Reply to: Disappearing loans?

We remain of the view that a non existent loan at the trigger date is very difficult to tax and we will be arguing that.

That makes perfect sense in isolation but I do not understand why it is something to get excited about. If a loan is written off, the write-off gives rise to income tax on the amount written off, does it not? This is covered by ITEPA 2003 s188.

[lowpaidworker]

Ah the postponement - You''ll find references to that old chestnut elsewhere

which effectively means nadda

[QCApproved]

Ah the postponement - You''ll find references to that old chestnut elsewhere

[lowpaidworker]

Postponing

Anyone know what this means ?

https://www.gov.uk/guidance/disguise...he-loan-charge

I guess you use this is you have already settled an APN relating to a loan. Can this be used for any other reason ??

[webberg]

I must admit it does seem to be a poorly written article.

Quote.

"There are two exemptions to this. Where the loan was written off on or before March 16th 2016 (the date the legislation was announced), then it is not subject to the charge....."

webberg can you clarify what your guy says.

I can.

The original legislation when presented was , if you recall, included in a Finance Bill and then withdrawn because of the General Election. After that, it was reintroduced in substantially the same form.

There was a thought at the time that the delay in announcing the loan charge measure and its subsequent withdrawal and later inclusion, left open a window in which loans which no longer existed could be excluded.

That may still be the case.

When the article was written, we were of the view that loans which did not exist had a better than even chance of being excluded from the charge as on a strict reading, it could never apply.

We have since had a number of conversations with HMRC over that point and they are firmly of the view that a loan that has not been "repaid" is included, even where nobody any longer has any claim on the borrower.

That is a stance that we disagree with for a number of practical, commercial and legal reasons. It is a position that we will certainly be putting to our clients and explaining our view and the consequences should it be incorrect.

We remain of the view that a non existent loan at the trigger date is very difficult to tax and we will be arguing that.

It would be sensible however in the light of information on how HMRC plan to interpret the law, to be less bullish, especially where the loan write off was a contrivance.

I very much stand by my man who wrote the piece in good faith based on our view at that time.

[kryten22uk]

How do HMRC find out that any such loan exists in the first place? Do they just email trusts asking for a list of loans and beneficiaries? Presumably a loan could 'disappear' if the HMRC never knew about it in first place?

[me206et]

Thanks for the response. The two points I mentioned were from this article

https://www.wttconsulting.co.uk/sing...ration-to-bite

I must admit it does seem to be a poorly written article.

Quote.

"There are two exemptions to this. Where the loan was written off on or before March 16th 2016 (the date the legislation was announced), then it is not subject to the charge....."

webberg can you clarify what your guy says.

[webberg]

Thanks for the response. The two points I mentioned were from this article

https://www.wttconsulting.co.uk/sing...ration-to-bite

That article reflected thinking at the time it was written.

The write off of a loan pre March 16 should, in theory, mean no loan to be disclosed. We put this to HMRC who - after a lot of logic somersaults - disagreed.

We still beleive that it offers a way out of the charge but it will be challenged.

Repaying in cash is fine, but you will never see the money again.

[dmuk]

I believe that in most cases, HMRC will not agree with either of the points you make.

Thanks for the response. The two points I mentioned were from this article

https://www.wttconsulting.co.uk/sing...ration-to-bite

[webberg]

I take it from this thread that posters may be exempt from the 2019 loan charge:

1) Where the loan was written off on or before March 16th 2016 (the date the legislation was announced), then it is not subject to the charge.
2) Where the loan has been repaid, in money, before April 5th 2019 then it will not be subject to the charge.

However sourcing such evidence is difficult as in most cases the original scheme is liquidated (but the loan still exists as transferred to a trust or other entity)?

What format/type of evidence does HMRC accept?

I believe that in most cases, HMRC will not agree with either of the points you make.

1. The loan charge uses its own definition of outstanding loan. That is basically the original loan less repayments made in cash.

A write off, release, forgiveness etc is not a repayment and will be ignored for the purposes of the loan charge.

2. A loan repaid in cash will not be chargeable provided that the repayment was not in itself part of a tax avoidance plan and you do not have the money returned nor are likely to.

Unfortunately therefore the HMRC claims that the charge can be avoided by repaying the loan are false and simply part of the misinformation they feed MPs.

[me206et]

I take it from this thread that posters may be exempt from the 2019 loan charge:

1) Where the loan was written off on or before March 16th 2016 (the date the legislation was announced), then it is not subject to the charge.
2) Where the loan has been repaid, in money, before April 5th 2019 then it will not be subject to the charge.

However sourcing such evidence is difficult as in most cases the original scheme is liquidated (but the loan still exists as transferred to a trust or other entity)?

What format/type of evidence does HMRC accept?

Not convinced 1) is correct.

[dmuk]

I take it from this thread that posters may be exempt from the 2019 loan charge:

1) Where the loan was written off on or before March 16th 2016 (the date the legislation was announced), then it is not subject to the charge.
2) Where the loan has been repaid, in money, before April 5th 2019 then it will not be subject to the charge.

However sourcing such evidence is difficult as in most cases the original scheme is liquidated (but the loan still exists as transferred to a trust or other entity)?

What format/type of evidence does HMRC accept?

[howcanigetyoualoan]

Most have already comunicated.

Mine certainly have.
I was with AML

And the admin fee to release the loan?

[pateen]

Most have already comunicated.

Mine certainly have.
I was with AML

[ununInformed]

Who are the providers, and trustees please? How much is the admin fee?

I’d rather not say who, but they are mentioned here and there on this website. It’s in the order of USD600.