Reply to: HMRC Consultation : Tackling Disguised Remuneration

[flamel]

This "consultation" closes on 5th October i.e. tomorrow

Just saying....

[DotasScandal]

You can try, but considering that HMRC 's very official business plan states that their no.1 objective is now "maximizing the amount of tax collected" (NOT ensuring you pay the correct amount of tax)，don't hold your breath too much.

[Tomo1971]

So, in 2008 I went into an accountant's office with a view of using a LTD Co (I had just been laid off PAYE and the role I had been offered was contract only) - I thought I was seeking professional advice!

I came out signed up for an EBT. I now owe circa £24k. This is based on HMRC thinks I should have paid in tax and NI if the 'loans' had been paid as PAYE.

The job I did meant working all over the UK - as part of that, I purchased my own vehicle (van on personal HP), paid for its upkeep, fuel, insurance etc. All my accommodation while been away from home, food, incidentals, PPE, tools, IT, Phone bill etc, all came from my income from PAYE (10k) and the loan payments.

If HMRC can have the argument that IF I was PAYE that's the amount of tax I should have paid, then surely I can have the argument if I was PAYE, I would have been claiming the above expenses back and thus reducing any tax liability..... but let me gues... it doesnt work like that.....

Looking back and having since been a LTD Co, as my expenditure was quite high due to the amount of travel I did, LTD Co would have been the best way to have gone ..... typical IT contractors who have few expenses Im sure benefited a lot from EBT's as they have less legitimate expenses to offset.

My day rate was £210 a day - I think my van HP was £280/month, fuel for 50k miles a year, average of £45 a night for hotel/food and maybe away from home 15 nights a month.... im sure that wouldn't leave much left that is taxable!

Clutching at straws, or a valid argument to take to HMRC?

[DonkeyRhubarb]

Minor point to above but with this 'proposed' loan charge I don't think it's interest included (well it will be if you are late paying it). So is PAYE & NIC
But still horrendous...

To find out how horrendous, plug the total value of all your loans into this.

Eg. £300k loans results in a £130k tax/nic bill. (Note: you lose £1 of personal allowance for every £2 you go over £100k income.)

https://www.incometaxcalculator.org....=300000&time=1

It will be even worse if you earn other income in 2018/19 because more of the loan charge will get pushed into the 40% and 45% tax bands.

[difficulttimes]

Minor point to above but with this 'proposed' loan charge I don't think it's interest included (well it will be if you are late paying it). So is PAYE & NIC
But still horrendous...

[neil99]

So, why does the total of my APN's add up to <10k, yet if I do back of fag packet calcs on the tax and NI i should have paid on the loans equal >£24k

If (big IF), i did succumb to paying off the APN's, would that be it, done and dusted, end of story, no more money owed?

*note that I did have a letter through for a discovery assessment for one year but never had anything further from that year, so may at one point have another APN through but still wouldn't put the total above what I calculated as tax and NI owed.

Again, thanks for spending time to explain in simple terms for a thicket!

The APN will only be raised for years where HMRC have opened an enquiry. In the days before retrospective taxation HMRC had to go through a formal process of opening an enquiry if they had queries about your tax return. This gives them the power to raise a demand with a revised calculation of what they think you SHOULD have payed. There is no time limit for this. A lot of us have had enquires opened for 2004/5/6 tax years. Then silence for 10 years. And now this tulip.

The 2019 charge is calculated on the total loan amount - irrespective of open or closed years. This is the shocking part.

A hypothetical case where you have loans of £150k over 3 years then 2019 charge will be around £75k. (PAYE + NIC + INTEREST)

If HMRC opened an enquiry into only 1 of those years then the APN would be around 20k. (PAYE only - NO INTEREST)

[webberg]

An APN is a demand for tax in dispute.

It does not settle the dispute.

It does not give you finality on your actual liability.

Paying an APN is not admitting liability.

Simple.

[Tomo1971]

Absolutely not.
For the 1838474th time: APN s are a payment on account of an amount of tax "due" to be assessed at a later time.

For starters, they'll come back for interest.

Seriously, if you have APN s, don't you think that the least you could do would be to do your homework? Plenty of FAQs out there.

Yes, I try too but the threads get over complicated by folk who are willy waving to make themselves look smart.

I'm trying to get things simplified... Every time I ask the scheme questions they just come back with legality and technical speak that to be frank, confuses and doesn't answer my questions.... Pretty much like the other threads I've tried to search.

[DotasScandal]

If (big IF), i did succumb to paying off the APN's, would that be it, done and dusted, end of story, no more money owed?

Absolutely not.
For the 1838474th time: APN s are a payment on account of an amount of tax "due" to be assessed at a later time.

For starters, they'll come back for interest.

Seriously, if you have APN s, don't you think that the least you could do would be to do your homework? Plenty of FAQs out there.

[Tomo1971]

Something to be aware of - I think someone said that the loan amounts across the years are rolled into one, and taxed as if they were all paid out together. I don't know for sure if this is 18/19 or 19/20 - others will know better. Therefore, you don't calculate the tax year by year....unless I misunderstood.

So, why does the total of my APN's add up to <10k, yet if I do back of fag packet calcs on the tax and NI i should have paid on the loans equal >£24k

If (big IF), i did succumb to paying off the APN's, would that be it, done and dusted, end of story, no more money owed?

*note that I did have a letter through for a discovery assessment for one year but never had anything further from that year, so may at one point have another APN through but still wouldn't put the total above what I calculated as tax and NI owed.

Again, thanks for spending time to explain in simple terms for a thicket!

[Darren at Fox-Bartfield]

Schemes

As an aside, are scheme promoters still pushing loan schemes? If they are, won't the scheme users automatically be caught?

Yes, there's a lot still going, quick Google search brings up quite a few. We've had emails/spam in from a few including BestPay.

[bandemelbs]

Won't the judiciary & law enforcers have their hands full around then removing the riff-raff that can longer stay in the UK due to Brex-it???

[DotasScandal]

Yep - HMRC are really going all out to destroy many that will be impacted by this.

Kinda like using a nuclear bomb to crack an egg - quite in character for HMRC.
And why? because "someone" doesn't like contractors, and that "someone" liked even less that contractors did dare challenge their APNs (the nerve!).
And decided to throw his toys ouf of the pram.
It will be interesting to see how the Judiciary like these new "proposals".

[dezze]

Ouch

Yep - HMRC are really going all out to destroy many that will be impacted by this.

As an aside, are scheme promoters still pushing loan schemes? If they are, won't the scheme users automatically be caught?

[eek]

Correct.

The charge is based on the total outstanding loans on 5/4/19 (the first day of the 2019/20 tax year).

The whole charge then falls in the previous tax year 2018/19.

Ouch