HMRC enquiries for EBT schemes through SANZAR

[MercladUK]

I'm afraid your statement is incorrect.

The APN is a payment on account. It is NOT the final liability arising from your scheme. The tax may be higher, there will be interest due, possibly penalties.

Do NOT make the mistake of thinking that paying the APN means the whole issue is dealt with.

The settlement opportunity DOES work on a take it or leave it basis. However it reflects HMRC's current view of the situation and that may be wrong. Until a Judge decides what his/her view is, we won't know.

My personal view of the options available to a Judge are as follows.

1. The loan value is net salary. It should be grossed up for tax and NIC and the final liability is around 60% to 70% of the loan value, before interest and penalty.

2. The loan value is gross income and should be subject to tax and NIC. Interest and penalty to be decided.

3. The loan is just that, a loan. There is no immediate liability. In the event that the loan is written off or forgiven, some liability may arise.

4. The loan is a distribution from a trust and the trustee is liable for tax which is a credit for the recipient in scenarios 1,2 or 3 above.

5. The loan is outside the scope of UK tax laws and is a tax "nothing".

I'm sure with a bit of creativity more options are available.

So what does an adviser bring?

A. The generation of options such as those above, based on facts and law
B. An objective assessment of the likely result
C. Advice as to whether to take a settlement or not
D. Advice on legal/tribunal process and cost
E. Guidance and an expert view

As has been said the arithmetic here is simple. Understanding the environment and the likely outcomes is not.

It is a fact that a professional adviser can only advise. The decision is the clients'. That advice might be seen as too cautious, too aggressive, ill informed or brilliant. Very subjective.

The advisers role is not to make problems and liability disappear. It is to understand and recommend. If the result is to make a liability disappear, everybody is happy. If not, that is usually not the fault of the adviser.

I have not met the gentlemen mentioned here and have no particular opinion other than to expect that he meets the standards of his profession.

Webberg your knowledge and help on this forum has been excellent, but I think anyone who has been associated with this particular forum for a while is aware of what an APN is and what the SO is.

That wasn't my point.

My point is that at this present point, why would you waste precious funds on an advisor?

An SO figure can be gained from HMRC and can be paid or not
An APN figure may be received and must be paid, you can challenge the value if you have evidence which HMRC agree with (ie statements etc)

Wasting money on an advisor now is pointless for the majority of cases (bar a few which are more complex ie LTD companies)

interestingly from the 4 tax specialists I spoke to (free) have all been recommending settlement.

[webberg]

Do you have any stats as to which of these are the norm in terms of HMRC settlement calculations (focusing specifically on 1 and 2 above)?
If one is looking to settle, and option 1 above is an option for HMRC when determining the liability, would it not be in one's interest to have the loan written off first, then inform HMRC, and 'force' them to option 3?
Has anyone used this approach?

I think this is not something that is reduced to "stats".

My understanding is that the settlement offer is option 2 (broadly).

I would say that whether the loan is written off or not is not relevant for the purposes of HMRC analysis. They believe that the loan does not exist (except when it suits them on IHT) and that the "loan" is in fact income that has no repayment terms attached.

I would not however put it past them to tax the loan as income and then try to tax the write off as some form of event as well.

[webberg]

Webberg your knowledge and help on this forum has been excellent, but I think anyone who has been associated with this particular forum for a while is aware of what an APN is and what the SO is.

That wasn't my point.

My point is that at this present point, why would you waste precious funds on an advisor?

An SO figure can be gained from HMRC and can be paid or not
An APN figure may be received and must be paid, you can challenge the value if you have evidence which HMRC agree with (ie statements etc)

Wasting money on an advisor now is pointless for the majority of cases (bar a few which are more complex ie LTD companies)

interestingly from the 4 tax specialists I spoke to (free) have all been recommending settlement.

Thank you for the kind words and my apologies if I misunderstood your post.

I would agree that the present situation is a bit of a stalemate. HMRC has a view and is not willing to entertain other analysis, no matter how valid. They will explain their view quite clearly if asked. They may be less clear about some aspects (IHT, loan write off, trust dissolution) as they haven't got that far.

You can certainly challenge an APN on the grounds that the asserted advantage is incorrectly calculated. That is an arithmetic challenge only and does not go to the heart of any of the options I put up earlier.

Once you have chosen to settle, spending money with an advisor is pointless because aside from the consequences and further analysis that may be required, you can't unwind an agreement.

If you choose not to settle, you must await a Court decision. You can protect yourself from interest charges and start making provision for payment (or non payment) but you have little influence on the final decision unless you contribute (experience, data, analysis and cash) to a suitable group. (You could take an individual action but that is expensive and draining in every way).

As to final result, I suspect that advisers will fall into three camps. Settle now because HMRC will win eventually; don't settle because HMRC may not win; not enough information.

A year ago, I would have been in camp 1.

Today, I'm more inclined towards camp 2. HMRC's position has not gone as they hoped and they are at least 2 years behind where they want to be and there is a rising tide of decisions (some at early stages) against them.

So perhaps, I'm actually in camp 3 today.

[Jammie]

Another Noob

Hi All ,

I used the Sanzar / Garraway Schemes in 09/10 & 10/11 tax years.

Needless to say I am a little dissappointed that chslimited are now advising us to settle.

Admin can I please have rights to send messages as i would like to join the Private group.

Thanks,

Jammie.

[Jes1]

Newbie

I used the DarwinPay scheme for less than a year before the use of EBTs was closed and have been whacked with a large demand. I understand after reading through this forum that Darwin originated from the Sanzar and Garraway schemes. Someone please correct me if I am wrong. There is not much activity in the seperate Darwin thread.
I was forwarded onto Contractor Helpdesk who have been useless and are basically pushing me to settle which I don't agree with.
Please can I have PM rights so I can join the relevant group. Thanks.

[administrator]

Please can I have PM rights so I can join the relevant group. Thanks.

Done!

[bill357]

join

I am in the position. Please can I have PM rights so I can join the relevant group. Thanks.

[morris3372]

Can my account be reactivated

Hi Moderators i am trying to activate my account to seek information on the best ways to deal with APNs etc.

[administrator]

I am in the position. Please can I have PM rights so I can join the relevant group. Thanks.

Done!

Hi Moderators i am trying to activate my account to seek information on the best ways to deal with APNs etc.

You have access to the PM system. Please read the thread to see who you need to contact.

[Unix95]

First post

Hi moderators,

Please can I have PM rights so I can join the relevant group?

Thanks.