HMRC Enquiry letters on Loans from EBT and other schemes

[IngloriousContractor]

Referring to this old post by varunksingh:
"ToAA is what HMRC wants to apply to all EBTs and Boyle's case has not done us any favors but some points to keep in mind
1) Many points related to ToAA were not even discussed in Boyle's case - thus HMRC in court cannot refer to Boyle's case for those arguments.
2) If courts agree that EBT loans are loans and not income as HMRC wants to argue, even after applying ToAA tax will be much low as benefit of ToAA with only getting a loan not getting full loan amount as income"

#2 is interesting. How would tax be calculated on benefit of ToAA? Is info available on what boyle had to pay? It may help us work out what we might need to pay if it comes to it. Thanks

[pimpernell]

Like you, I received a settlement opportunity letter which is not specific to a particular tax year. I also used ASIOM.

I called hmrc when I received the settlement opp letter and asked them what I owed which was how their letter was worded. They indicated that it was for a specific tax year and I asked them whether time limitations on raising an enquiry would apply - they were evasive on this and claimed they had sent me a letter in the requisite 12 months. I denied receiving this and asked them to send me a copy - they said they couldn't find it but would look further.

I subsequently found a cop8 letter just like yours - had forgotten about it because it said no info was required and they would write again when closer to resolution or if enquiries do not progress issue satisfactorily. Nothing
heard in 4 years. It will be interesting to see if they can find the letter but I too would like to know whether a cop8 gives them an indefinite period for re-opening assessments?

Also, in my case, I used the ASIOM scheme in the tax year prior to the cop8 latter, but no enquiry raised on that year. The form hmrc want us to fill in seems to require disclosure of any tax years even where they are out of time to raise an enquiry - feel a bit like trawling to me.

My understanding is that they have to issue an Assessment within 4 years / 6 years or 20 years. They can extend to 6 years only of they can justify carelessness and 20 years if they argue fraud. So I'm being told by my tax adviser who is an ex HMRC inspector at a high level (so therefore knows what he's talking about).

So if you received a COP8 or any other enquiry prior to tax year 2009-2010 but did not then receive an assessment, then they cannot now retrospectively create an assessment unless they argue carelessness in which case they can go back to 2007-2008.

(Think I've got my years right - but not sure - it's +/- 1 year from what I'm quoting)

Likewise pre 2006, HMRC would have to say your were fraudulent which is a serious charge, and one they'd be hard pressed to make because at the time (pre change in law) you were acting based on what was law at the time. There is a clause that says 20 years is applicable in the case of some avoidance schemes but that is only if the SA was incomplete or didn't disclose full info.

My situation was I received two COP8s but no follow up or requests for more info or any assessment. The last one was for 2007-2008, therefore I have nothing to worry about because they cannot now assess unless they claim I was trying to be fraudulent (which I wasn't), and neither should you if you are in the same boat.

I think you're right - they're trying it on. Get advice from a pro. I can recommend one if you PM me.

[dezze]

So if you received a cop8 for 2006/07 (and assuming 6 year rule only) but never received an assessment (which I presume includes actual amounts hmrc say you should pay) you will NOT be asked for a penny more because hmrc can't issue an assessment? So apn, fn would not apply? Am I reading this wrong? (it is early).

[vern19]

My understanding is that they have to issue an Assessment within 4 years / 6 years or 20 years. They can extend to 6 years only of they can justify carelessness and 20 years if they argue fraud. So I'm being told by my tax adviser who is an ex HMRC inspector at a high level (so therefore knows what he's talking about).

So if you received a COP8 or any other enquiry prior to tax year 2009-2010 but did not then receive an assessment, then they cannot now retrospectively create an assessment unless they argue carelessness in which case they can go back to 2007-2008.

(Think I've got my years right - but not sure - it's +/- 1 year from what I'm quoting)

Likewise pre 2006, HMRC would have to say your were fraudulent which is a serious charge, and one they'd be hard pressed to make because at the time (pre change in law) you were acting based on what was law at the time. There is a clause that says 20 years is applicable in the case of some avoidance schemes but that is only if the SA was incomplete or didn't disclose full info.

