HMRC Enquiry letters on Loans from EBT and other schemes

[eek]

The desired outcome for HMRC is issue APNs, get cheques back in the post. Job done.

That's probably worked quite well up to now, apart from some footballers, because they've only targeted wealthy investors in film schemes.

The process might break down when they issue APNs to tens of thousands of contractors.

What nobody, including HMRC, knows is what % of contractors won't be able to pay.

Not quite true, as soon as soon as HMRC start hitting contractors I think the fact is that most won't be able to pay. The question is, does most mean 51% or 90%?

[davieloco]

Not quite true, as soon as soon as HMRC start hitting contractors I think the fact is that most won't be able to pay. The question is, does most mean 51% or 90%?

I think that it really all depends upon how long a contractor has been using these schemes as that will determine how much, I have heard figures from £12k up to £400k where the contractor has been using the schemes for years.

Has anyone carried out a survey of how many people fall into the different bands as I think that that would give a better idea of ability to pay.

DL

[webberg]

Not quite true, as soon as soon as HMRC start hitting contractors I think the fact is that most won't be able to pay. The question is, does most mean 51% or 90%?

It's a numbers game.

APN's are targeting £7bn. If HMRC gets 75% of this, they have a "success" because that's far higher than they got from the Swiss offshore campaign and many others.

DR is correct in that film schemes (and similar structures without film but say IP or green energy) are the initial targets. If you speak with HMRC, they say that film relief claimed and now under the spotlight is "£6bn to £7bn" of which they have withheld perhaps £2bn. Therefore they think the target under APN is £4bn to £5bn.

If you speak with those who did these schemes, the tax relief in point is perhaps £10bn to £12bn. Simple arithmetic means that the APN target has just doubled.

That should mean that the £7bn they've told Parliament about is relatively easy (although we are helping resist APN's) and if they get that from film schemes, the money from contractors is a bonus.

That can go one of two ways.

Either the pressure is off in terms of collection and we might see some humanity, or having reached the target HMRC might see this as giving them more time to collect funds.

Either way I think this might create some space to negotiate (assuming our efforts to nullify APN's on film schemes come to nought).

[DonkeyRhubarb]

I don't know about humanity but there's no doubt that collecting relatively small individual amounts from contractors is going be a lot more resource intensive.

I guess the success, or otherwise, of the EBT Settlement Opportunity might also factor into it.

[regron]

I guess the success, or otherwise, of the EBT Settlement Opportunity might also factor into it.

I agree. Until this stalemate is resolved, it's all guess work...on both sides !!

[StrengthInNumbers]

I think HMRC will just do what they said. Will issue APNs to all they can. Without stopping for any logic or humanity.

[regron]

Agree with you there, but the fact they haven't issued APN's for EBT scheme users yet (that I am aware of) would suggest even they know it isn't that straight forward, mainly due to Rangers I guess. Will that stop them, no. They are probably just getting their story of lies together ready to answer the house of lords and the press once bankruptcies start coming thick and fast.

[StrengthInNumbers]

I'm guessing that it's more to with the fact that the APN legislation in place at the moment does not cover NIC. That's changing though. Parliament is playing a game of ping pong with the NIC Bill on Tuesday. Once that get's Royal Assent (no idea when, but will be before they go home for the election at the end of March), I'm guessing the postman will be busy. Coincidentally, or not, the day after the MPs go home is also the day the EBT settlement opportunity ends.

And you have read the NIC bill and it effects past EBTs? Can you point me relevant sections?

[jbryce]

Yes - because HMRC would say NIC should have been paid. Schedule 2.

NICs have been done to death on these forums - it's just not that simple. It is highly unlikely that HMRC would try and apply NICs to EBTs - HMRC can't even get to a consistent point on IHT - NICS would be a nightmare - who pays what?

To be brutal, HMRC want cash - hence the settlement offer.

[carling]

NICs have been done to death on these forums - it's just not that simple. It is highly unlikely that HMRC would try and apply NICs to EBTs - HMRC can't even get to a consistent point on IHT - NICS would be a nightmare - who pays what?

To be brutal, HMRC want cash - hence the settlement offer.

Also I believe that in the bill mentioned, anti-avoidance measures apply to arrangements entered into after April 2014.
Not sure how they would retrospectively apply these via DOTAS based APN's.