Reply to: AML Loan Charge Calculator

[Willo76]

Has anyone using SPM received this recently ? I received it yesterday

Is this a new attempt to pass the buck ? I have not previously received this offer of assistance from them.


From: "Tax (SP-MGT)" <[email protected]>
Subject: 2018/19 Tax Return
Date: 17 September 2019 at 15:51:12 BST
To: “'


Good afternoon,

We are writing to advise that you have received self-employed income during the 2018/19 tax year, from ourselves, and therefore you are required to submit a self-assessment (SA) tax return to HMRC.

If you would like assistance with your SA tax return, please follow the link below which will engage you directly with …..Accountant….. It will also authorise us to provide them with the relevant details to complete your SA tax return.

Click Here

Alternatively, if you have your own accountant, who completes your Self-Assessment (SA) tax return, or you complete it yourself, please see below income figures, which you will be required to include on your SA tax return. Please send these details to your accountant directly:

Pages to Complete – Self employed (Short) Pages (SA103S)
Business Name – Your Full Name
Business Description – Sole Trader

Total Self Employed Income - £ 11,255
Start Date – Leave Blank
End Date – Leave Blank
Date Books Made up to – Leave Blank

Please note that if you also received a dividend from your limited company please ensure the amount declared on your self-assessment matches the amounts declared in your company accounts.

If you have any queries, please do not hesitate to contact us directly.

Kind regards,

Tax Department

[dammit chloe]

Any idea on HMRC response times…I applied for settlement in May-18, received incorrect calculations in Apr-19 and after that no response since then. Not sure what’s point if they can keep on dragging this for 18 months. Their helpline is joke with standard response. Seems it has been set up so that they can tell in parliament that they are helping us but otherwise, those call centre staff cannot give any meaningful response.

I am assuming, they may take months even to close after one accepts settlement terms.

Has anybody tried raising this to their MP with any +ve outcome…

With Regards,

MPs, in general, seem to provoke a quick response from HMRC.

[patel]

Settlement Opt-in to actual closure timelines – HMRC delays

Any idea on HMRC response times…I applied for settlement in May-18, received incorrect calculations in Apr-19 and after that no response since then. Not sure what’s point if they can keep on dragging this for 18 months. Their helpline is joke with standard response. Seems it has been set up so that they can tell in parliament that they are helping us but otherwise, those call centre staff cannot give any meaningful response.

I am assuming, they may take months even to close after one accepts settlement terms.

Has anybody tried raising this to their MP with any +ve outcome…

With Regards,

[webberg]

So where there is an open year(s) but settlement has been completed, are the enquires still officially open? Assuming from HMRC perspective if they have reached settlement they won’t be perusing these further?
Since I settled some prev years no confirmation has been rec.

If you have settled a year then it is closed.

Enquires are at an end.

[Iter]

An open year is one which has had a valid enquiry opened under section 9A TMA 1970 or where a discovery assessment has been validly issued.

There are a number of rules around that process and careful checking is required.

HMRC does not and cannot "choose" to keep enquiries open. If you have a validly open year, then you are at liberty to push HMRC to "close" it. This starts with a closure notice which is meant to be a statement from HMRC explaining why they have adjusted (raised) your tax bill for that year. If HMRC will not issue that notice, you can apply to the Tribunal to force HMRC to do that.

Once issued, if you disagree with their assessment, you can appeal and go to argue your case at Tribunal.

It is a fallacy to think that only HMRC can control and run this process. They have obligations here just like you.

Even if the loan charge law disappears, where you have open years you still have to deal with them.

We wish all those campaigning for the law to the revoked the very best and hope they succeed. Even if they do however, the liability for open years remains to be dealt with.

So where there is an open year(s) but settlement has been completed, are the enquires still officially open? Assuming from HMRC perspective if they have reached settlement they won’t be perusing these further?
Since I settled some prev years no confirmation has been rec.

[webberg]

How does settlement play into other notices (eg APN)?

And do you even have an option under the LC settlement terms to only settle on the open enquiry period?




In 1 - 3 there is a chance to escape the loan charge any tax liability?

An APN is a payment on account. When the final liability is agreed, it is a credit against that. Be careful with applying APN amounts against the loan charge because the latter, once paid, is non refundable. (I know - and I hope this is part of the various loan charge action group/JR plans).

Yes.

Escaping the loan charge?

Depends who you speak to.

LCAG and those backing the political/legal route will say "yes" by virtue of having the law revoked and/or declared invalid. If that is the case, then clearly the Government has the option to remake it perhaps in a different manner.

