HMRC enquiries for EBT schemes through SANZAR

[chubacabra]

I'd be interested to know which contractor type 'loans instead of salary' Tribunals HMRC have lost. I'm not trying to be argumentative and having been involved in this sh1t, I'm hoping that HMRC are forced to see reason. I know they have been given a 'bloody nose' so far in the Rangers case but I doubt that is relevant to the average contractor

I'd say the Rangers EBT is the MOST like contractor EBT schemes. HMRC have been losing the argument that loans are not loans all the way down the path with this case.

I don't think HMRC have taken any of the mainstream contractor loan schemes to court yet. They have challenged a lot of slam dunk cases already, but as Dotas says a lot of these were badly implemented and have limited or no relevance to the main contractor loan schemes.

[webberg]

Re:Sanzar Solutions

HMRC have sent me letters saying I owe £11,220 but today have received another letter "Notice of Penalty assessment" £588.11 penalty taking it to £11,762.

Presumably because I have not paid.

It is for 2010-2011

I sort advise from someone before and I was told to ignore it because HMRC are just scaremongering.

However, I don't think these letters or fines are going to stop.

I need to reply with something. Can anyone advise me what I need to reply as my understanding was that at the time it was all legit.

Although a loan that doesn't need to be paid back does sound too good to be true.

Not surprisingly they have closed down down but at the time they said it was all legitimate and it was a loop-hole in terms of loan that didn't need to be paid back.

They were based in Isle of Man and I was classed as an employee. I guess you all know that being on this forum.


Please held as this is really stressing me out and I don't have that sort of money to hand to pay HMRC now. Also, I don't want to pay if I was not doing anything illegal at the time because I genuinely did not know. I assumed it was a legal loophole.

Also, has anyone actually been successful in getting HMRC to write off this tax avoidance debt?

Can anyone please point me in the right direction?

Regards

<mod snip. Posting your real name is not a great idea>

That sounds like an unpaid APN with a 5% penalty. Too late now to delay that APN so I suggest you contact HMRC and arrange to pay as soon as you can.

NEVER IGNORE HMRC. If in doubt get advice.

"Legit" is a red herring. the schemes are all legal it's just that HMRC prefers to believe that the tax rules produce a liability. So far they cannot convince a judge of that but they are persistent.

The loan DOES have to be repaid at some time.

Get advice

[webberg]

I'd be interested to know which contractor type 'loans instead of salary' Tribunals HMRC have lost. I'm not trying to be argumentative and having been involved in this sh1t, I'm hoping that HMRC are forced to see reason. I know they have been given a 'bloody nose' so far in the Rangers case but I doubt that is relevant to the average contractor

To my knowledge there have been no contractor cases that use an EBT arrangement gone through the Courts to date. The only one I know is on the horizon is due for a hearing in late 2016 or early 2017.

What has been tested are a number of the core elements in HMRC's argument.

Notably this is the Murray Group case. In particular HMRC wants the Judge to see the various transactions in that case to be seen as a "composite transaction" where each element was inevitable and therefore you should look at the start and end of the money flow and tax it accordingly. This is a derivation of the Ramsay principle. In essence HMRC wants to ignore the legal effects of the documents. So far, the Judges have said that if a transaction is undertaken that has real and legal consequences, it cannot be ignored.

The Ramsay principle is seen in a lot of avoidance cases. Look at USB and DB. This is a joint case going to Supreme Court next year, having already seen HMRC defeated. The banks had an EBT arrangement to pay bonuses. They freely admitted that it avoided tax (NIC mainly) but that it worked because it followed the rules.

We also know that the Ramsay principle is of interest to the Supreme Court following a number of film scheme challenges, the latest of which is perhaps DeGorce, as they want to examine whether the principle is being applied correctly. They may decide it has been but the fact that they want to see it is important.

HMRC is already showing signs of moving away from ramsay and instead looking at transfer of assets abroad that they are "confident" is an anti avoidance provision that has always applied to loan/EBT schemes involving a foreign trust/employer. There is significant legal weight to an argument that the TOAA rules are much more limited. There was a test if one of the exemptions from TOAA, the so called motive test, in a case called Fisher. That case basically disallowed the exemption as tax (betting duty) was avoided and was a main purpose. However the taxpayers also challenged other matters (notably discovery) and won. Bit of a score draw that is going to a replay next year.

