in the full knowledge that they haven't yet won the Rangers case (in any court) ?

(2) "If that happens though expect an appeal to Supreme Court." - Do you mean that you would expect HMRC to go to the Supreme Court if the case is heard and lost in the CofA - or can HMRC go to the Supreme Court even if the CofA refuses to hear an appeal on the basis of inadequate grounds ?

[Rob79]

Thanks again for another knowledgeable answer.

But could you clarify two aspects:

(1) "HMRC may wish to have a couple of similar cases heard at lower tiers before the CofA hearing" - Does this really mean that HMRC will go forward to the FTT with cases involving EBT schemes similar to the Rangers EBT scheme, in the full knowledge that they haven't yet won the Rangers case (in any court) ?

(2) "If that happens though expect an appeal to Supreme Court." - Do you mean that you would expect HMRC to go to the Supreme Court if the case is heard and lost in the CofA - or can HMRC go to the Supreme Court even if the CofA refuses to hear an appeal on the basis of inadequate grounds ?

1. Yes
2. HMRC will appeal if they lose. There is no ability to leapfrog CoA and go to Supreme Court.

[Rob79]

Is this becoming the Rob79 forum.

You seem to have so much knowledge/opinions it makes me wonder who or what you are

My apologies if I contribute too much. Happy to withdraw for a while if you wish.

As regards knowledge, I've worked in the tax sector for nearly 40 years now and along the way have accumulated knowledge that I'm happy to pass on.

I'm not looking for work, clients or making punts for any firm and certainly not punting products.

[dezze]

Is this becoming the Rob79 forum.

You seem to have so much knowledge/opinions it makes me wonder who or what you are

I for one am happy he/she is around. (and no I don't know he/she). I think there is a lot of good information that is being disseminated.

My view anyway.

[dangerouswhensober]

Thanks again.

With regards to point (1), I would have thought that if HMRC did this (i.e. proceeded with other cases), then they could face a serious charges of wasting significant amounts of taxpayers money on cases which they are unlikely to win.

But then, as has been remarked before, huge sums of (claimed) tax are at stake ...

[dangerouswhensober]

I for one am happy he/she is around. (and no I don't know he/she). I think there is a lot of good information that is being disseminated.

My view anyway.

I agree - and I'm not related to him in any way :-)

[tax is taxing]

ROB79

Appreciate your insight in to routine legal proceedings, application of law, etc. Helps idiots like me understand reality.

Stick around, though the purpose of this forum may not be accomodating.

[sl4]

Appeal (of Appeal)

BBC News - HMRC bids to appeal Rangers tax case

[jbryce]

I would respectfully disagree with some of what your accountant says. That said I suspect that if you put 3 accountants in a room and asked them for an opinion, you'd get at least 5 different opinions (and a big bill).

Boyle is based on such specific facts that an FN would almost certainly be defeated. Arguably Rangers has special facts as well.

APN's have no appeal mechanism. The ONLY Court action is judicial review for HMRC acting outside its remit. HMRC's success at JR hearings is much better than 80%. the hurdle is high.

The 80% success rate is against tax avoidance cases generally. In getting to that, HMRC has deliberately cherry picked egregious cases and held back less likely cases. Eventually that percentage will fall back but probably too late for most.

Settlement opportunities for claims yet to have a final decision are common. This is part of HMRC policy and not specific to EBT.

Ah gotcha. I think what my accountant was saying was - if you get an APN it will be for the amount in dispute. No interest, no penalties. In order for HMRC to get the latter they would have to drag you to an FTT or, I guess, issue a FN. Does that make sense?

[dangerouswhensober]

Potential HMRC revenues from EBT tax claims

There is an interesting and valuable snippet of information in the BBC report of the HMRC appeal:

"HMRC continues to believe that schemes using employee benefit trusts to avoid tax do not work. Around 700 users of EBT schemes have already settled with us resulting in around £800m of tax and NICs (National Insurance Contributions) being paid."

Now using some 'back-of-an-envelope' calculations (and because it's Friday afternoon & I have some time):

It has been commonly quoted that there are 60,000+ individuals in 1000+ schemes which are being (or may be) investigated by HMRC.

Let's assume that only one-third of those schemes involve EBTS (although I suspect it may be more than that, given the high priority that HMRC has assigned the Rangers case)

So roughly 20,000 individuals may be involved in EBT schemes under investigation - of which 700 have already settled for £800m

These ball-park figures show:
(1) Only 3.5% of EBT scheme users have already settled, and
(2) Total tax claimed from EBT scheme users is £ 22,857,000,000 (i.e. > £22 billion)

I find point (1) to be very heartening - I for one am not responding to the Settlement Offer I received, on a point of principle (I don't owe the money) and on a point of practice (I don't have the money immediately to hand). (And let's not forget that everone who does not settle causes extra workload for HMRC).

If in any way accurate, I find point (2) to be VERY REVEALING - it's not surprising HMRC won't give up on the Rangers EBT case - set against this potential collection, the legal fees (all the way up to the Supreme Court) are a drop in the ocean.

Now - bearing in mind that these guesstimates may be significantly wrong - anyone care to comment ?