HMRC enquiries for EBT schemes through SANZAR

[MrO666]

In my case and presumably others for Sanzar 08.09 they didn't provide the DOTAS number in time for the Self assesment. It was advised a good few months after and I submitted it to hmrc via an AAG4 form.

How does this fit with a discovery assessment?

Presumably it should be deemed part and parcel of the SA as hmrc has still been advised. Is DOTAS number sufficient ? What if the whitespace was blank?

There NEEDS to be enough info on the return for HMRC to realistically believe that there may be an underpayment of tax. In the absence of both a DOTAS number and any comments in the white space, then you haven't told them anything at all. Don't get me wrong, I'm not saying if you had added these things then you would have a get out of jail card, but you'd at least have a chance.

Personally I don't believe that the DOTAS number on it's own is enough to knock the DA out......and that seems to be the thinking of most of the professionals I've spkoen to.

[gamechanger]

With regards to the NIC, I've had it on good authority that HMRC are VERY unlikely to try and get that on top of tax and interest.

The key reasons as explained to me (by a leading tax consultancy) are:

1) Seeing as a scheme promoter was in many cases the employer, then as we know the employer is responsible for NIC contributions. Now before anyone jumps at me and says that HMRC can transfer that debt to the taxpayer in the case of the employer not existing anymore, this is in fact incorrect in the case of NIC's (not for Income tax). That rule can only be applied where the taxpayer was also a director of the employing company.

2) The second point was that if they were to come back with a NIC demand at a later date, my sources tell me that in all likelihood the taxpayer could strongly argue that HMRC were in full knowledge that NIC's would be due on any balance sought in the original DA, so hence should have been included in the original DA's.

3) Class 1 NIC's are not and cannot be collected by the self-assessment system.

In relation to if you were to pay the assessment and then do nothing, it's very unlikely that HMRC would then start to pursue you for further money unless they were suddenly in receipt of information which were to clearly show that their original DA was insufficient. In reality that's very unlikely, however as DR has said, the discovery would probably stay open for years, although I'm assuming on dusty day they would have to close it down, but who knows.

If it comes to the crunch, my personal approach will be to sit down with HMRC, iron out the figures between us, get closure notices for the agreed figures and that'll be the end of it.

I think what you are saying makes sense... Should we involve a Solicitor or call HMRC directly -- Say to them we can arrange x amount of money through loan or something and if you are willing to settle and give me a closure notice then lets just call it a day?? Or no chance of this??

[MrO666]

I think what you are saying makes sense... Should we involve a Solicitor or call HMRC directly -- Say to them we can arrange x amount of money through loan or something and if you are willing to settle and give me a closure notice then lets just call it a day?? Or no chance of this??

If you can prove to HMRC that what you're telling them is correct, then 100% they will take your money and issue a closure notice. Why wouldn't they, you would in effect be paying all outstanding tax which is what they're asking for.

If that is your approach, then i wouldn't waste any money on accountants, there's no need. Just write to them outlining what you're saying and ask them to revise the figure and issue a closure notice. Then when you pay it (in full) that's the end of of.

Keep in mind though that if you're going to try and 'do a deal' with HMRC, that's highly unlikely to happen. HMRC cannot be seen to be doing deals with taxpayers, so if you owe X, then that's what they'll want, they won't accept Y as an offer (from what I understand anyway).

[gamechanger]

If you can prove to HMRC that what you're telling them is correct, then 100% they will take your money and issue a closure notice. Why wouldn't they, you would in effect be paying all outstanding tax which is what they're asking for.

If that is your approach, then i wouldn't waste any money on accountants, there's no need. Just write to them outlining what you're saying and ask them to revise the figure and issue a closure notice. Then when you pay it (in full) that's the end of of.

Keep in mind though that if you're going to try and 'do a deal' with HMRC, that's highly unlikely to happen. HMRC cannot be seen to be doing deals with taxpayers, so if you owe X, then that's what they'll want, they won't accept Y as an offer (from what I understand anyway).

There is no way I can pay the entire sum.. I am expecting them "to settle". Which you say is not possible.. So that's out of the window.

I do have one question..

What can actually a solicitor help us with here? As anybody actually got one lined up?

[MrO666]

There is no way I can pay the entire sum.. I am expecting them "to settle". Which you say is not possible.. So that's out of the window.

I do have one question..

What can actually a solicitor help us with here? As anybody actually got one lined up?

As I understand it (I could be wrong) HMRC will not negotiate, if you owe it (and it's far from being proved you do), then they will expect it in full, or installments until the balance is paid.

A solicitor can't do anything at all, this isn't a legal dispute, it's a tax one. If you want to engage anyone to 'work' with HMRC on your behalf, then find a good tax specialist. I don't mean a day to day accountant either, you want to instruct somebody who specialises in tax disputes and investigations.

Beware though, the going rate is anywhere from £80 per hour (+VAT) upwards........so I wouldn't do this as a knee jerk reaction. Sit down, make sure you yourself truly understand the worst case figures and go from there.

[gamechanger]

As I understand it (I could be wrong) HMRC will not negotiate, if you owe it (and it's far from being proved you do), then they will expect it in full, or installments until the balance is paid.

