Reply to: Learn fron NTRT's experience (or not)

[webberg]

I assume you mean just for open years here? Seems no point paying LC for closed years and then later settling for them as well. Open years make sense as LC does not close enquiries.

We're going into deep waters here.

A closed year cannot be settled except by loan charge or HMRC settlement.

So, you are basically correct, but a lot of implications.

[starstruck]

If your liability - assuming loans are taxed in the year received - is say £50,000 but your loan charge in 2018/19 is £60,000, then when you eventually settle the earlier years any excess is not repayable.

This is why you need to manage/mitigate the loan charge.

I assume you mean just for open years here? Seems no point paying LC for closed years and then later settling for them as well. Open years make sense as LC does not close enquiries.

[webberg]

If your liability - assuming loans are taxed in the year received - is say £50,000 but your loan charge in 2018/19 is £60,000, then when you eventually settle the earlier years any excess is not repayable.

This is why you need to manage/mitigate the loan charge.

[Dmac]

No I think the quote means you will not get any excess payment refunded to you.

Ah, yes, clarified. Many thanks

[me206et]

So, if I understand this correctly, are you saying that if you do not settle and wait for the loan charge to kick in, you would only pay the lower of the loan charge figure or the settlement amount if you had been taxed correctly in the years the loans were advanced?

What are "in some instances"?

No I think the quote means you will not get any excess payment refunded to you.

[Dmac]

No denying that you are again correct.

It's also worth pointing out that in some instances, if the loan charge in 2018/19 is more than the final liability if the loans are taxed in the year received, then the excess is not repayable.

The only ways to avoid that risk are to settle pre 5th April 2019 or use statutory tax relief.

So, if I understand this correctly, are you saying that if you do not settle and wait for the loan charge to kick in, you would only pay the lower of the loan charge figure or the settlement amount if you had been taxed correctly in the years the loans were advanced?

What are "in some instances"?

[headspin]

You are correct.

However, the loan charge was first announced in March 2016, withdrawn when the general election was called, reinstated after that election and finally made legislation late in 2017.

In the letter Stride sent to my MP he fails to point this out, only saying it was introduced in the Budget of 2016 and so contractors have had 3 years to prepare for it. I have informed my MP that he is at best being economical with the truth.

[Calmbeforethestorm]

No denying that you are again correct.

It's also worth pointing out that in some instances, if the loan charge in 2018/19 is more than the final liability if the loans are taxed in the year received, then the excess is not repayable.

The only ways to avoid that risk are to settle pre 5th April 2019 or use statutory tax relief.

OR, repay the loans thus meaning there is no loan to charge.

Clearly this will only be of interest to a few people.

[webberg]

And therein lies the rub and the downright unfairness, which is, of course, why they want you to settle....saying there is no double taxation , when in fact, income tax and IHT may be levied on the same money. Its scandalous.

No denying that you are again correct.

It's also worth pointing out that in some instances, if the loan charge in 2018/19 is more than the final liability if the loans are taxed in the year received, then the excess is not repayable.

The only ways to avoid that risk are to settle pre 5th April 2019 or use statutory tax relief.

[Calmbeforethestorm]

You are correct.

However, the loan charge was first announced in March 2016, withdrawn when the general election was called, reinstated after that election and finally made legislation late in 2017.

As NTRT will tell you - and as they have told the TSC inquiry - HMRC has (deliberately?) stalled the progress of any case going to Tribunal which may call into doubt the analysis they use. Such doubts would also damage the loan charge and expose the fact that it has little basis in the real world.

Even if a case was started on the Tribunal path in March 2016, the chance of having that heard and decided at any level that sets precedent (UTT and above), by 5th April 2019 was low to nil. HMRC knows this and has managed the timetables to engineer it.


So you are also correct that at some point a decision is needed as to whether settlement or continued discussion and perhaps legal action is required on the core point of whether there is a liability on the original payments, whose liability that is, and whether the loan charge can be resisted.

You are correct that to do something that frustrates HMRC risks penalties.

My role here (along with the other advisers) is to make sure that in arriving at such a decision, you are aware of the consequences. We cannot make the decision for you. We are objective and have to be.