Some scheme promoters and their tame advisers will claim that their scheme sits outside the legislation because a literal reading of the law can achieve that. Perhaps they can. However HMRC has already persuaded a GAAR Panel that the words in the law can be ignored where the intention of the law is contrary to that. This is not yet tested in Court but probably will be soon.

Some advisers in this space, (long term or newly arrived), may have ideas or plans but you would need to discuss this with them as little is shared publicly.

We have a strategy and you can call us to discuss it. Ours is part of a long term and wider plan rather than a stand alone. Dealing with the loan charge in isolation is pointless. You can call us and ask, initial call is free of charge.

You need to do some research, get as much as you can for free, sit back and think, perhaps seek a second independent review and then decide. You have until the end of September before you need to disclose loan values.

[webberg]

Please could you clarify 'open years'? I assume you are referring to an HMRC open enquiry? And if so, does this scenario actually exist as I suspect HMRC have chosen to keep these enquiries open even though years have passed.




Good point - there's this third scenario of hoping the law will be overturned.

An open year is one which has had a valid enquiry opened under section 9A TMA 1970 or where a discovery assessment has been validly issued.

There are a number of rules around that process and careful checking is required.

HMRC does not and cannot "choose" to keep enquiries open. If you have a validly open year, then you are at liberty to push HMRC to "close" it. This starts with a closure notice which is meant to be a statement from HMRC explaining why they have adjusted (raised) your tax bill for that year. If HMRC will not issue that notice, you can apply to the Tribunal to force HMRC to do that.

Once issued, if you disagree with their assessment, you can appeal and go to argue your case at Tribunal.

It is a fallacy to think that only HMRC can control and run this process. They have obligations here just like you.

Even if the loan charge law disappears, where you have open years you still have to deal with them.

We wish all those campaigning for the law to the revoked the very best and hope they succeed. Even if they do however, the liability for open years remains to be dealt with.

[dmuk]

In due course, it will be necessary to settle the year under enquiry. When that happens, the tax and interest due will be calculated, credit given for the loan charge paid and you will owe the difference.

How does settlement play into other notices (eg APN)?

And do you even have an option under the LC settlement terms to only settle on the open enquiry period?

Defeating the loan charge is being attempted by:

1. Political means, i.e. persuading HM Treasury to reverse or remove the law presently on the statute book.

2. Judicial Review, i.e. persuade a Judge that the law contravenes human rights or natural justice or perhaps some other grounds.

3. Particular schemes not being within the remit, i.e. a loan direct from an employer is technically outside the rules. Beware this one however as HMRC has already persuaded the GAAR Panel that even though the law is clear and unequivocal, because Parliament "intended" to include all loans, it is "natural" to extend the loan charge to such situations.

4. Argue that there is no loan (which is what HMRC claim for income tax purposes) and instead the payment is either employment income or a trust distribution or some other beast.

(The last may allow escape of the loan charge but not perhaps the tax liability).

In 1 - 3 there is a chance to escape the loan charge any tax liability?

[dmuk]

As far as I am aware if your year is closed then there is no interest to pay when you settle, as it is voluntary.

If you think that the Loan Charge may be overturned and have no open years then you can take the risk to not settle. If you have open years, then regardless of what happens with the loan charge you will have to deal with the issue. Interest will be stacking up.

Please could you clarify 'open years'? I assume you are referring to an HMRC open enquiry? And if so, does this scenario actually exist as I suspect HMRC have chosen to keep these enquiries open even though years have passed.

Or you think the loan charge is a complete outrage and choose to fight. Or for your open years you are prepared to litigate.

Good point - there's this third scenario of hoping the law will be overturned.

[webberg]

Be very careful.

If your earlier year is under enquiry, your choice is essentially settle or fight.

The loan charge is NOT settlement.

If the year is under enquiry and you choose not to settle and the loan charge applies, then you will pay some tax in January 2020.

In due course, it will be necessary to settle the year under enquiry. When that happens, the tax and interest due will be calculated, credit given for the loan charge paid and you will owe the difference.

(In the event that the loan charge is more than the tax and interest due from the earlier year, there is no repayment).

And I have simplified the above to show the effect rather than the exact mechanism used in the legislation, necessary in order to refute claims that the loan charge is retrospective.

If your earlier year has no enquiry, then HMRC will claim that the loan charge is due and you have no option to settle the earlier year EXCEPT by way of voluntary restitution. That means that you pay an amount equal to the tax that would be due but you pay no interest as it's not tax.

If you choose not to volunteer a payment, then you need to defeat the loan charge.

Defeating the loan charge is being attempted by:

1. Political means, i.e. persuading HM Treasury to reverse or remove the law presently on the statute book.

2. Judicial Review, i.e. persuade a Judge that the law contravenes human rights or natural justice or perhaps some other grounds.

