Reply to: Overdrawn Capital Account Scheme (Aston Mae / Glen Mae / Procorre)

[mightyspur]

Hi,

Were you originally with Glen May and then moved over to Procorre in March 2017? That is what happened with me but I did not put a single invoice through Procorre, since it was a situation that happened without consultation, and immediately initiated the closure of my company, which was completed in November 2017.

In late 2016, I sent over 120 pages of statements and other information to HMRC as part of their investigation, and have heard nothing since.

Given that my old company has been closed for over six years, I don’t believe it can be reopened in order to pursue the employer’s NI and the change in legislation to allow that liability to be transferred to former employees, following the Rangers case, only became statute in late 2017.

A friend of mine kept his company open and has just received a large bill, addressed to his company, for the NI HMRC has calculated as owing and the amount includes interest back dated to 2019.

No. I joined up with Procorre in 2017 and received circa £14k payments via the overdrawn capital account that year (over a period of around 9 months), before I went through the acquisition process. I hadn't paid any tax on those payments because Procorre said I only had to declare it on my returns when they announced their profit allocation. As part of the acquisition process I asked what it meant to these payments and they said "it had been reconciled by ourselves, and as such you do not need to declare them against your self-assessment", so I didn't put them on either my 2016-17 or 2017-18 self-assessments, which my accountant at the time didn't seem to think was a problem.

I've made it clear to WTT as part of my appeal, that I am more than happy to pay the appropriate tax due on that 14k (plus any interest/penalties), as I can fully understand now why they are classified as a credit facility (despite the advice and assurances from Procorre to the contrary). Problem is, HMRC have taken the full amount my company was valued at with the acquisition and are claiming that is the total amount I had in the overdrawn capital account and classified it as income and thus calculated my tax on that amount.

As far as I can gather, there are a lot of people where that is the case, i.e. the total valuation of their company is the amount they had in the overdrawn capital account, so I am guessing HMRC have made a simple assumption for my case as well.

Sorry, I can't comment on your situation as my company is also still open. I tried to get it closed after IR35 changes were brought in, as I moved away from contracting through my Ltd company and the Procorre LLP, but then I received the letter from HMRC so it's still open.

It's all so painful how long it is taking.

[Smurfburger]

Yesterday morning, I received a letter via my accountant that HMRC have sent, that states, as they "only" have 6 years to get back outstanding NICs they believe are due, I have to either enter into a 'standstill agreement' with them to effectively say I'm OK if it takes longer, or they will go to court and apply for recovery of the sum outstanding, and then immediately ask for an adjournment as the amount is under dispute. All it does, is effectively let them get any liabilities due after the 6 years is up.

This process incurs a fee of around £3.5k that they will add to the liability, which if found in HMRCs favour I will have to pay as well. And if I don't/can't pay it, I am obviously at risk of getting a CCJ.

Advised to just accept the agreement, but here's an idea HMRC... why don't you just do your job and investigate the actual case, so you can see I don't owe this amount you say I owe. It's been over 6 months and this letter doesn't feel me with joy, considering the 6 year 'deadline' is still 2 years away.

Hi,

Were you originally with Glen May and then moved over to Procorre in March 2017? That is what happened with me but I did not put a single invoice through Procorre, since it was a situation that happened without consultation, and immediately initiated the closure of my company, which was completed in November 2017.

In late 2016, I sent over 120 pages of statements and other information to HMRC as part of their investigation, and have heard nothing since.

Given that my old company has been closed for over six years, I don’t believe it can be reopened in order to pursue the employer’s NI and the change in legislation to allow that liability to be transferred to former employees, following the Rangers case, only became statute in late 2017.

A friend of mine kept his company open and has just received a large bill, addressed to his company, for the NI HMRC has calculated as owing and the amount includes interest back dated to 2019.

[frontmen242]

It's nearly Christmas time, so it's that time of year HMRC want to screw your life over once again with threat and worry... just received via the Accountant said letter of stay of execution or "standstill agreement". How many more years do we all have to suffer their ineffectiveness.... I have battled cancer and got through but cant shake this off whatever I try..... let me know how you all get on with this standstill agreement, I have just 6 days to respond nothing like giving me time to digest and think about it....

Merry Christmas one and all...

[navemitt001]

I’ve had a similar letter and also been advised by WTT to accept the standstill agreement. This has been dragging for me since the backend of 2018.

I got a similar letter now. The strange thing is that they have changed the case ref numbers and the amount details also do not seem to match previous figures. So not sure what is happening.

[ProcorreVictim]

Yesterday morning, I received a letter via my accountant that HMRC have sent, that states, as they "only" have 6 years to get back outstanding NICs they believe are due, I have to either enter into a 'standstill agreement' with them to effectively say I'm OK if it takes longer, or they will go to court and apply for recovery of the sum outstanding, and then immediately ask for an adjournment as the amount is under dispute. All it does, is effectively let them get any liabilities due after the 6 years is up.