I can see other elements coming to the courts to be tested as well. Discovery is a good one. Agency rules. PAYE obligations. etc.

So after 10 years of investigation is HMRC any closer to imposing their opinion?

NO

[Calamity]

pm rights....... New member...... How can i pm u OKR?

** UPDATE 21 Dec 2013 - Please PM me if you are interested in joining the Sanzar private forum **


Hi there, count me in, I'm on the original thread from an early post. I've checked with Miss Stopp's office and my appeal has been received OK from Cobham Murphy. They sent a single generic letter, with a big list of names attached to it who are appealing. All F.O.C. so far, but I'm wondering when the fees will kick in...





I was in 08/09 for a bit and 09/10 for longer, before leaving. I would be interested in checking your scheme ref numbers for both these years, as in theory Sanzar may have offered multiple schemes, but unlikely. Might be better to PM these?

I have an open COP8 enquiry for 09/10 as well as the 08/09 letter, so I've got that to look forward to as well. Anybody else with an open 09/10 enquiry, bit off the 08/09 topic, but curious?

Hi
Im a new member and need pm rights.
I was with sanzar/garraway/iq&darwin.
I would like to join the group.
Please reply
Thanks

[StrengthInNumbers]

And remember Scheme used by Boyle implemented properly in 1990s, HMRC settled on and agreed it work. Problem with Boyles scheme was close to fraud. Currency did not existed and was artificially brought and sold at artificial rates.

On the flip side, HMRC themselves are saying contractor schemes have valid loans in trusts on which they want to charge IHT. So to an extent they agree trusts existed.

[StrengthInNumbers]

Fisher is due to hearing in Apr 16 - important decision by end of 2016

[webberg]

And remember Scheme used by Boyle implemented properly in 1990s, HMRC settled on and agreed it work. Problem with Boyles scheme was close to fraud. Currency did not existed and was artificially brought and sold at artificial rates.

On the flip side, HMRC themselves are saying contractor schemes have valid loans in trusts on which they want to charge IHT. So to an extent they agree trusts existed.

It's been said before but worth repeating.

HMRC can and does hold different interpretations of the loans for income tax and IHT purposes.

For income tax, they believe (and are trying to convince a Judge) that the loan is a legal fiction and for tax law purposes should be recharacterised as income.

For IHT, a tax on WEALTH (not income), they say that placing funds into trust incurs charges depending on the type of trust, the time since settlement, certain events between trust and beneficiary.

So, YES, the agency holds the view that the loans simultaneously exist and don't exist.

Not saying it's correct or fair or the final position or anything other than the position today.

[tax is taxing]

Sanzar scheme users - Update

If you have used Sanzar Solutions / Partnership before and still haven't joined our group, you may find the following useful and perhaps makes a case for joining the group.

1) Pinsent mason has secured Interim relief for those who have brought Judicial review against APNs. 5 out of 7 cases have secured relief over the past 3 weeks. As I understand it, this relief means that 5% six monthly penalties will not be applied until the we loose the Judicial review. This has been a sticking point for many of us (to accumulate 15% penalty whilst fighting the case). Assuming we get the same relief, the penalty will apply only if we loose the appeal.

2) Should we get the interim relief, HMRC will not allowed to proceed to collection until the judicial reivew process is complete.

3) We are in the process of gathering more info from Pinsent Mason.

We have 45 members in our group and the more we are in numbers, the cheaper it gets to bring the Judicial review.

[jlchchnz]

Group

If you have used Sanzar Solutions / Partnership before and still haven't joined our group, you may find the following useful and perhaps makes a case for joining the group.

1) Pinsent mason has secured Interim relief for those who have brought Judicial review against APNs. 5 out of 7 cases have secured relief over the past 3 weeks. As I understand it, this relief means that 5% six monthly penalties will not be applied until the we loose the Judicial review. This has been a sticking point for many of us (to accumulate 15% penalty whilst fighting the case). Assuming we get the same relief, the penalty will apply only if we loose the appeal.

2) Should we get the interim relief, HMRC will not allowed to proceed to collection until the judicial reivew process is complete.

3) We are in the process of gathering more info from Pinsent Mason.

We have 45 members in our group and the more we are in numbers, the cheaper it gets to bring the Judicial review.

How do i join the group please? Thanks.

[chubacabra]

Go to WTT Consulting | Tax Enquiry Specialists | London

There is an application form at the bottom.

Any issues postback