HMRC Enquiry letters on Loans from EBT and other schemes

[pimpernell]

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

From what I'm being told -

case 1: COP8 only but no follow up assessment - after 6 years they cannot then raise an assessment unless I'm being accused of fraud/ deliberately misleading.

COP8 plus assessment - your most likely toast, since an assessment has been raised

It's the rules (law) around raising assessments that are key (at least to me because I never got one)


CH50100 - Assessing Time limits: Overview

[jbryce]

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.

To pursue an FN/APN they need to have started to investigate you with a COP 8. They have one year to do that after the end of the tax year, four years in the case of incomplete disclosure and six if you have been careless. Twenty is into the land of fraud - are we fraudsters now too??

Even the four years one is difficult as what you were required to show for a DOTAS scheme is arguable - if you had not been supplied with an SRN then how could you have completed the SA? Who knows?

[pimpernell]

To pursue an FN/APN they need to have started to investigate you with a COP 8. They have one year to do that after the end of the tax year, four years in the case of incomplete disclosure and six if you have been careless. Twenty is into the land of fraud - are we fraudsters now too??

Even the four years one is difficult as what you were required to show for a DOTAS scheme is arguable - if you had not been supplied with an SRN then how could you have completed the SA? Who knows?

What is the precursor for an APN? Is it COP8 or an assessment or either of the two? The normal rules around Assessment and time limits are clear - I think DR is saying that if a COP8 has been raised then the normal rules don't apply but that's NOT what my tax adviser is saying.

A COP8 does not contain a monetary figure; an assessment does and an APN would have to also. So COP8 on its own - no indication of how much HMRC think is owed and to work that out needs an assessment (with rules about time limits).

DR - If you can show me where a COP8 allows assessment time limits to be waived, then that'd help because I'll ask my tax adviser to clarify.

[vern19]

What is the precursor for an APN? Is it COP8 or an assessment or either of the two? The normal rules around Assessment and time limits are clear - I think DR is saying that if a COP8 has been raised then the normal rules don't apply but that's NOT what my tax adviser is saying.

A COP8 does not contain a monetary figure; an assessment does and an APN would have to also. So COP8 on its own - no indication of how much HMRC think is owed and to work that out needs an assessment (with rules about time limits).

Maybe worth contacting Rob79 who is a professional tax advisor on this forum

[Rob79]

What is the precursor for an APN? Is it COP8 or an assessment or either of the two? The normal rules around Assessment and time limits are clear - I think DR is saying that if a COP8 has been raised then the normal rules don't apply but that's NOT what my tax adviser is saying.

A COP8 does not contain a monetary figure; an assessment does and an APN would have to also. So COP8 on its own - no indication of how much HMRC think is owed and to work that out needs an assessment (with rules about time limits).

DR - If you can show me where a COP8 allows assessment time limits to be waived, then that'd help because I'll ask my tax adviser to clarify.

My understanding is as follows.

There is no precursor to the APN regime.

Prior to APN, HMRC could issue a demand for tax ONLY when as assessment was issued. That assessment could be appealed, the tax postponed and be subject to endless delay and abuse of process.

The APN is a way to accelerate the tax that you think you don't owe and HMRC think you do - nothing else.

COP 8 is a process that says to you, "we think your tax position for year 20xx/xx is incorrect and we're investigating. Your rights and obligations are as follows".

It puts you on notice that the year in question is not agreed for tax purposes. The year is consequently what we would call "open".

As it is open and that status is a key condition for APN issue, you may get a demand via APN. There does not need to be an assessment. There is no appeal and limited opportunity to defer payment.

This is why many people in the tax profession (many think it's the second oldest profession and closely related to the first) are really worried. Having the ability to demand tax with almost no ability to challenge and no assessment or calculation, is dangerous and arguably an extension of powers beyond HMRC's remit. Expect to see constitutional challenges here.

In summary, if you have had a COP 8 notice you are in the firing line and assessment or not, you might get a demand (APN).

This is my opinion. You should ALWAYS consult a tax professional as you personal circumstances may alter this analysis.

[DonkeyRhubarb]

DR - If you can show me where a COP8 allows assessment time limits to be waived, then that'd help because I'll ask my tax adviser to clarify.

You won't find anything about time limits after the opening of an enquiry because there aren't any.

[eek]

You won't find anything about time limits after the opening of an enquiry because there aren't any.

Yep its worth reading Taxman no longer limited to six-year look back :: Contractor UK as it shows that once an enquiry has began it can continue as long as HMRC want.

As the SN58 people would confirm...

[TheDandy]

Maybe worth contacting Rob79 who is a professional tax advisor on this forum

Apologies if I have missed it but where on this forum does it validate that Rob79 is a professional tax advisor - link, credentials etc?

[Rob79]

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....

My opinion:

1. Yes. An APN is just a payment on account of the tax and does not mean that penalties are no longer in point.
2. I would recommend that you get a professional involved. See my post on settlement process.
3. You won't. Once you have accepted a settlement you will not get the benefit of any subsequent litigation decision. If you have just paid the APN and a favourable case arises, you will get the money back. Reckon on about 10 years. (Don't forget interest at 0.5% per annum).

[Rob79]

Apologies if I have missed it but where on this forum does it validate that Rob79 is a professional tax advisor - link, credentials etc?

It doesn't validate the fact, it is just my saying so.

If you want to PM, I can perhaps prove it to you but it's not proof I'm willing to put in a public forum for a number of reasons, not the least of which is professional practice.