Reply to: HMRC saying 200,000 people have registered for CLSO2

[ConfusedEasily]

Sorry, I don't do offline. Information should be free.

I wish HMRC took a similar view to transparency.

Information should be free; unfortunately, the veracity of information on here is open to question (not including you in this Iliketax, Webberg or Phil).

[GreenMirror]

lol.

MPs don't care, HMRC don't care, the public don't care.

The clouds are gathering against HMRC on many fronts. There will be a parliamentary committee hearing soon. It is a slow process.

I think the general contracting industry are concerned about public sector reforms going private so are interested in seeing HMRC power curtailed - or at least trying to work with HMRC.

[Iliketax]

Going back to my original question,
Does this mean that I will be subject to loan charge if HMRC fail to send me settlement figures by 5 April 2018?

It's not the settlement figures that matter. It is that you have paid the tax by 5 April 2019 (or agreed time to pay with HMRC by 5 April 2019).

That may change if, in my view very unlikely, the government changes the law or HMRC introduce some sort of relaxation.

[GUD]

Indeed I did. Like I said happy to take it offline.

Going back to my original question,
Does this mean that I will be subject to loan charge if HMRC fail to send me settlement figures by 5 April 2018?

[Dylan]

Ok, say HMRC fail to get settlement figures out to a few thousand people before 5/4/19.

Everyone goes to see their MP and complains that they registered for settlement before 31 May 2018, they've chased HMRC and nothing has been forthcoming.

Then watch the brown stuff hit the fan.

lol.

MPs don't care, HMRC don't care, the public don't care.

[webberg]

Sorry, I don't do offline. Information should be free.

True. In this instance however it's an exchange with an HMRC officer as part of a series of discussions we're having and he specifically asked that we not publish in a public forum a view that is potentially limited to his understanding.

I offered a private exchange as I believe that you would respect that request.

However, as you wish.

[Iliketax]

Indeed I did. Like I said happy to take it offline.

Sorry, I don't do offline. Information should be free.

[webberg]

And then expanded on it later in the thread. Is that what you mean?

Indeed I did. Like I said happy to take it offline.

[Vincenth1]

Today's Telegraph Article

Interesting article in the Telegraph today ...
"Immoral HMRC retrospective taxation of contractors"
Stephen Lloyd's (Lib Dem MP for Eastbourne) parliamentary motion has cross-bench support from Labour & DUP MPs. His motion is that retrospectively taxing something that was technically allowed at the time is unfair and should not apply to those who entered into schemes before the Finance Bill gained royal assent last year.
I like many others was led into the arrangement by my accountant.
A tax consultant also believes that this is "taxing individuals retrospectively, which would be illegal and the protocol is that this should only be retrospective in exceptional circumstances."
Although HMRC has the power to fine and recover any fees earned by enablers of tax avoidance, I haven't seen any sign of this ...
I'm thinking of writing to Stephen ...

[Iliketax]

He indicated that where, for example, a pension contribution was paid in 2018/19 and the result was that the net tax due was less than that arising from earlier open years, then the loan charge would not be as you describe.

I haven't mentioned pension contributions in this thread. But I did put some stuff here:

1. Making a pension contribution is fine for the April 2019 loan charge if you have closed years (i.e. reduces the 2018/19 tax due). If you have open years, HMRC says as less tax actually paid in 2018/19, the double tax relieving rule won't relieve the tax due for the earlier years. They did not say this, but this effectively means you don't get tax relief for pension contributions to the extent that there are open years.

And then expanded on it later in the thread. Is that what you mean?

[webberg]

But if you later settle then you get double tax relief under a different section and that effectively means you pay the higher of (i) the earlier year's tax liability plus any interest, (ii) the April 2019 loan charge liability. Which isn't that helpful.
.

We have asked that question of HMRC. Accepting that the officer was not committing HMRC but also that they were a senior officer, he disagreed with the scenario here.

He indicated that where, for example, a pension contribution was paid in 2018/19 and the result was that the net tax due was less than that arising from earlier open years, then the loan charge would not be as you describe.

Happy to share the exchange offline.

[Iliketax]

Ok, say HMRC fail to get settlement figures out to a few thousand people before 5/4/19.

Everyone goes to see their MP and complains that they registered for settlement before 31 May 2018, they've chased HMRC and nothing has been forthcoming.

Then watch the brown stuff hit the fan.

You may be right. But if 40,000 register and you are one of the 100 people who don't get it ll sorted by 5 April 2019 then you will be the one paying the extra tax, having the sleepless nights, etc. I'm not sure the MP point would help much if the MPs are told that most of those who did not settle did not "send us all of the required information by 30 September 2018". You might be one that did. But you still pay the extra tax / interest.

[Loan Ranger]

Why is it not your problem?

Ok, say HMRC fail to get settlement figures out to a few thousand people before 5/4/19.

Everyone goes to see their MP and complains that they registered for settlement before 31 May 2018, they've chased HMRC and nothing has been forthcoming.

Then watch the brown stuff hit the fan.

[Iliketax]

As long as you've registered an interest by 31 May, you are covered. If HMRC can't get the settlement figures out by 5/4/19 then that's there problem.

Why is it not your problem? The April 2019 loan charge "relevant step" will apply on 5 April 2019 whether you settled or not. This means that, subject to the double tax relieving rules, the outstanding loan amount will be taxed as employment income. So the question then is how do the double tax relief rules apply:

1. You've settled and paid the tax in full by 5 April 2019 - full double tax relief, no liability in respect of the April 2019 loan charge.

2. You've settled and agreed time to pay with HMRC by 5 April 2019 - full double tax relief, no liability in respect of the April 2019 loan charge.

These are basically the "payment condition" in s554Z5.

Any other circumstances, the April 2019 loan charge applies. But if you later settle then you get double tax relief under a different section and that effectively means you pay the higher of (i) the earlier year's tax liability plus any interest, (ii) the April 2019 loan charge liability. Which isn't that helpful.

So unless the government changes the law, or HMRC introduce some sort of relaxation, then it seems to make a lot of difference whether you settle by 5 April 2019 or not.

[Loan Ranger]

I'm wondering the same but can't help thinking that HMRC will expect the LC because, frankly, of their ineptitude and inability to deal with their own convoluted laws and regulations.

Trust me, HMRC will be in deep doo-doo if they can't get settlement figures out in time for everyone who has registered.