Reply to: Calculating Potential APN

[regron]

30 days?

The leaflets seem to back up the legislation which says that tax is due 90 days from issue and that if you make a representation within that 90 day period, the demand is stood over until HMRC respond. Once you have that response then the tax is due on the later of 30 days from response or original due date.

Just be aware that it's 30 days from when HMRC date their letter. You will lose at least 8 days of that because HMRC insist on sending things out second class post.

Yep, I can see exactly how I confused things there. Put much better than me webberg, thanks

[webberg]

Also remember (if my memory serves me correct) you only have 30 Days to dispute the amount and YOU have to give HMRC a valid reason why, with supporting information. Once the 30 days is up, the APN is still due within the next 90 days and either the original amount has to be paid, or the newly agreed amount.

30 days?

The leaflets seem to back up the legislation which says that tax is due 90 days from issue and that if you make a representation within that 90 day period, the demand is stood over until HMRC respond. Once you have that response then the tax is due on the later of 30 days from response or original due date.

Just be aware that it's 30 days from when HMRC date their letter. You will lose at least 8 days of that because HMRC insist on sending things out second class post.

[regron]

You can dispute the amount. This one of the legitimate grounds for contesting an APN.

Also remember (if my memory serves me correct) you only have 30 Days to dispute the amount and YOU have to give HMRC a valid reason why, with supporting information. Once the 30 days is up, the APN is still due within the next 90 days and either the original amount has to be paid, or the newly agreed amount.

[DonkeyRhubarb]

Lilikins1, I think the problem with APN's is that you can't dispute them. Once issued you have 90 days to pay. Period

You have to pay first!

Failure to pay results in penalties.

Regards

You can dispute the amount. This one of the legitimate grounds for contesting an APN.

[webberg]

Would it be better to dispute the amount now or when the APN arrives?

Until the APN arrives, the only way to "dispute" the tax is to get into a discussion with HMRC.

A representation against an APN can be made on various grounds and I have seen some that dispute the calculation of the "asserted advantage". I can't say I see much merit in that and HMRC tends to dismiss that argument.

In the case of an EBT loan scheme can the tax in dispute be anything other than tax at your marginal rate on the loan value? Probably not in HMRC's eyes.

You also need to think carefully about outcomes in a dispute.

Those providers who are supporting their users appear to be going for the position that either the scheme works (and there is no taxable income) or it doesn't (and it's all taxable). It's a digital option and it's unclear whether they are looking at alternative analysis which may leave some of the loan as taxable income?

So you get an APN and say "no tax due". HMRC say "yes there is" = tax on loan.

If instead you have some alternative that says "it might be taxable in your eyes but this alternative analysis says that x% might be taxable, would that have a better chance of reducing APN and eventually final settlement?

Don't know.

[cliffordthedog]

Would it be better to dispute the amount now or when the APN arrives?

Lilikins1, I think the problem with APN's is that you can't dispute them. Once issued you have 90 days to pay. Period

You have to pay first!

Failure to pay results in penalties.

Regards

[lilikins1]

As has been observed above, the APN is for the tax in dispute.

HMRC cannot charge interest and penalties without there being some form of appeal process as that would not be legal. The APN regime is a way of getting the cash without the danger that the prols might revolt.

Only when the final tax position has been settled (5 years from now if you're lucky) can interest etc be calculated. Penalty depends on behaviour, not tax liability.
The APN is likely to be based on the amount of the loan you received x your marginal rate of tax. There is ample evidence that HMRC does not have enough data to make an accurate assessment and that might allow you to delay the amount payable.

Would it be better to dispute the amount now or when the APN arrives?

[flamel]

Bottom line.

The tax stated in the APN should be the same as in any previous assessments.

There are no deals/discounts for EBTs.

This is absolutely true.

The only way you'll pay less is after they have distrained your assets, skinned you alive, taken the shirt off your back (and your dependents) until there's nothing left to take. Afterwards they will demand a percentage of your earnings until you die. After death they will impose IHT on anything they've forgotten about so your ancestors can remember HMRC.

After that, if there is still an outstanding balance, you can say you got away with it or got a "deal".

[DonkeyRhubarb]

Bottom line.

The tax stated in the APN should be the same as in any previous assessments.