My situation was I received two COP8s but no follow up or requests for more info or any assessment. The last one was for 2007-2008, therefore I have nothing to worry about because they cannot now assess unless they claim I was trying to be fraudulent (which I wasn't), and neither should you if you are in the same boat.

I think you're right - they're trying it on. Get advice from a pro. I can recommend one if you PM me.

Encouraging information I was under the impression that once HMRC issued the assessment/COP8 they had then protected that year and could take as long as they want. If you look at the Boyle case, his assessments were for 2001/2/3

[dezze]

Based on the information above, the important thing is when the assessment is made after an initial enquiry. If you have already received assessments the above doesn't help (if correct) I have a feeling this happy balloon will be burst by a poster who knows/thinks different.

[PeterF]

I don't think that's true. If you received a COP8/enquiry notice back in the day there is no time limit upon which HMRC has to act upon it. They can't open new enquiries past 4/6/20 years where there isn't one already - but with an existing COP8 they can take another decade or 3 before acting upon it if they like.

[dezze]

I don't think that's true. If you received a COP8/enquiry notice back in the day there is no time limit upon which HMRC has to act upon it. They can't open new enquiries past 4/6/20 years where there isn't one already - but with an existing COP8 they can take another decade or 3 before acting upon it if they like.

That is my understanding.

[Saintman100]

Darwinpay partnership

All - appreciate that there are numbers of threads and believe me have spent hours reading through them but still have some unanswered questions. I contracted through darwinpay for in 2010/2011. Have received Settlement opp letter (and enquiry letter beginning last year)but no calculations of any sort- reckon liability circa £8.5k The contractor helpdesk they refer me to is a joke. Options as I see it are

(1) I settle and get them to agree instalment plan over say 12months
(2) I dont settle and will receive an APN at some point after 9th Jan, which will give me 3 months to pay up a figure I may not agree with.

Questions
(1) If I pay up via an APN am I still liable to penalties in the future ? this is my main concern as if im paying up either way I may as well take a punt that I could potentially get the money back if EBT rulings are favourable
(2) Would I need to get a tax specialist/accoutant involved at this stage - as i see it I either pay up or dont (appeal letters links etc are detailed in forum)
(3) If the HMRC are defeated on a number of cases at what point would you potentially see the money again and how would that get communicated. (ie if a similar scheme is successful do they then accept that this would be applicable to your scheme)

I appreciate that this has been done to death on these threads so treat me gently....

[pimpernell]

So if you received a cop8 for 2006/07 (and assuming 6 year rule only) but never received an assessment (which I presume includes actual amounts hmrc say you should pay) you will NOT be asked for a penny more because hmrc can't issue an assessment? So apn, fn would not apply? Am I reading this wrong? (it is early).

What I'm being told is that if after 6 years if you have not had an assessment - and I take assessment to mean a letter from HMRC with a ball park figure of how much they think you owe them for a given tax year - then if its more than 6 years since the tax year has ended they cannot then work out an assessment unless they're accusing you of fraud / deliberately missing info from your tax return (the 20 year category), and that is something they will not do lightly.

From what I'm reading on the forum, it looks as though they have been firing out EBT Settlement Offers without applying these rules in some cases. I'm not sure how joined up their processes are re APNs etc, but I'd suggest that if you were to get an APN in these circumstances it would not be valid and it would lose in court which is I think where HMRC would have to take you to get the money if you get an APN and don't pay up.

I have a call with my tax advisor tomorrow and I'll clarify the above, but that's my understanding of what he told me yesterday.

[DonkeyRhubarb]

What I'm being told is that if after 6 years if you have not had an assessment - and I take assessment to mean a letter from HMRC with a ball park figure of how much they think you owe them for a given tax year - then if its more than 6 years since the tax year has ended they cannot then work out an assessment unless they're accusing you of fraud / deliberately missing info from your tax return (the 20 year category), and that is something they will not do lightly.

That is not correct.

If they've already opened an enquiry then they can take as long as they like to issue an assessment or closure notice. There is no time limit once an enquiry has been opened.