Reply to: Closing opened years - is this possible?

[webberg]

I contacted my most recent employer which was an umbrella company making payments to a company in IOM, they refused to accept they have any liability come 2019 and are very comfortable with that position. I assume they have taken professional advice to reach that position. I certainly don't envisage them amending their payroll to pay all the tax and NI they'd be due on the loans I have with the 3rd party, I also cannot see HMRC throwing a large bill at them for non-payment of tax, although this is only my opinion.

I don't want to burst your bubble, but ask yourself what motivation the umbrella company might have to tell you anything other than the above.

They are not your tax adviser. They owe you very little duty of care in terms of tax.

If they have taken advice, then I suspect it was advice around their tax position and not yours.

Personally I can see HMRC throwing large bills at just about everybody and seeing which ones stick.

You should get advice from somebody who is working for you and not rely upon unseen advice given to somebody else for heaven knows what.

[jbryce]

I contacted my most recent employer which was an umbrella company making payments to a company in IOM, they refused to accept they have any liability come 2019 and are very comfortable with that position. I assume they have taken professional advice to reach that position. I certainly don't envisage them amending their payroll to pay all the tax and NI they'd be due on the loans I have with the 3rd party, I also cannot see HMRC throwing a large bill at them for non-payment of tax, although this is only my opinion.

Errr - come 2019 your employer will be long gone. They probably have advice from the supplier of the trust which will be relying on a narrow interpretation of the law which will fail.
Of course, your employer is allowed their 'opinion' too. Unlikely that HMRC will agree with it.

[eek]

I contacted my most recent employer which something pretending to be an umbrella company making payments to a company in IOM, they refused to accept they have any liability come 2019 and are very comfortable with that position. I assume they have taken professional advice to reach that position. I certainly don't envisage them amending their payroll to pay all the tax and NI they'd be due on the loans I have with the 3rd party, I also cannot see HMRC throwing a large bill at them for non-payment of tax, although this is only my opinion.

not intending to wind you up but that bit needs to be clear.

As for the rest - yes nobody knows but your employer (whatever it actually is) and the IoM company will have disappeared by April 5th 2019 if things pan out as HMRC hope...

[FakeHorizon]

It's not known yet. Expect to hear more towards the end of November / early December. If the employer is still around then the employer will have to pay the PAYE/NIC with March's payroll (i.e. mid April or so). If the employer is not around then some other mechanism for the payment will be needed and I'm expecting that the exact details will be consulted on. In the Q&A at the end of the webinar (someone like webberg will be able to supply a link as there is a recording) HMRC suggested it may well be a self-assessment process. To me, that makes sense rather than creating a separate process. But it also makes payements on account a bit more interesting and does not deal with NIC. To be clear, HMRC has not said whether NIC (employees and, potentially, employers) and Apprenticeship Levy will be transferred to the individual. That is still up in the air as far as I am aware. If it was self-assessment then it would be 31 January 2020.

I contacted my most recent employer which was an umbrella company making payments to a company in IOM, they refused to accept they have any liability come 2019 and are very comfortable with that position. I assume they have taken professional advice to reach that position. I certainly don't envisage them amending their payroll to pay all the tax and NI they'd be due on the loans I have with the 3rd party, I also cannot see HMRC throwing a large bill at them for non-payment of tax, although this is only my opinion.

[webberg]

Oh dear it just gets worse and worse.

So there is no clarity when it comes to settling now or the loan charge. Settling closed years now didn't used to include interest but now it looks like it does, but presumably you won't know until you approach HMRC and the 2019 loan charge is also an unknown (it may or may not include ees NI and ers NI and/or something else).

So is it fair to say it is impossible to make any kind of informed decision at this point as to how best to proceed?!

Welcome to our world.

Ask HMRC for your numbers and make your decision.

If you need to, get professional help.

[starstruck]

Oh dear it just gets worse and worse.

So there is no clarity when it comes to settling now or the loan charge. Settling closed years now didn't used to include interest but now it looks like it does, but presumably you won't know until you approach HMRC and the 2019 loan charge is also an unknown (it may or may not include ees NI and ers NI and/or something else).

So is it fair to say it is impossible to make any kind of informed decision at this point as to how best to proceed?!

[webberg]

I'd agree with the above.

HMRC last week were clear about very little other than "pay us money and we'll go away".

Even then, the amount you need to pay is their present number plus potentially more if they decide in a few years' time that IHT is due.

In terms of settlement, there is no commitment made until you sign the contract. You can stop at any time.

HMRC try to push you into a particular time window by suggesting that the terms are available only for a certain period. Given the extra statutory (i.e. HMRC making up its own rules) nature of the settlement, they probably can withdraw an "offer" if they choose to. Might be cutting off their nose to spite their face, but since when has that stopped them?

[Iliketax]

So all loans not settled before April 5th 2019 will be treated as income received within the 2018/19 tax year and the final tax bill will need to be settled as part of a standard self assessment tax return by 31st January 2020?

