Edge EBT thread

[ramzanamin]

Hello all, we seem to be getting a bit sidetracked with conversations that have no benefit at this stage.

I'm going to repeat my earlier advice regarding group representation

If you have any desire to pursue group representation please

Request PM (private message) access if you don't already have it. You can post a request or contact the admins via this page: http://forums.contractoruk.com/sendmessage.php

PM TheDandy here: http://forums.contractoruk.com/priva...=newpm&u=39502
PM Saleos here: http://forums.contractoruk.com/priva...=newpm&u=41765

then make a decision if you have interest in one or both of the groups and if you are willing to foot the likely costs and advise the organiser(s) accordingly

Simply posting a desire to join a group will not achieve anything.

Couldn't agree more, we need to follow the logical steps and not start jumping the gun. We only need to look at QCs if we get to tribunal, until then we can use expert tax consultancy advice

[DonkeyRhubarb]

Based on my experience dealing with solicitors and counsel over the past 5 years in Huitson/Shiner -v- HMRC...

Saleos is on the ball. I can't fault anything in these 2 replies. What he says instills confidence.

http://forums.contractoruk.com/hmrc-...ml#post1857013
http://forums.contractoruk.com/hmrc-...ml#post1857014

[FHP143]

Edge Appeal Template

Thanks - however in my letter i have been requested to outline why i think their decision is wrong, so am assuming they are looking for more than just an appeal letter - has anyone else had this request and if so is there a letter template which meets this requirement?

Ramzan,

Below is the original appeal template that Edge drafted for their contractors. My understanding is that this appeal letter was "approved" by KPMG. It seemed to achieve the desired result last time around, so I'd suggest it's ok to use.

Miss L J Stopp
Local Compliance
Personal & CGT Compliance
Chailey House
Cardington Road
Bedford
MK42 0 YS

Date
Your ref LC/PTC/SO470/xxxxxxxxx
NI Number xxxxxxxxxxx

Dear Miss Stopp,

I am writing to formally notify my appeal against an additional tax liability of £xxxxxxxxxx assessed for the tax reporting period 2009/2010 which has arisen from an outstanding beneficial loan balance.

During the 2009/2010 tax period, I was employed by Edge Consulting Limited in the capacity of a xxxxxxxxx. My services were outsourced to an end client for an arranged fee and I was remunerated by way of an agreed salary. At this time, profit that Edge Consulting Limited generated from the outsourcing of its employees was settled into an employee benefit trust of which its employees and I as such an employee, became beneficiaries. The employees were then able to periodically request funds from the trust, this was a request made to the trustees who, at their discretion, would advance funds to the employee from the trust. The funds were paid to the employees as a loan, these loans did not attract an interest rate and were therefore regarded as beneficial to the employee. The loans have always been treated as beneficial by Edge Consulting Limited and my P11D documents support this. Furthermore, these loans all remain outstanding and can be recalled by the trustees at any time.

In consideration of the above, the outstanding EBT loan values should not be treated as income and only the relevant benefit-in-kind tax should apply. This benefit-in-kind denoted in the P11Ds should have been collected through subsequent adjustments of my PAYE tax code.

In consideration of the above, please postpone collection of this demand while the appeal process continues.

I trust this should prove sufficient at this stage.

Yours sincerely,



Mr. xxxxxxxxx

[david se london]

All,

TheDandy looks to be taking up Saleos' "personal references on behalf of the group" . Shall we perhaps see what the result of this is first (ie a yes/no verdict posted here or even more detail if this is permitted, and if not we can PM TheDandy individually for info I guess?) - then we will know if there are 2 real but contrasting options on the table.

I don't think TheDandy has any axes to grind, so comfortable with him taking the lead on this.

From what Ive seen so far, there are material differences in approach and 'services' provided, albeit with the same end in view.

[cerner]

HMRC so called 'DISCOVERY' lie is the key to winning this battle.

If you are getting a lawyer representation, make sure you make them aware of this and if you're not using lawyer take note and use in your defence.

HMRC claimed they have recently discovered something they don't know with the EBT-loan scheme. This is a blatant lie. Not only was HMRC aware of it back then but in fact reacted and took what action they thought was necessary at the time. I remembered getting a tax code increase notification from HMRC and stating EBT-Loan as the reason. I know they taxed something extra back then interest on the loan whatever I'm not so sure. Even though back then I disagreed with HMRC increasing my tax code or imposing extra tax as a result of the loan as they didn't do same for my mortgage loan I thought it's a small price to pay to continue with the scheme so I didn't bother to challenge it.

At the same time HMRC started and investigation on Edge consulting and eventually bullied them into winding down the scheme even though Edge did not break any law with the scheme. I clearly remember this. Anyway Edge complied and wind down the scheme. So everything was put to bed. so we think, until years later when government is now squeezed for cash they decided to go back and start harassing contractors who were enrolled in the scheme to start paying up. They felt like they had nothing to lose by opening up the EBT-loan saga again. In fact they have everything to gain. For a start they bank on the weak ones among us to start coughing up cash immediately upon their tax demand and a few to miss the appeal deadline and be fully liable to pay the tax demand. After that anything else they can claw back is a bonus.