This process incurs a fee of around £3.5k that they will add to the liability, which if found in HMRCs favour I will have to pay as well. And if I don't/can't pay it, I am obviously at risk of getting a CCJ.

Advised to just accept the agreement, but here's an idea HMRC... why don't you just do your job and investigate the actual case, so you can see I don't owe this amount you say I owe. It's been over 6 months and this letter doesn't feel me with joy, considering the 6 year 'deadline' is still 2 years away.

I’ve had a similar letter and also been advised by WTT to accept the standstill agreement. This has been dragging for me since the backend of 2018.

[mightyspur]

Yesterday morning, I received a letter via my accountant that HMRC have sent, that states, as they "only" have 6 years to get back outstanding NICs they believe are due, I have to either enter into a 'standstill agreement' with them to effectively say I'm OK if it takes longer, or they will go to court and apply for recovery of the sum outstanding, and then immediately ask for an adjournment as the amount is under dispute. All it does, is effectively let them get any liabilities due after the 6 years is up.

This process incurs a fee of around £3.5k that they will add to the liability, which if found in HMRCs favour I will have to pay as well. And if I don't/can't pay it, I am obviously at risk of getting a CCJ.

Advised to just accept the agreement, but here's an idea HMRC... why don't you just do your job and investigate the actual case, so you can see I don't owe this amount you say I owe. It's been over 6 months and this letter doesn't feel me with joy, considering the 6 year 'deadline' is still 2 years away.

[mightyspur]

It's been over 6 months since HMRC acknowledged my appeal about the Notice of Assessment. It's like a dark cloud just hanging over my head and I am unable to move on and think about any future plans.

[interestedparty]

I reached an agreement with HMRC to repay the loan charge liability + penalties + interest. I'm 63 and this will take me until I'm 76 to repay. Happy days - no, but at least it's ended the constant stress and worry about how bad the outcome might turn out to be.

[mightyspur]

So i have just received a letter from HMRC Counter avoidance ASP Teams stating that their queries in the use of a loan cleanse scheme “Procorre” are now complete and that they are taking no further action.

They do then go on to say that this does not mean any other enquiry in to your tax returns for avoidance use are over or negate the potential loan charge position. Therefore, other enquiries in to anything other than a Loan Cleanse arrangement remain open.

Not sure what to make of this? Anyone else received something similar?

I wonder if they are calling people who went through the Procorre Acquisition are part of this "loan cleanse scheme", but because you didn't, they've just told you enquiries into that are closed. Not sure it means you're free from the Overdrawn capital account / expenses card payments prior to 2019 though, but I'm purely making an educated guess.

[woody1]

Strange how they are calling it a loan cleanse now as opposed to Loan Charge dont you think?

I think they are referring to the Procorre scheme as a "loan cleanse scheme". No idea what "cleanse" is about but I don't think this has any relation to the Loan Charge legislation.

[ProcorreVictim]

Did you have any other enquiries, apart from the loan cleanse scheme? Surely that could only happen if you used another scheme in the same year?

You'd think that them closing the enquiries should take the loan charge off the table but that's a question for a tax advisor.

Apart from Procorre, no others. Strange how they are calling it a loan cleanse now as opposed to Loan Charge dont you think? I’ve forwarded to WTT for their advice as well.

[woody1]

Did you have any other enquiries, apart from the loan cleanse scheme? Surely that could only happen if you used another scheme in the same year?

You'd think that them closing the enquiries should take the loan charge off the table but that's a question for a tax advisor.

[ProcorreVictim]

So i have just received a letter from HMRC Counter avoidance ASP Teams stating that their queries in the use of a loan cleanse scheme “Procorre” are now complete and that they are taking no further action.

They do then go on to say that this does not mean any other enquiry in to your tax returns for avoidance use are over or negate the potential loan charge position. Therefore, other enquiries in to anything other than a Loan Cleanse arrangement remain open.

Not sure what to make of this? Anyone else received something similar?

[NickLeeson2]

Who was the specialist?

[GregRickshaw]

I'm pretty close to reaching a settlement agreement with HMRC - I'm hoping the final agreed monthly figure will be affordable but will definitely take me well past my pension age. Before I commit to this, does anyone genuinely believe there is a strong legal basis to say no to HMRC and fight them in the tribunals - or are we genuinely at the stage (and probably have been for quite some time) where I should just accept they've got me over a barrel and hope for as kind a repayment agreement as possible?

I think you just have to accept it, from what I read and hear not a single 'loan style charge' case has been won by anyone other than HMRC. If there are cases which are similar to yours which have been won, one of the posters here will know about it.

The only fight which may be worth having is to ask HMRC to remove late payment fees, which are probably quite substantial, I managed this through very good tax specialists.