A solicitor can't do anything at all, this isn't a legal dispute, it's a tax one. If you want to engage anyone to 'work' with HMRC on your behalf, then find a good tax specialist. I don't mean a day to day accountant either, you want to instruct somebody who specialises in tax disputes and investigations.

Beware though, the going rate is anywhere from £80 per hour (+VAT) upwards........so I wouldn't do this as a knee jerk reaction. Sit down, make sure you yourself truly understand the worst case figures and go from there.

Worse case scenario -- I will have to pay them all the amount they have asked for in discovery... I think that is true for other's too? If we cannot pay it in one go -- Then they might spread it across 3/4/5/6/7/8/9/10 years so ??

Apologies for using the word "Solicitor" -- I meant a tax expert who has previously dealt with this kind of cases... Edge consulting recommended him in the last mail they send out...So i guess he is very well aware of Edge setup and current situation.

[MrO666]

Worse case scenario -- I will have to pay them all the amount they have asked for in discovery... I think that is true for other's too? If we cannot pay it in one go -- Then they might spread it across 3/4/5/6/7/8/9/10 years so ??

Apologies for using the word "Solicitor" -- I meant a tax expert who has previously dealt with this kind of cases... Edge consulting recommended him in the last mail they send out...So i guess he is very well aware of Edge setup and current situation.

Again, this depends on whether the DA is accurate. You really need to go through all your paperwork and bank statements and find out exactly what your position is, don't rely on any paperwork from HMRC to be accurate.

As for spreading debts of 10 years, that isn't an option. They are looking for it as quickly as possibly, and saying you'll pay them £100 per month for a 50 grand debt isn't going to be an option. I think they'd be looking for a chunk up front and the balance over a couple of years.

Please keep in mind though that this is only my opinion, and I could be wildly wrong.

[gamechanger]

Again, this depends on whether the DA is accurate. You really need to go through all your paperwork and bank statements and find out exactly what your position is, don't rely on any paperwork from HMRC to be accurate.

As for spreading debts of 10 years, that isn't an option. They are looking for it as quickly as possibly, and saying you'll pay them £100 per month for a 50 grand debt isn't going to be an option. I think they'd be looking for a chunk up front and the balance over a couple of years.

Please keep in mind though that this is only my opinion, and I could be wildly wrong.

I don't have a property or cash available --- Been through few bad years (in history they would be referred to as credit crunch!) ... I do have a decent job now....But with two kids and MRS not working -- Savings are nearly 0..

Finding paperwork will be very difficult if not impossible......There assessment are all over the place...

[MrO666]

I don't have a property or cash available --- Been through few bad years (in history they would be referred to as credit crunch!) ... I do have a decent job now....But with two kids and MRS not working -- Savings are nearly 0..

Finding paperwork will be very difficult if not impossible......There assessment are all over the place...

I know it's easy to say, but don't panic about it. Think logically and approach it calmly. Just look for whatever paperwork you can find, print out your bank statements for the year(s) in question and go through it all and try to put it all into some sense of order.

There is zero point in you paying a tax specialist a fortune to do what you can do yourself. Once you have some sense of it, at that point then perhaps approach a specialist.

Ultimately, although we all know that HMRC are b@stards, there main aim is to get the money from you, so if you're playing ball and being straight with them from day one, then I don't see why they would be difficult about it, as it's clearly not in their interests to do so. If you haven't got it then they can't have it, but if you can agree a way to get it to them, then forget all the scare stories, i'm sure they'll be OK.

Everyone on here keeps talking about how HMRC will bankrupt you for a fiver......I just don't see it, it's zero benefit to them if they do that, i'm sure they'd much prefer the money, even if over a few years.

So first things first, find some paperwork and start working through it.

The key thing to remember here, is that HMRC haven't proved (or even attempted to) that this money is even owed yet.

[gamechanger]

I know it's easy to say, but don't panic about it. Think logically and approach it calmly. Just look for whatever paperwork you can find, print out your bank statements for the year(s) in question and go through it all and try to put it all into some sense of order.

There is zero point in you paying a tax specialist a fortune to do what you can do yourself. Once you have some sense of it, at that point then perhaps approach a specialist.

Ultimately, although we all know that HMRC are b@stards, there main aim is to get the money from you, so if you're playing ball and being straight with them from day one, then I don't see why they would be difficult about it, as it's clearly not in their interests to do so. If you haven't got it then they can't have it, but if you can agree a way to get it to them, then forget all the scare stories, i'm sure they'll be OK.

Everyone on here keeps talking about how HMRC will bankrupt you for a fiver......I just don't see it, it's zero benefit to them if they do that, i'm sure they'd much prefer the money, even if over a few years.

So first things first, find some paperwork and start working through it.

The key thing to remember here, is that HMRC haven't proved (or even attempted to) that this money is even owed yet.

You are right --- They will not bankrupt anyone...They just interested in money.And anyways majority of the ppl will have property --- not sure if they will go after that too!!

I do have a few questions over the assessment send... Any chance you have five minutes to spare? ( I Know its too much to ask) Need direction on how to read what they have send and how do i approach my calculations if i get hold of all bank statements...