Reply to: Finance Bill 2017-18 V HMRC DR Settlement Terms

[burnside]

My general advice is exactly that, there’s no harm in asking for the settlement figure so worth getting that and then considering options once you have the full details.

I have asked them the question when sending them yet another copy of a loan statement and agreement, one that I had sent them previously. Seems they are being a little careless with our confidential paperwork!

Basically I have asked them what my position currently is, how the DR LC19 impacts me and what I will be liable to pay under that and what the likely settlement figure will be under CLS02. I have also asked them why they have neglected to send me any information about LC19 and CLS02...it was only by me stumbling across this forum that I found out.

[phil@pmtc]

So I guess the next step for me then is to enquire with HMRC re CLS02 to get a settlement figure and then see where that takes me?

My general advice is exactly that, there’s no harm in asking for the settlement figure so worth getting that and then considering options once you have the full details.

[burnside]

Is anyone able to provide any information or clarity around differences between loans received from a trust compared to loans received from the employer who no longer exists, unlike a trust they are gone so how can you pay a loan back. wouldn't these have been effectively written off?

[burnside]

So I guess the next step for me then is to enquire with HMRC re CLS02 to get a settlement figure and then see where that takes me?

[phil@pmtc]

That would change things a little, obviously bankruptcy wouldn't suit either party, HMRC would only receive a small percentage of total debt and the consequences for me could be far reaching, i.e. losing home and any other possessions that are deemed of value, potential to lose my job but certainly could no longer contract in the finance industry any more, then there's the mental strain of it all. I want to ensure that my wife is clear and then I will take any penalty coming my way, if that means paying £1k a month for the rest of my working life then so be it.

And let's face it, if my career is ended due to bankruptcy then it would double penalise HMRC, as not only would they not receive full payment they also would not receive any future income tax and NI, or at least a vastly reduced rate when I have to retrain into a new career

Fully understand, ive had many a negotiation with HMRC where ive pointed out that it can be a win/win or a lose/lose.
You would hope that they would always work with the person to avoid bankruptcy and to ensure they got paid the full amount. Not always the case sadly but I find they are slightly more flexible nowadays on TTP than perhaps have been in the past. Certainly on larger scale, newsworthy cases so I'm hoping will be the case with the LC/Settlements.

[phil@pmtc]

Hi Phil

Does HMRC charge interest in the length of the repayment years? So if say it to be paid over 20 years, do they charge interest over this period for the outstanding amount? If so what is the rate?

In theory yes, though i've also seen where they have agreed not to. On the whole ive always been somewhat surprised that there aren't any set guidelines for TTP agreements though to be fair I suppose HMRC would say they look at each case individually.
late payment interest current set at 3% I think (but happy to be corrected as I'm working from memory)

[burnside]

There isn’t a limit on how many years a time to pay can be arranged for. Just this week I saw one agreed for over 20+ years.

That would change things a little, obviously bankruptcy wouldn't suit either party, HMRC would only receive a small percentage of total debt and the consequences for me could be far reaching, i.e. losing home and any other possessions that are deemed of value, potential to lose my job but certainly could no longer contract in the finance industry any more, then there's the mental strain of it all. I want to ensure that my wife is clear and then I will take any penalty coming my way, if that means paying £1k a month for the rest of my working life then so be it.

And let's face it, if my career is ended due to bankruptcy then it would double penalise HMRC, as not only would they not receive full payment they also would not receive any future income tax and NI, or at least a vastly reduced rate when I have to retrain into a new career

[luxCon]

There isn’t a limit on how many years a time to pay can be arranged for. Just this week I saw one agreed for over 20+ years.

Hi Phil

Does HMRC charge interest in the length of the repayment years? So if say it to be paid over 20 years, do they charge interest over this period for the outstanding amount? If so what is the rate?

[phil@pmtc]

Obviously if repayment could be agreed then that would be the preferable option, but £35k a year is well out of reach, I recently took a permanent role and £3k a month would mean handing over 90% of my salary over to HMRC for 7 years...ouch!

I've got a bit of homework to do to calculate all the loans received, and get the ballpark estimate on what the bill would be. Interestingly looking at my loan agreements only the early ones were with a trust, the majority were from the employer who no longers exists, what impact does this have?

There isn’t a limit on how many years a time to pay can be arranged for. Just this week I saw one agreed for over 20+ years.

