Reply to: Aml pbt 2011/12 hmrc

[webberg]

1. Appeal and request payment is postponed
2. Collect and organise whatever paperwork and emails you have to support your appeal
3. Throw nothing away

Not sure about contacting AML or where best to get professional help - anyone else care to comment?

Definitely contact AML and let them know.

Any decent professional adviser would be able to help.

Some have specialist knowledge and Big Group is one such

[webberg]

[I]

I've previously said that whilst I'm glad AML are still in there pitching, it's unclear who they are acting for and whether they see you as a client they are representing or a customer they are selling things to. Very different relationships.
AML are making the right 'noises' but who are they acting for: themselves, keeping HMRC 'sweet' (to keep them off their backs) or their clients. They are acknowledging queries but not really responding to them. I've had 3 responses recently sayimng that they haven't forgotten about me and will respond in due course ... but nothing yet. I appreciate that they must be run off their feet at present but their clients are being left in the dark. They are not being pursued for tax (as far as I am aware) nor being accused of doing anything illegal. Presumably they have accounted for their 'take' correctly so my concern is what is in it for them to continue to incur admin costs and future legal costs of defending the scheme apart from losing clients .. but who in their right mind would join the scheme in the current climate?
... so bottom line what have they to to gain or lose defending/not defending the scheme?

Again, you'd have to ask AML for their motives and make a judgement.

They probably have a strategy and whilst they may not be willing to make that public, you can ask questions to try and get to that.

If they defend the scheme successfully, they'll be the only show in town (at least until their scheme is copied) and stand to make a fortune as having a scheme that works. My bet is HMRC will change the law again in that event but there is a window of opportunity.

If they defend the scheme unsuccessfully then the next iteration they produce will have the "benefit" for new users of knowing AML will stand their corner.

If they start a defence and then give up before the denouement, they stand to lose credibility and clients. Don't forget that for as long as contractors use their scheme, they get paid.

I'm hoping therefore that their thought process is along the above lines.

Whichever of those strategies is right, AML are doing this for themselves.

If you want INDEPENDENT assessment, you need to look outside AML.

[webberg]

[I]
GET ADVICE AT A PERSONAL LEVEL

The problem with getting advice is that I do not have the full detail of the AML scheme. I have asked questions and requested copies of counsel advice / opinion etc. but AML are hiding behind legalities saying that for legal reasons these cannot be divulged but I was welcome to attend their offices to view them ... fobbing off if you ask me.
Are we legally entitled to see the full detail of the scheme so that we can appoint our own legal repesenative if neccessary? .. or conversely if I appoint a solicitor is he entitled to request them from AML? I would like an independent opinion of the AML scheme and the likelihood of it being successfully challenged so that this will inform whether to bite the bullet and pay up to avoid penalties or to continue the fight.

AML are correct in that making a QC opinion available risks losing legal privilege and if that happens, HMRC might be able to see it, which is like starting the cup final 2-0 down.

You are entitled to read the opinion and your representative is also (probably) able to read it. Any decent professional would not need a copy of it to extract the detail and key issues.

The best way of resolving this is to ask AML.

[webberg]

[I]

5. the 18% paid to AML (if that's what it is) is NOT tax deductible.
I thought as much ... HMRC 'tactics' to wind us up and provoke a response!

No it's not.

Expenses that are tax deductible against salary must be incurred "wholly, exclusively and necessarily" in the performance of the duties.

A tough hurdle and one that is very limited in practice.

Expenses that are tax deductible against profits must be incurred "wholly and exclusively" in the course of earning profits. That might be easier, but HMRC don't argue that the loans are profits.

Expenses that are tax deductible against "other income" have to be directly attributable to that income. Again a high hurdle but perhaps possible.

The costs of tax advice, tax mitigation, tax planning are NEVER allowed. Aside from various tax cases on the issue, tax is seen as a personal issue and it is almost inconceivable that the cost of a personal matter will ever be tax deductible against salary (not "necessary"), profits (not a business cost) or other income (not directly attributable).

None of this is new. This is solid tax law and has been for decades.

[webberg]

[I]

3. Don't confuse a surcharge for non payment (5% plus 2 more 5% charges later) with interest. Interest is at 3% on unpaid amounts. A surcharge is for non payment by the due date - so important to agree a postponement.