I'm asking just to make things clear for people....

It's not known yet. Expect to hear more towards the end of November / early December. If the employer is still around then the employer will have to pay the PAYE/NIC with March's payroll (i.e. mid April or so). If the employer is not around then some other mechanism for the payment will be needed and I'm expecting that the exact details will be consulted on. In the Q&A at the end of the webinar (someone like webberg will be able to supply a link as there is a recording) HMRC suggested it may well be a self-assessment process. To me, that makes sense rather than creating a separate process. But it also makes payements on account a bit more interesting and does not deal with NIC. To be clear, HMRC has not said whether NIC (employees and, potentially, employers) and Apprenticeship Levy will be transferred to the individual. That is still up in the air as far as I am aware. If it was self-assessment then it would be 31 January 2020.

[starstruck]

I report what I see in my clients' papers and I have now seen two instances in which HMRC is insisting on "interest" on voluntary payments.

If interest were to make settlement no longer preferential to the loan charge, can your clients just withdraw from negotiations and wait for 2019 or are they somehow now committed to the settlement process? The mention of litigation and fines from HMRC makes me think that they are now unintentionally in a worse situation than sitting tight for 2019.

[eek]

The HMRC webinar last week indicated that liability under the 2019 charge would be on self assessment timetables and as such a payment of any assessment no later than 31st January 2020, should not attract any interest.

So all loans not settled before April 5th 2019 will be treated as income received within the 2018/19 tax year and the final tax bill will need to be settled as part of a standard self assessment tax return by 31st January 2020?

I'm asking just to make things clear for people....

[webberg]

Adding interest to closed years that are 15+ years old would suddenly make the loan charge far more attractive than an earlier than 2019 settlement. Are you still of the opinion that the loan charge won't have interest?

The HMRC webinar last week indicated that liability under the 2019 charge would be on self assessment timetables and as such a payment of any assessment no later than 31st January 2020, should not attract any interest.

[starstruck]

I report what I see in my clients' papers and I have now seen two instances in which HMRC is insisting on "interest" on voluntary payments.

We are obviously resisting.

I remain of the view that HMRC has no legal authority to request interest on sums that are not tax.

However, their "settlement" is extra statutory and they can offer pretty much anything they want and refuse to amend it. If you don't like it, there is no compulsion to accept it.

There is however a subtle pressure and a not so subtle string of threats from HMRC about litigation, fines, worse terms later, etc.

This enquiry process has been running for a long time (17 years) and certainly in the last 3 years it feels as though something has happened pretty much every month that changes the way in which all the parties involved might react. This is not a situation in which an answer today might be 100% valid in say 3 months. It is a morass of constantly changing analysis and actions and I for one make no apology for reporting each change.

I appreciate that it sounds as though we are shifting ground all the time but we're not. If the facts change, then we change our process, not the strategy, the process.

Adding interest to closed years that are 15+ years old would suddenly make the loan charge far more attractive than an earlier than 2019 settlement. Are you still of the opinion that the loan charge won't have interest?

[webberg]

So hang on, a week ago on this thread you said no interest on closed years, but now there is?! Is that in all cases (e.g. settlement now) or just in the 2019 loan charge. What has changed in the last week?

I report what I see in my clients' papers and I have now seen two instances in which HMRC is insisting on "interest" on voluntary payments.

We are obviously resisting.

I remain of the view that HMRC has no legal authority to request interest on sums that are not tax.

However, their "settlement" is extra statutory and they can offer pretty much anything they want and refuse to amend it. If you don't like it, there is no compulsion to accept it.

There is however a subtle pressure and a not so subtle string of threats from HMRC about litigation, fines, worse terms later, etc.

This enquiry process has been running for a long time (17 years) and certainly in the last 3 years it feels as though something has happened pretty much every month that changes the way in which all the parties involved might react. This is not a situation in which an answer today might be 100% valid in say 3 months. It is a morass of constantly changing analysis and actions and I for one make no apology for reporting each change.

I appreciate that it sounds as though we are shifting ground all the time but we're not. If the facts change, then we change our process, not the strategy, the process.

[eek]

So hang on, a week ago on this thread you said no interest on closed years, but now there is?! Is that in all cases (e.g. settlement now) or just in the 2019 loan charge. What has changed in the last week?

Probably nothing except HMRC trying it on hoping that the Tax payer doesn't have suitable qualified advisors able to pick up on the trick....

[starstruck]

True and for a long time this was not the case.

We are though starting to see it appear in HMRC calculations and refusing to pay it (more precisely asking HMRC why it can be charged) results in them picking up their ball and going home.

In my view this is unfair pressure on taxpayers.

So hang on, a week ago on this thread you said no interest on closed years, but now there is?! Is that in all cases (e.g. settlement now) or just in the 2019 loan charge. What has changed in the last week?