[burnside]

If you know you're going bankrupt for sure, then put your affairs in order (read into that however you will...) before contacting HMRC for settlement.

Bear in mind that HMRC might offer you a long (up to 7 years?) Time to Pay agreement.

On loans of £500k, assuming no open years, then you should probably estimate ~£250k tax at a wild guess.

Obviously if repayment could be agreed then that would be the preferable option, but £35k a year is well out of reach, I recently took a permanent role and £3k a month would mean handing over 90% of my salary over to HMRC for 7 years...ouch!

I've got a bit of homework to do to calculate all the loans received, and get the ballpark estimate on what the bill would be. Interestingly looking at my loan agreements only the early ones were with a trust, the majority were from the employer who no longers exists, what impact does this have?

[ChimpMaster]

If you know that you have no way of paying any bill, is it even worth going down the CLS02 route, surely that would just mean that your failure to pay will come sooner and so would the impending bankruptcy? The only benefit, if you can call it that, of going down the CLS02 route is that your bankruptcy will end sooner and you can go about trying to repair the car crash of your life caused by ruthless scheme promoters, experts who gave bad advise, HMRC that can make up the rules as they go along and make changes retrospectively, media and public who will show no sympathy and greedy and/or gullible contractors.

If you know you're going bankrupt for sure, then put your affairs in order (read into that however you will...) before contacting HMRC for settlement.

Bear in mind that HMRC might offer you a long (up to 7 years?) Time to Pay agreement.

On loans of £500k, assuming no open years, then you should probably estimate ~£250k tax at a wild guess.

[burnside]

Thank you. I see bankrupcy law not youre area but Some much UNCERATINTY makes me FEARFUL and DOUBT
Trust will NOT exist NOT coperatate AND charge fees AND obliged iht AND legal fees AND charge income tax all UNCERTAINTY/

CLSO2 will means NO legal fees NO 3% fees HRMC will FIX the trust and NO trust fess and NO charges ALL CERTAIN just tax.
The CLSO2 HRMC kindly offering to takeg tax and EVERYTHING fixed that is WORSE worse so we move on with life. NO UNCERTIANTY NO double tax just pay the iht and single tax and NO trust the trustee problems left/
NO FEAR NO DOUBT with CLOS2.

If you know that you have no way of paying any bill, is it even worth going down the CLS02 route, surely that would just mean that your failure to pay will come sooner and so would the impending bankruptcy? The only benefit, if you can call it that, of going down the CLS02 route is that your bankruptcy will end sooner and you can go about trying to repair the car crash of your life caused by ruthless scheme promoters, experts who gave bad advise, HMRC that can make up the rules as they go along and make changes retrospectively, media and public who will show no sympathy and greedy and/or gullible contractors.

[demby]

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[regron]

Thank you. I see bankrupcy law not youre area but Some much UNCERATINTY makes me FEARFUL and DOUBT
Trust will NOT exist NOT coperatate AND charge fees AND obliged iht AND legal fees AND charge income tax all UNCERTAINTY/

CLSO2 will means NO legal fees NO 3% fees HRMC will FIX the trust and NO trust fess and NO charges ALL CERTAIN just tax.
The CLSO2 HRMC kindly offering to takeg tax and EVERYTHING fixed that is WORSE worse so we move on with life. NO UNCERTIANTY NO double tax just pay the iht and single tax and NO trust the trustee problems left/
NO FEAR NO DOUBT with CLOS2.

Really ? Have a read up on a company called behavioural insights !

[webberg]

Thank you. I see bankrupcy law not youre area but Some much UNCERATINTY makes me FEARFUL and DOUBT
Trust will NOT exist NOT coperatate AND charge fees AND obliged iht AND legal fees AND charge income tax all UNCERTAINTY/

CLSO2 will means NO legal fees NO 3% fees HRMC will FIX the trust and NO trust fess and NO charges ALL CERTAIN just tax.
The CLSO2 HRMC kindly offering to takeg tax and EVERYTHING fixed that is WORSE worse so we move on with life. NO UNCERTIANTY NO double tax just pay the iht and single tax and NO trust the trustee problems left/
NO FEAR NO DOUBT with CLOS2.

Just remember that resolving the tax issues DOES NOT mean that the loan disappears.

That has to be dealt with.

HMRC is clear that if this happens in certain ways, further liability can arise.