3. Particular schemes not being within the remit, i.e. a loan direct from an employer is technically outside the rules. Beware this one however as HMRC has already persuaded the GAAR Panel that even though the law is clear and unequivocal, because Parliament "intended" to include all loans, it is "natural" to extend the loan charge to such situations.

4. Argue that there is no loan (which is what HMRC claim for income tax purposes) and instead the payment is either employment income or a trust distribution or some other beast.

(The last may allow escape of the loan charge but not perhaps the tax liability).

Get advice.

[NeedTheSunshine]

I am late to the game here but just trying to clear this up in my head. Is the decision to settle going to be down to how much your income is now versus then? I am ignoring IHT here.

Example:

Loans:
£50k loan from 2008/09

Settlement scenario (A):
HMRC recalculate your 2008/09 tax return by adding the £50k loan amount to your assessable income at the time.
They then add interest from 2008/09 to today.
Pay revised income tax figure + interest.

Declare scenario (B):
You include the £50k loan amount as your assessable income in your 2018/19 tax return.
Pay income tax figure. Not interest applies.


Only looking at scenario A - is this the type of consideration to make and compare it today including the loan figure in current tax return?

A - no salary:
£k
0 Salary
50 Loan
--
50 Assessable
--
Plus
10 Tax
2 Interest
--
12 owed under settlement

A - salary:
£k
50 Salary
50 Loan
--
100 Assessable
--
Plus
30 Tax
6 Interest
--
36 owed under settlement

As far as I am aware if your year is closed then there is no interest to pay when you settle, as it is voluntary.

If you think that the Loan Charge may be overturned and have no open years then you can take the risk to not settle. If you have open years, then regardless of what happens with the loan charge you will have to deal with the issue. Interest will be stacking up.

If you settle, whatever happens with the loan charge or litigation for your particular scheme you will not get the money back.

So depending on the interest and open/closed issue and your earnings in the year you settling compared to your earnings for the loan charge year, it's a maths job.

Or you think the loan charge is a complete outrage and choose to fight. Or for your open years you are prepared to litigate.

[dmuk]

I am late to the game here but just trying to clear this up in my head. Is the decision to settle going to be down to how much your income is now versus then? I am ignoring IHT here.

Example:

Loans:
£50k loan from 2008/09

Settlement scenario (A):
HMRC recalculate your 2008/09 tax return by adding the £50k loan amount to your assessable income at the time.
They then add interest from 2008/09 to today.
Pay revised income tax figure + interest.

Declare scenario (B):
You include the £50k loan amount as your assessable income in your 2018/19 tax return.
Pay income tax figure. Not interest applies.


Only looking at scenario A - is this the type of consideration to make and compare it today including the loan figure in current tax return?

A - no salary:
£k
0 Salary
50 Loan
--
50 Assessable
--
Plus
10 Tax
2 Interest
--
12 owed under settlement

A - salary:
£k
50 Salary
50 Loan
--
100 Assessable
--
Plus
30 Tax
6 Interest
--
36 owed under settlement

[dammit chloe]

But your missing the point on the two years that are not currently under investigation. The tax and interest is the "The Loan Charge" so if there is no interest to pay which is a big factor then there is nothing else they can charge on those two years except the tax, rather like originally declaring the loan as additional income in the tax year it was received. As for the two years under investigation one year was only £8k which i declared and paid three years ago and the second one £25K and paid all the tax that the SA requested. I would have thought that HMRC would have come after me by now for more on the two open years if needed.

My other point around expenses was that I had £2500 for the first year which I didn't offset against the £8k and £9000+ for the second year again which I didn't offset against the £25k I want to reopen these years in inject the expenses if possible.

I have also read the LCAG website and tonight contacted my local MP for Swindon to plead with him to sign the EDM and get his colleagues to do the same. My advice for the LCAG is to focus the campaign towards maybe getting a BBC Panorama program done or a slot on Breakfast TV maybe with Eamonn Holmes because he hates HMRC and so does Lizz Kelly. Frankly any of the presenters would be only to keen to help shaft HMRC as they are all under the spotlight for tax reasons. Your fight against the big mask of brexit so getting airtime will be hard but something has to change before more people jump or step in front of trains.

Absolutely gobsmacked about the Evening Standard running that piece given their editor "Trustfund George" was the architect of the Loan Charge.

I wish LCAG all the best and will join but I intend to pay as it seems a fruitless task given Rangers had loads more cash and still lost. If people read their judgement the supreme court only needed to add one line to the end of it like " If a person is an employee only then explicit responsibility of tax on all monies received within that employment falls due on the employer and not the employee" They didn't because the bet was £1.2bn hence they do the bidding of the HMRC and the government which tells you all how this case will end. Rangers won at round one and got stuffed at rounds two and three.