And therein lies the rub and the downright unfairness, which is, of course, why they want you to settle....saying there is no double taxation , when in fact, income tax and IHT may be levied on the same money. Its scandalous.

[webberg]

With all due respect, thats easy to say if you aren't faced with a bill for hundreds of thousands of pounds which kicks in in April next year ..... leaving you little or no time to get a court ruling prior to then .....unless, of course, you are prepared to take the risk that you can " manage/frustrate/reduce it " successfully. Bear in mind, that after HMRC has all the information it will then add penalties, or try to, for not agreeing with their position.This is the real world.

You are correct.

However, the loan charge was first announced in March 2016, withdrawn when the general election was called, reinstated after that election and finally made legislation late in 2017.

As NTRT will tell you - and as they have told the TSC inquiry - HMRC has (deliberately?) stalled the progress of any case going to Tribunal which may call into doubt the analysis they use. Such doubts would also damage the loan charge and expose the fact that it has little basis in the real world.

Even if a case was started on the Tribunal path in March 2016, the chance of having that heard and decided at any level that sets precedent (UTT and above), by 5th April 2019 was low to nil. HMRC knows this and has managed the timetables to engineer it.

So you are also correct that at some point a decision is needed as to whether settlement or continued discussion and perhaps legal action is required on the core point of whether there is a liability on the original payments, whose liability that is, and whether the loan charge can be resisted.

You are correct that to do something that frustrates HMRC risks penalties.

My role here (along with the other advisers) is to make sure that in arriving at such a decision, you are aware of the consequences. We cannot make the decision for you. We are objective and have to be.

[Calmbeforethestorm]

LCAG are well aware of what happened with NTRT and are going to build on that.

Bearing in mind the huge advantages HMRC have I would hope everyone is getting fully behind LCAG. Even those in NTRT without loans shall have a score to settle.

Personally I think LCAG is still a learning curve. It will be the fight for the "future of contracting" that will be important. I just hope that IPSE and QDOS will be able to join forces with the other groups for an anti-HMRC alliance.

There is still alot of people shouting "listen to me". Sign my petition. Watch my EDM thread. OldGreg, historically someone who has helped point out flaws in our campaign(!) put up a brilliant thread about GDPR requests. Which has been lost now. A great pity. We should all be doing all we can.



At this point any "criticism" of LCAG would be very bad. They have done an amazing amount in a short time. I hope all our efforts will go into supporting them.

Sorry if you thought I was being critical, I didn't mean to be.... just realistic . Im fully supportive of their and anyone else's actions .

[GreenMirror]

LCAG are well aware of what happened with NTRT and are going to build on that.

Bearing in mind the huge advantages HMRC have I would hope everyone is getting fully behind LCAG. Even those in NTRT without loans shall have a score to settle.

Personally I think LCAG is still a learning curve. It will be the fight for the "future of contracting" that will be important. I just hope that IPSE and QDOS will be able to join forces with the other groups for an anti-HMRC alliance.

There is still alot of people shouting "listen to me". Sign my petition. Watch my EDM thread. OldGreg, historically someone who has helped point out flaws in our campaign(!) put up a brilliant thread about GDPR requests. Which has been lost now. A great pity. We should all be doing all we can.

At this point any "criticism" of LCAG would be very bad. They have done an amazing amount in a short time. I hope all our efforts will go into supporting them.

[Calmbeforethestorm]

I know what the loan charge law says.

I know what HMRC thinks it says.

There are significant differences between the world the loan charge assumes and the real world.

There is a real issue for HMRC in squaring the Supreme Court decision with the loan charge circle.

There are opportunities, without being part of a scheme, to manage/frustrate/reduce the charge.

With all due respect, thats easy to say if you aren't faced with a bill for hundreds of thousands of pounds which kicks in in April next year ..... leaving you little or no time to get a court ruling prior to then .....unless, of course, you are prepared to take the risk that you can " manage/frustrate/reduce it " successfully. Bear in mind, that after HMRC has all the information it will then add penalties, or try to, for not agreeing with their position.This is the real world.

[stonehenge]

HMRC drafted the legislation, so it ought to do exactly what they wanted it to do.

But they're not infallible.