'Postponment' presumably means just that ... interest and charges are still accruing and WILL be payable should appeal fail! .. they just aren't payable until after appeal decision.
This is very alarming ... are you saying that on top of 5% surcharge (applied at 6 monthly intervals .... on any unpaid amount?) there is an additional 3% per annum? This is extortion and a deliberate ploy to prevent anyone defending themselves as in addition to legal costs there will be a huge amount of interest & charges to add should appeal be unsuccessful. It would seem much cheaper (and far less stressful) just to pay up ... which is exactly what HMRC want.

The main problem is that whilst AML claim their scheme 'works' no one will really know until it goes to tribunal and in all this time the interest & charges are accruing! I don't want to sound like a 'wimp' but this is exactly what HMRC want to soften us up so that we roll over and cough up ... which is exactly why we need the Big Group as I don't know if we can really trust the provider any longer.

Once an assessment is issued, non payment attracts interest and possible surcharge.

An agreed postponement will reset the surcharge date to 28 days after the postponement is removed.

However if there is a charge, interest at 3% will apply.

Assuming AML are serious about a FTT appearance (and I have no reason to suggest that they are not), then the process of applying is simple enough. The stage after that is for HMRC to state a case. They will be given time commensurate with the complexity of the case. I'm guessing they will ask for at least a year, perhaps more. The taxpayer/AML then submits a counter argument. Some of this can be prepared in advance, but some will need to be crafted as a direct result of the statement of case. That might take another 6 months. Then a date is set.

Assuming no delays (stays) are sought, an application made today might get a date in 2016 but more likely 2017. So a date set in 18 months time might be in late 2018/early 2019?

So before the case reaches Court you might have 3 years interest (9%) racked up.

Buy a Certificate of Tax Deposit as that stops interest running.

[webberg]

[I]
2. make an appeal and ask for the tax to be postponed on the grounds that the liability is disputed. Do this within 30 days.
AML are doing this on behalf of members caught by this ... but as far as I am aware they only have 2 options a/ get an independent inspector to review (hardly likely to make any difference IMHO) or 2/ go to tribunal. AML has stated previously that they are 'confident' in their scheme and are prepared to go to FTT .. however Rangers won FTT & UTT and HMRC have still appealed in July this year and judgement hasn't yet been published. What we don't know (and I have asked them) is what will happen should they lose FTT?

The appeal is against the DA. That might be on a) why is there a discovery, or b) why is there a liability or on both. These are separate matters to be heard in FTT and beyond.

HMRC review is now too late. That takes place upon taxpayer request following the closing of an enquiry and is an entirely internal matter and as you unlikely to make any difference.

Eventually the appeal will go to FTT but hopefully in a controlled way and as part of a large group, UNLESS, you agree a position with HMRC beforehand.

I've been thinking a lot about the Murray Group case recently. As you say HMRC has lost it twice and we await the third instalment. If HMRC lose again, I can see enough differences between that and the approach we've seen since from HMRC to potentially limit the impact and allow HMRC to push on with the same or a different argument.

If HMRC win, those same reasons allow contractors to fight on and probably open up better opportunities to negotiate.

What Murray Group is NOT however , is a panacea that will cure all contractor problems overnight.

[ctdctd]

I was with AML for 3 years including tax year 2011/2012.

I have received a Notice of Assessment for the year 2011/2012 with a tax due in excess of £25K.
This is nearly as much as I took home via AML - no way can I pay this!

One of the figures on the assessment is £75K "profit for partnerships".
Where did this come from?

Should I appeal, should I contact AML, should I pay something on account?
Do I need professional help - if so, who from?

1. Appeal and request payment is postponed
2. Collect and organise whatever paperwork and emails you have to support your appeal
3. Throw nothing away

Not sure about contacting AML or where best to get professional help - anyone else care to comment?

[unhappyguy]

Hi, newbie here, pointed in this direction by a long term member!

I was with AML for 3 years including tax year 2011/2012.

I have received a Notice of Assessment for the year 2011/2012 with a tax due in excess of £25K.
This is nearly as much as I took home via AML - no way can I pay this!

One of the figures on the assessment is £75K "profit for partnerships".
Where did this come from?


Should I appeal, should I contact AML, should I pay something on account?
Do I need professional help - if so, who from?
I do not have an account or other financial advisors.

Any advice appreciated to stop me panicking!

