Edge EBT thread

[SimonJones]

I thought I understood the scope that HMRC are chasing but am confused about IHT? Can anyone share with me how IHT comes into the exposure? Thanks in advance.

This IHT is certainly very scary. Apparently HMRC are after additional tax of 1% per annum of the total loan amount. For example, if you are done for 2005 & 2006 than they want 10 years of tax at 1% of the total amount for 2005 plus 9 years of tax of 1% of the total loan amount for 2006.

This makes settlement absolutely ridiculous.

It's strange they class the loan as other income but for IHT they treat it as a loan. Double way of getting the money.

This effectively doubles the liability!

[kmpm]

Thanks for the info Simon. Will talk to advisor but how do loans incur IHT?

[Markn99]

Ammark, if you joined Saleos you should be getting updates from him. He is still working for us.
You can join other groups of course and do get as much advice from as many sources as possible.
I've just been given some hope by a tax advisor when I thought there was nothing I could do when the promised APNs drop through my door.
I'd advise anyone awaiting or having received APNs to speak to professionals and get their advice. They'll have an initial chat for free and then you can decide how much youre willing to spend to protect what should still legally be yours!
Good luck.

Hi Tweedle, are you able to tell us what your tax advisor said, or tell us who it is?

[gettingangry]

What does this really mean???

taken from HMRC**ts website

"Section 29(2)

In any case in which a self assessment has already been made for the relevant period a discovery assessment will not be made where:

the loss of tax arose out of an error or mistake concerning the basis on which the returned tax liability was calculated, and
that basis was the generally prevailing practice at the time the tax return was made.

So, HMRC are not able to raise discovery assessments simply because they have changed their practice in relation to the treatment of some particular item."

and

"HMRC has the power to make 'discovery assessments', under TMA70/S29 (1), to prevent a loss of tax.

TMA70/S29 provides general rules for HMRC assessments to prevent any loss of tax, but the rules limit the right to make a discovery assessment for any period if a self assessment has already been made by the taxpayer for that period.

The rules that apply where a self assessment has already been made embody the principles established in case law and in particular in the case of Scorer v Olin Energy Systems Limited [58 TC p592]. Unless the loss of tax has been brought about carelessly or deliberately, if the information 'discovered' was already in the officer's possession when the self assessment became final, HMRC have no right to make a discovery assessment.

These rules ensure that a taxpayer who has made a full disclosure in the tax return has absolute finality once the time allowed for opening an enquiry has passed. This is the case even if the tax return is subsequently found to be incorrect, unless it was incorrect because of careless or deliberate conduct."

[evildrome]

PAYE ?

I found this on Ross Martin Tax Consultancy...

"Aberdeen Asset Management PLC v HMRC is one of a string of cases where an employer company paid funds for employee bonuses to its Employee Benefit Trust which injected funds into a series of what the court describes as “money box” companies offshore. Via options granted by family EBTs, the employees ended up having control of their own money box.

The company's appeal to the Upper Tier Tax Tribunal failed: the scheme was found ineffective for PAYE and NICs avoidance.
•Amounts paid into the EBT were not taxable as bonuses at the time that the company transferred funds (this is where other schemes have failed).
•The sums contained in the personal companies were found to be readily convertible assets, and so taxable as earnings and subject to PAYE and NICs - tax was not recoverable from the employees."

OK then... so "tax was not recoverable from the employees". Does that mean that Edge are het for the PAYE & not us?

Am I wrong but isn't HMRC chasing Rangers ie the employer for the PAYE for their EBT scheme, not the players ?

[Ozbird]

Please can I have PM access?

[squirrel]

Am I wrong but isn't HMRC chasing Rangers ie the employer for the PAYE for their EBT scheme, not the players ?

I'm not going to be able to help much here, but I've always wondered that too. Someone might be able to shed some light on it ...

[DonkeyRhubarb]

I'm not going to be able to help much here, but I've always wondered that too. Someone might be able to shed some light on it ...

It might be worth getting a legal opinion on this.

One difference may be that Edge was an offshore employer?

[evildrome]

Deliberate ?

HMRC have 12 months to open an inquiry unless:

1) New information comes to light

2) There is careless action by the tax payer

3) There is deliberate action by the tax payer


So, we're all agreed that if we submitted a tax return with a scheme number then there is no new information.

Is joining a scheme a 'careless' action? No.

Is joining a scheme a 'deliberate' action? Errr... HMRC might see it that way.

But... although we have no settled case for our EBT scheme, there must be legal precedent for whether joining a DOTAS scheme is classed as 'deliberate'. There must already be case law for this.

[administrator]

Please can I have PM access?

Done!