However way you intend to fight this make sure you take note and make your lawyer or if representing yourself the tribunal Judge aware of this situation [If you take a lawyer, your lawyer can then interrogate HMRC about their blatant discovery lie]


The rangers case is closely aligned to our Edge EBT-loan scheme so we wait for the outcome of HMRC appeal on this case.

In the tax assessment tax demand letter from HMRC. HMRC gives you 2 options of appeal. Work one on one with their tax inspector to prove your case that it's a loan or go to tribunal.

NOTE: Beware of lawyers painting this case as more complex than it is to justify huge lawyers fees.

[FHP143]

Here here!

Ever heard of the Ramsay principle? Patently artificial arrangements intended to sidestep taxation will be ignored.


I think some people need lessons in coffee smelling. The way out of this is unlikely to be simple.

Finally.....some sense! Here, here Malvolio! Any attempt to "repay the loans" now after years of no contributions toward the loans at all would be obviously contrived and would be seen as such by HMRC. Everyone seems to think that repayment of the loans would simply resolve all the problems. That would unfortunately not achieve the desired result! The suggestions are great guys but it's naive not to think the the promoters of these schemes, who have and had access to senior tax counsel opinion, have not already thought of all of these ideas! If it was that simple, they would all be doing it!

[DonkeyRhubarb]

In fact they [HMRC] have everything to gain. For a start they bank on the weak ones among us to start coughing up cash immediately upon their tax demand and a few to miss the appeal deadline and be fully liable to pay the tax demand. After that anything else they can claw back is a bonus.

You've hit the nail on the head.

And don't forget, a new law was introduced in Dec 2010 to specifically close these arrangements. If the previous law was sufficient why did they need a new one?

[Saleos]

Discovery - HMRC can discover America twice!

Cerner

I am sorry but your focus on what "discovered" is misplaced. The case law shows that HMRC can discover America twice. So, an Inspector looking at the same information as a colleague, but reaching a different conclusion, or even the same Inspector looking at the same information but reaching a different conclusion can be sufficient to amount to a "discovery" within s29(1) TMA 1970.

If you want to understand the issues better may I suggest reading the decisions of the First and Upper Tribunals in Charlton, or indeed the Court of Appeal in Langham and Valtema.

The focus should not be upon what HMRC "discovered" but rather whether the information disclosed upon the tax return was sufficient such that a hypothetical officer of HMRC should have been aware of the actual insufficiency before the expiry of the statutory enquiry window.

All the case law points to inclusion of the DoTAS number on the return being crucial.

If you are getting a lawyer representation, make sure you make them aware of this and if you're not using lawyer take note and use in your defence.

HMRC claimed they have recently discovered something they don't know with the EBT-loan scheme. This is a blatant lie. Not only was HMRC aware of it back then but in fact reacted and took what action they thought was necessary at the time. I remembered getting a tax code increase notification from HMRC and stating EBT-Loan as the reason. I know they taxed something extra back then interest on the loan whatever I'm not so sure. Even though back then I disagreed with HMRC increasing my tax code or imposing extra tax as a result of the loan as they didn't do same for my mortgage loan I thought it's a small price to pay to continue with the scheme so I didn't bother to challenge it.

At the same time HMRC started and investigation on Edge consulting and eventually bullied them into winding down the scheme even though Edge did not break any law with the scheme. I clearly remember this. Anyway Edge complied and wind down the scheme. So everything was put to bed. so we think, until years later when government is now squeezed for cash they decided to go back and start harassing contractors who were enrolled in the scheme to start paying up. They felt like they had nothing to lose by opening up the EBT-loan saga again. In fact they have everything to gain. For a start they bank on the weak ones among us to start coughing up cash immediately upon their tax demand and a few to miss the appeal deadline and be fully liable to pay the tax demand. After that anything else they can claw back is a bonus.

However way you intend to fight this make sure you take note and make your lawyer or if representing yourself the tribunal Judge aware of this situation [If you take a lawyer, your lawyer can then interrogate HMRC about their blatant discovery lie]


The rangers case is closely aligned to our Edge EBT-loan scheme so we wait for the outcome of HMRC appeal on this case.

In the tax assessment tax demand letter from HMRC. HMRC gives you 2 options of appeal. Work one on one with their tax inspector to prove your case that it's a loan or go to tribunal.

NOTE: Beware of lawyers painting this case as more complex than it is to justify huge lawyers fees.

[cerner]

And don't forget, a new law was introduced in Dec 2010 to specifically close these arrangements. If the previous law was sufficient why did they need a new one?

Exactly, again another point for the lawyers to argue in our defence. I believe With a good defence counsel there are several points to score against HMRC on this case.

It's just a shame that this doesn't qualify for a no win no fees from the lawyers or does it?

I would hope if HMRC eventually lose the Edge EBT-loan case, those that have coughed up can request a refund.

[JHW]

Stick Together

There have been many posts on here about group representation. In my view sticking together as ONE group is absolutely vital to giving us the best flexibility of approach as things go forward and events unfold. There is absolutely no doubt in my mind that we are far stronger as one group, rather than a fragmented set of groups plus individuals.

I have been in touch with The Dandy now for several months and I would strongly urge that anyone who has appealed these demands gets in touch with him to at least hear what he has to say.

While other options on here are obviously of great interest, and may well be of use by the group, it actually makes sense that if we are to follow them, we should engage with them as a single group.