You already seem to know a lot about your situation and I am not a tax advisor but I am a bit confused, maybe because there is a lot of info. AFAIK interest is only applicable to open years settled under the CLSO2 settlement opportunity. Closed years and years you pay the Loan Charge on do not attract interest. Of course Loan Charge doesn't settle those open years so there's that.

Each person has to make their own best decisions according to their circumstances.

Most of the things you suggest have or are being done. Someone from LCAG tweeted Eamonn Homes and he picked up on it and did a slot on Talk Radio about it. We are trying to get a documentary done but that is more difficult.

Virtually all the press coverage has been achieved through the LCAG efforts.

Political pressure is a big factor here. We have a lot of cross party support, and in some people's view, the only people standing in the way of a change being made are Hammond and Stride. If that pair get removed, there is a decent possibility the Loan Charge could be withdrawn.

The APPG report is due out in a week or so, I doubt it will be kind to HMRC or Treasury.

It's also worth checking out the contract you are made to sign when settling. You have confessed to everything and you no longer have any rights or any recourse should things change. It is something that you would have thought only existed in cold war East Germany.

If you are contracting and wish to keep contracting it is worth fighting anyway to stop even further aggressive moves by HMRC or the government.

[AVFC]

LCAG. Please see my latest post. It is not Big Group.

I think you need to slow down a little. There is still time to find out a bit more and I can't tell you much from what you have said. What I can tell you is that the game is weighted in HMRC's favour. Just because they have not told you do do something doesn't mean you don't have to do it. By law, in the end, all loans need to be settled or declared.

"I have also been told that if I pay the two years that are not under investigation before 5th April then HMRC can't charge interest even if I register them because they do not have an open an investigation"

This bit is true but you still need to settle or pay the Loan Charge on them.

But your missing the point on the two years that are not currently under investigation. The tax and interest is the "The Loan Charge" so if there is no interest to pay which is a big factor then there is nothing else they can charge on those two years except the tax, rather like originally declaring the loan as additional income in the tax year it was received. As for the two years under investigation one year was only £8k which i declared and paid three years ago and the second one £25K and paid all the tax that the SA requested. I would have thought that HMRC would have come after me by now for more on the two open years if needed.

My other point around expenses was that I had £2500 for the first year which I didn't offset against the £8k and £9000+ for the second year again which I didn't offset against the £25k I want to reopen these years in inject the expenses if possible.

I have also read the LCAG website and tonight contacted my local MP for Swindon to plead with him to sign the EDM and get his colleagues to do the same. My advice for the LCAG is to focus the campaign towards maybe getting a BBC Panorama program done or a slot on Breakfast TV maybe with Eamonn Holmes because he hates HMRC and so does Lizz Kelly. Frankly any of the presenters would be only to keen to help shaft HMRC as they are all under the spotlight for tax reasons. Your fight against the big mask of brexit so getting airtime will be hard but something has to change before more people jump or step in front of trains.

Absolutely gobsmacked about the Evening Standard running that piece given their editor "Trustfund George" was the architect of the Loan Charge.

I wish LCAG all the best and will join but I intend to pay as it seems a fruitless task given Rangers had loads more cash and still lost. If people read their judgement the supreme court only needed to add one line to the end of it like " If a person is an employee only then explicit responsibility of tax on all monies received within that employment falls due on the employer and not the employee" They didn't because the bet was £1.2bn hence they do the bidding of the HMRC and the government which tells you all how this case will end. Rangers won at round one and got stuffed at rounds two and three.

[dammit chloe]

But HMRC have all of the details on P11D so I fail to see how they wouldn't know about the latter two years. I have also been told that if I pay the two years that are not under investigation before 5th April then HMRC can't charge interest even if I register them because they do not have an open an investigation. This was the opinion of two tax advisors.

My account also told me that I can claim mileage even though my so called employer under the scheme said I could not so you can see that it's all a big minefield for everyone involved.

How can you settle something when nobody can give clear accurate answers.

What is LCAG are you referring to Big Group and what is the LCAG actively given we are 14 days away from end of financial year?

LCAG. Please see my latest post. It is not Big Group.

I think you need to slow down a little. There is still time to find out a bit more and I can't tell you much from what you have said. What I can tell you is that the game is weighted in HMRC's favour. Just because they have not told you do do something doesn't mean you don't have to do it. By law, in the end, all loans need to be settled or declared.

"I have also been told that if I pay the two years that are not under investigation before 5th April then HMRC can't charge interest even if I register them because they do not have an open an investigation"

This bit is true but you still need to settle or pay the Loan Charge on them.