[DotasScandal]

These are public forums and advice is generic and not specific and HMRC no doubt read them.

Precisely. CUK is an open forum so people tend to keep their cards close to their chest (and rightfully so). You'll notice the traffic of this particular sub-forum has gone down dramatically lately. Most people have moved to private forums, and really so should everyone at this stage.

[LandRover]

Hi

I did not set out to dupe HMRC when I signed up to AML and believed this was a bone fide scheme. I still hope it is but do not want to spend the next 10 years worrying that HMRC will come after me and not enjoying my kids growing up.


Did AML do a P11D and/or a P60 for 2011/12 or 2012/13 for anyone on here?

Does anyone know how could amltax advise HMRC on the total amount of loans if we weren't employed by AML for 2011/12?

Re the loans (in part of full) that were given in 2010/11 did anyone repay them in 2011/12 and how did you let HMRC know?

Thanks
Pat

These are public forums and advice is generic and not specific and HMRC no doubt read them.

Quick answers, AML sent loan amounts to HMRC, no P11d required as partnership (self-employed) not employee. Ask AML why they are offering up information to HMRC.

Get over to Big Group is my advice, plenty AML over there.

[patrickegan75]

p60

Hi

I did not set out to dupe HMRC when I signed up to AML and believed this was a bone fide scheme. I still hope it is but do not want to spend the next 10 years worrying that HMRC will come after me and not enjoying my kids growing up.


Did AML do a P11D and/or a P60 for 2011/12 or 2012/13 for anyone on here?

Does anyone know how could amltax advise HMRC on the total amount of loans if we weren't employed by AML for 2011/12?

Re the loans (in part of full) that were given in 2010/11 did anyone repay them in 2011/12 and how did you let HMRC know?

Thanks
Pat

[DotasScandal]

You are asking yourself the right questions. I look to look at what this or that party does...what they say matters little.
Looking forward to seeing you on BG.

[mst1958]

1. Get advice

I certainly intend to join Big Group for independent advice and support.

2. make an appeal and ask for the tax to be postponed on the grounds that the liability is disputed. Do this within 30 days.
AML are doing this on behalf of members caught by this ... but as far as I am aware they only have 2 options a/ get an independent inspector to review (hardly likely to make any difference IMHO) or 2/ go to tribunal. AML has stated previously that they are 'confident' in their scheme and are prepared to go to FTT .. however Rangers won FTT & UTT and HMRC have still appealed in July this year and judgement hasn't yet been published. What we don't know (and I have asked them) is what will happen should they lose FTT?

3. Don't confuse a surcharge for non payment (5% plus 2 more 5% charges later) with interest. Interest is at 3% on unpaid amounts. A surcharge is for non payment by the due date - so important to agree a postponement.

'Postponment' presumably means just that ... interest and charges are still accruing and WILL be payable should appeal fail! .. they just aren't payable until after appeal decision.
This is very alarming ... are you saying that on top of 5% surcharge (applied at 6 monthly intervals .... on any unpaid amount?) there is an additional 3% per annum? This is extortion and a deliberate ploy to prevent anyone defending themselves as in addition to legal costs there will be a huge amount of interest & charges to add should appeal be unsuccessful. It would seem much cheaper (and far less stressful) just to pay up ... which is exactly what HMRC want.

The main problem is that whilst AML claim their scheme 'works' no one will really know until it goes to tribunal and in all this time the interest & charges are accruing! I don't want to sound like a 'wimp' but this is exactly what HMRC want to soften us up so that we roll over and cough up ... which is exactly why we need the Big Group as I don't know if we can really trust the provider any longer.

4. Interest is "simple" at 3% per annum.

5. the 18% paid to AML (if that's what it is) is NOT tax deductible.
I thought as much ... HMRC 'tactics' to wind us up and provoke a response!

GET ADVICE AT A PERSONAL LEVEL

The problem with getting advice is that I do not have the full detail of the AML scheme. I have asked questions and requested copies of counsel advice / opinion etc. but AML are hiding behind legalities saying that for legal reasons these cannot be divulged but I was welcome to attend their offices to view them ... fobbing off if you ask me.
Are we legally entitled to see the full detail of the scheme so that we can appoint our own legal repesenative if neccessary? .. or conversely if I appoint a solicitor is he entitled to request them from AML? I would like an independent opinion of the AML scheme and the likelihood of it being successfully challenged so that this will inform whether to bite the bullet and pay up to avoid penalties or to continue the fight.