There are no deals/discounts for EBTs.

[webberg]

That still seems odd but I'm no tax accountant so I'm not surprised I don't follow it :-) Is the 5% - 36% (or whatever the ranges may be) directly related to how much tax relief the individual tried to claim rather than the invested amount? If it's the former, I get it, and get why there is a difference in each case. If it's the latter then how can HMRC be asking for the full tax on, say a £100,000 investment when you've only tried to offset £20.000 for tax relief?!?

Or is the 5% - 36% the offer that the scheme user has made to HMRC?

I think what I'm trying to ascertain is if there are any breaks being given to users of some schemes but not others...

Oh dear - Pandora's Box.

I'm happy to respond on PM but think that there is no direct read across from the film scheme scenario to EBT type scenarios.

I suspect to get into this will take up space and distract from the thread here.

As I said, PM if you're interested.

[squirrel]

Apologies, that was a bit clumsy.

In the sort of film schemes I deal with, a common settlement proposal is "tax relief on the cash invested", which can be between 5% and 36% of the gross claimed. I therefore get such offers across my desk with an APN for the 100%.

In your case, there is no "cash invested" and therefore HMRC say that the full amount received is the taxable amount.

I did sort of attempt to say that APN and settlement would be similar but it was not clear.

That said, I think that there is scope for putting a plan to HMRC that the taxable income should be less than 100% of the received value. I'm sure the providers are doing that.

That still seems odd but I'm no tax accountant so I'm not surprised I don't follow it :-) Is the 5% - 36% (or whatever the ranges may be) directly related to how much tax relief the individual tried to claim rather than the invested amount? If it's the former, I get it, and get why there is a difference in each case. If it's the latter then how can HMRC be asking for the full tax on, say a £100,000 investment when you've only tried to offset £20.000 for tax relief?!?

Or is the 5% - 36% the offer that the scheme user has made to HMRC?

I think what I'm trying to ascertain is if there are any breaks being given to users of some schemes but not others...

[webberg]

I agree with the a previous poster - a very nice, concise summary from Mr Webburg - perhaps this post should go in a sticky somewhere, to give new forums visitors some background.

And to echo the previous question - to which schemes/individuals have HMRC have offered 25% deals (presumably after APNs and resistance) ?

(IMO, that level of discount would have seen / will see a lot more contractors likely to settle ...)

Needs to be amended if it becomes a "sticky"

[dangerouswhensober]

Sorry ...

Apologies, that was a bit clumsy.

In the sort of film schemes I deal with, a common settlement proposal is "tax relief on the cash invested", which can be between 5% and 36% of the gross claimed. I therefore get such offers across my desk with an APN for the 100%.

In your case, there is no "cash invested" and therefore HMRC say that the full amount received is the taxable amount.

I did sort of attempt to say that APN and settlement would be similar but it was not clear.

That said, I think that there is scope for putting a plan to HMRC that the taxable income should be less than 100% of the received value. I'm sure the providers are doing that.

... I think my last post crossed with your reply ...

[dangerouswhensober]

25% settlements

HMRC have always maintained there will be no settlement other than the full figure haven't they? which schemes HMRC have offered 25% deals to prior to issuing APN's?

I agree with the a previous poster - a very nice, concise summary from Mr Webburg - perhaps this post should go in a sticky somewhere, to give new forums visitors some background.

And to echo the previous question - to which schemes/individuals have HMRC have offered 25% deals (presumably after APNs and resistance) ?

(IMO, that level of discount would have seen / will see a lot more contractors likely to settle ...)

[webberg]

HMRC have always maintained there will be no settlement other than the full figure haven't they? which schemes HMRC have offered 25% deals to prior to issuing APN's?

Apologies, that was a bit clumsy.

In the sort of film schemes I deal with, a common settlement proposal is "tax relief on the cash invested", which can be between 5% and 36% of the gross claimed. I therefore get such offers across my desk with an APN for the 100%.

In your case, there is no "cash invested" and therefore HMRC say that the full amount received is the taxable amount.

I did sort of attempt to say that APN and settlement would be similar but it was not clear.

That said, I think that there is scope for putting a plan to HMRC that the taxable income should be less than 100% of the received value. I'm sure the providers are doing that.