Edge EBT thread

[LisaContractorUmbrella]

My latest assessment actually states the rules they are applying are the "transfer of assets" rules - part 13, chapter 2, income taxes 2007. Which is to do with the fact the money was earned in the uk but moved out of the uk then paid back into the uk....not sure if this can only be applied because they are still asserting this was income and not a loan or if this Transfer of Assets rule can be applied to loans....anyone able to enlighten me?

You may find what you are looking for here: https://www.gov.uk/government/consul...-assets-abroad

[K12AN]

Calculation for 2010-2011 tax year

I'm looking at the 'Other Income' figure for the 2010-2011 tax year and it is astronomical!
It looks like its the total loan amount for all the previous years combined.
So in 2008-2009, I have a small(ish) figure.
2009-2010 I have a large figure (as it looks like this is the loan amount for 2 years)
2010-2011 I have a ridiculous figure (as it looks like its the total for all 3 tax years).

Is anyone else seeing similar?

Not sure whether I should ask for clarification on these figures in my appeal response.
Any ideas?

[vern19]

I'm looking at the 'Other Income' figure for the 2010-2011 tax year and it is astronomical!
It looks like its the total loan amount for all the previous years combined.
So in 2008-2009, I have a small(ish) figure.
2009-2010 I have a large figure (as it looks like this is the loan amount for 2 years)
2010-2011 I have a ridiculous figure (as it looks like its the total for all 3 tax years).

Is anyone else seeing similar?

Not sure whether I should ask for clarification on these figures in my appeal response.
Any ideas?

These are probably guestimates. We were picked up in what HMRC call a 'Sweep'. They are putting in a marker because of discovery notice time limits. If Tribunals start going their way they will issue inquiries for the exact loan amounts.

Lets just hope the Tribunals go in our favour.

[kincaide]

I'm looking at the 'Other Income' figure for the 2010-2011 tax year and it is astronomical!
It looks like its the total loan amount for all the previous years combined.
So in 2008-2009, I have a small(ish) figure.
2009-2010 I have a large figure (as it looks like this is the loan amount for 2 years)
2010-2011 I have a ridiculous figure (as it looks like its the total for all 3 tax years).

Is anyone else seeing similar?

Not sure whether I should ask for clarification on these figures in my appeal response.
Any ideas?

Sounds like they are going with the total figure provided on the p11D, and not taking into account that it's a sum of a few years. Hopefully an appeal would reveal that it is a clerical error.


Hopefully.

[K12AN]

However, they are charging interest on these Guestimates...

I am still confused how they can accept my BIK interest payments on the loans, but now they want the Income tax on the loans as well!

[kincaide]

However, they are charging interest on these Guestimates...

I am still confused how they can accept my BIK interest payments on the loans, but now they want the Income tax on the loans as well!

Agreed - it does seem a bit of a mess to say the least.

[Ron Swanson]

You could consider lodging a Certificate of Tax Deposit (CTD):

The money lodged as a CTD with HMRC Cumbernauld will prevent interest accruing on the equivalent amount of the liability from the date that the CTD is created by HMRC...you would still be potentially liable for any interest accrued up to that point from the due date of the assessment and for any interest on liability amounts above the amount lodged as a CTD.

Note the following -
1) interest is currently accruing - last time I looked - at 3% per annum (simple interest, not compound, i.e. not interest on interest)
2) Unless you lodge an amount of £100,000 or more in a single deposit, your CTD does not earn interest whilst it is with HMRC so if you were to subsequently redeem your CTD (e.g. if you were no longer liable for the tax for some reason), it would not have earned interest in the meantime.

This option is not for everyone (i.e. you obviously need readily available funds to do it), but could be considered as a way of preventing the interest from spiralling.

A few questions relating to CTDs:

Is there any disdavantage of lodging a CTD - does it imply guilt, does it reduce the likelihood of a 'good' negotiated settlement downstream, are you likely to get earmarked or targetted by HMRC as the people to go for first, etc.
Cany you lodge a CTD for a partial maount and not the full amount?
Can you simply simply dissolve/terminate the CTD at any point?

[vern19]

However, they are charging interest on these Guestimates...

We haven't had to pay anything yet. These are just scare tactics. They want you to pay up now but if you do and an Edge taxpayer wins a Tribunal, you can forget a refund.

[malvolio]

Agreed - it does seem a bit of a mess to say the least.

Because they are assuming that an non-repayable loan (or a continuously recycled one) means you can spend the money as though it was income? So in their eyes it is income and therefore tax is due on it and the apparent accumulation is because the loans repeat year on year and are never repaid, so in Year 3 you still have the benefit of the loans from years 1 and 2.


I'm sure it's not that simple, but this is HMRC we're talking about.

[vern19]

A few questions relating to CTDs:

Is there any disdavantage of lodging a CTD - does it imply guilt, does it reduce the likelihood of a 'good' negotiated settlement downstream, are you likely to get earmarked or targetted by HMRC as the people to go for first, etc.
Cany you lodge a CTD for a partial maount and not the full amount?
Can you simply simply dissolve/terminate the CTD at any point?

Have you seen the interest they pay on a CTD? Much less than 3%. It used to be 1% for 100k deposited. May have changed since I looked at this option and discounted it