Many thanks for your advice.

I've previously said that whilst I'm glad AML are still in there pitching, it's unclear who they are acting for and whether they see you as a client they are representing or a customer they are selling things to. Very different relationships.
AML are making the right 'noises' but who are they acting for: themselves, keeping HMRC 'sweet' (to keep them off their backs) or their clients. They are acknowledging queries but not really responding to them. I've had 3 responses recently sayimng that they haven't forgotten about me and will respond in due course ... but nothing yet. I appreciate that they must be run off their feet at present but their clients are being left in the dark. They are not being pursued for tax (as far as I am aware) nor being accused of doing anything illegal. Presumably they have accounted for their 'take' correctly so my concern is what is in it for them to continue to incur admin costs and future legal costs of defending the scheme apart from losing clients .. but who in their right mind would join the scheme in the current climate?
... so bottom line what have they to to gain or lose defending/not defending the scheme?

[webberg]

In my case they have presented a notice of assessment under discovery provisions of section 29 Tax Management Act 1970. They received SA 2011/12 with salary only and made enquires regarding loan payments to AML. AML provided these and now HMRC has added gross salary to net loans and then factored up to 100%

e.g. £10 salary + £50k loans = £60k / 82% (figure presumably taken from AML marketing) = £73,170 and then applied tax and NI rates at the appropriate rates and then subtracted tax & NI declared on SA (and applied late payment penalty interest of approx £1k).

They have stated that this amount is payable within 30 days or 5% interest will be charged and additional increments of 5% charged after 6 months and 12 months on unpaid amounts. It is not clear what happens after this but I presume interest will be payable in 5% 6 monthly installments? .. which is a concern if a/ appeal takes a long time b/ appeal is unsuccesful

AML are appealing. By this is assume that they will need to take it to tribunal (FTT)? My primary concern is how long this will take as if appeal is unsuccessful interest will have accrued and be payable from Jan 2013.
... but the I guess that's what HMRC are banking on! If this is a long drawn out case (I've heard 6-7 years) the interest alone could double the tax owed (i.e. rule of 7 - 10% per annum componded over 7 years = 100%)


Also any advice on the tax/NI being applied to the 18% not received i.e. AMLs fees/commission and other deductions? I may be wrong, but surely we can't be taxed on funds we have not received? The letter states that if the figures are wrong to let them know. As AML are dealing with this I don't want to contact HMRC directly and confuse the situation.

1. Get advice

2. make an appeal and ask for the tax to be postponed on the grounds that the liability is disputed. Do this within 30 days.

3. Don't confuse a surcharge for non payment (5% plus 2 more 5% charges later) with interest. Interest is at 3% on unpaid amounts. A surcharge is for non payment by the due date - so important to agree a postponement.

4. Interest is "simple" at 3% per annum.

5. the 18% paid to AML (if that's what it is) is NOT tax deductible.

GET ADVICE AT A PERSONAL LEVEL

I've previously said that whilst I'm glad AML are still in there pitching, it's unclear who they are acting for and whether they see you as a client they are representing or a customer they are selling things to. Very different relationships.

[webberg]

Hi webberg

What are they arguing they have discovered, is the issue here that?

1. People didn't submit a SA for 2011/12 and HMRC is now asking for one

or

2. People submitted a SA with no loan details, only a low salary coming from self employment (and AML submitted the loan details of people to HMRC for whatever reason, and HMRC is now putting two and two together)

or

3. People submitted a SA with loan details and HMRC is only now getting round to assessing the tax they believe is due

or

4. People submitted a SA with salary from self employment and no other details, and HMRC now wants more information whether people received loans as well as income

Discovery - how long do you have?

HMRC has not really set out their detailed reasoning but my interpretation is that because they consider (without any judicial sanction) that the loans are really income and they have discovered that they have not been returned and as such HMRC has had no chance to tax them.

be interesting to see that in more detail eventually.

The counter might be that these loan schemes have been under enquiry for several years, the employer is always on the return and all that has happened is HMRC has made an internal decision that the loans are taxable and has "discovered" that their system failed.

Whatever grounds an appeal is made upon against discovery, I predict a long and bitter fight on section 29 even before the question of liability arises.