HMRC enquiries for EBT schemes through SANZAR

[centurian]

Their nightmare scenario (as admitted by HMRC to my accountant) is having to issue FN/APNs and then pursue them.

I.e. Having to actually do some work...

[MrO666]

Everybody keeps bringing up the subject of NI, so lets look at this (again).......

No matter what scare tactics HMRC are peddling, as it CURRENTLY stands they are 100% NOT legally able to apply NI to any money which they believe you received by way of loans whilst an employee.

Just to clear this up....

There is a caveat in the law that states in some scenarios HMRC are able to transfer a PAYE liability from the employer to the employee. However, this is not the case with regards to NI. HMRC are ONLY able to transfer the NI liability from the employer to the employee, if the employee was also a director of the company.....which in 99% of these cases nobody was. That's why until HMRC make a change to the law, they WILL NOT be pursuing people for NI, as they legally cannot do so. The NI contributions are legally the responsibility of the employer, and there is no provision in the law which allows this debt to be transferred to the employee.

Equally, i've been reliably informed that if HMRC decided to pursue the NI issue in some case years after initially sending DA's, they would be in for a very rough time, as HMRC would have been aware at the time of the DA that there was a potential NI liability, yet they decided to never mention it, so to retrospectively come looking for it years later would leave them open to all kinds of arguments.

Remember though, the above is how the law stands today, and as we know HMRC don't actually appear to have much regard for the law at all. I suspect that this is also part of why Captain Chaos (AKA George Osbourne) is keen to merge tax and NI (along with many other things too).

It'll certainly be interesting to see what happens when APN's come out. Some scheme's will no doubt force HMRC to a FTT, and if they do start to loose, then HMRC could suddenly start to look very very incompetent, especially after all they've gone through to the get the APN rule in place.

[LisaContractorUmbrella]

The National Insurance Contributions Bill hasn't gone through yet - 2nd reading 8th September National Insurance Contributions Bill 2014-15 — UK Parliament

[FTTM]

The National Insurance Contributions Bill hasn't gone through yet - 2nd reading 8th September National Insurance Contributions Bill 2014-15 — UK Parliament

So I take it this is the legislation that will enable HMRC to collect NI as well as Income Tax from EBT users facing an APN?

[LisaContractorUmbrella]

So I take it this is the legislation that will enable HMRC to collect NI as well as Income Tax from EBT users facing an APN?

Yep that's the one

[FTTM]

settlement opportunity suddenly looking more attractive!

[jbryce]

???

Yep that's the one

sigh. The bill appears to be tackling self employment NI dodges - not addressing adding NI contributions onto APNs for EBTs
HMRC are telling me that APNs will be issued for tax owed but that an FTT may well add NI (as they say in the settlement letter) there may also be penalties.
Can someone point out to me where, in the bill it states that employees are responsible for the NI contributions and how it will impact EBT users?

[LisaContractorUmbrella]

3 Application of Parts 4 and 5 of FA 2014 to national insurance contributions
(1) Part 1 of Schedule 2 applies Part 4 of FA 2014 (follower notices and accelerated
payments) to Class 1, 1A, 1B and certain Class 2 contributions.
(2) Part 2 of that Schedule applies Part 5 of that Act (promoters of tax avoidance
schemes) to Class 1, 1A, 1B and certain Class 2 contributions.
(3) Part 3 of that Schedule applies Parts 4 and 5 of that Act to Class 4 contributions.
(4) Part 4 of that Schedule contains commencement and transitory provision.

[carling]

The bill does not appears to be retrospective.
The Anti-avoidance sections appear aimed at arrangements entered into on or after 6 April 2014 or arrangements entered into on or after the act is passed.

[jbryce]

dooooommmmeeeeddd

3 Application of Parts 4 and 5 of FA 2014 to national insurance contributions
(1) Part 1 of Schedule 2 applies Part 4 of FA 2014 (follower notices and accelerated
payments) to Class 1, 1A, 1B and certain Class 2 contributions.
(2) Part 2 of that Schedule applies Part 5 of that Act (promoters of tax avoidance
schemes) to Class 1, 1A, 1B and certain Class 2 contributions.
(3) Part 3 of that Schedule applies Parts 4 and 5 of that Act to Class 4 contributions.
(4) Part 4 of that Schedule contains commencement and transitory provision.

Ah gotcha. It's not very clear if they will then have to raise another discovery assesment to cover off the NICs. It just seems they will have to notify, in writing, that they consider that it is owed.
The steer HMRC gave my accountant (last week) was that, in the event of this bill becoming law, they would not be modifying the discovery assesments etc. to include NICs and would not be considering NICs in my case.

They did point out that an FTT may choose to apply NICs, but that the single point of dispute was the Tax - applying NICs is not a trivial calculation.

Whatever - we're all doooooooommmmmmmed.