Penalty charges with settlement

[Endofdays]

We have not seen a penalty in a settlement calculation.

HMRC would like you to make a voluntary contribution towards the tax that would have been due on a closed year if they had actually bothered doing their job and opened an enquiry, but that can hardly be called a penalty - because it's voluntary. you do not have to include it.

What about non dotas schemes have penalties been seen here?

[phil@pmtc]

No interest for settlement with closed years. I take it that open years that were settled with CLSO1 are considered closed? - Yes, that's correct.

Also, what if one settles now with CLSO2 - does that include IHT, or do loans still 'outstanding' with the trust mean that one gets hit with the Loan Charge anyway, regardless of settlement (just because they can, and because of their 'maximum revenue' mandate)?

- Settlement removes the loan charge threat. IHT may apply depending upon the specific case. Assume probably does (I cant be more clear without specifics and tbh - HMRC are about as clear as mud on clarifying anyway)

[Groundhogdays]

We have not seen a penalty in a settlement calculation.

HMRC would like you to make a voluntary contribution towards the tax that would have been due on a closed year if they had actually bothered doing their job and opened an enquiry, but that can hardly be called a penalty - because it's voluntary. you do not have to include it.

No interest for settlement with closed years. I take it that open years that were settled with CLSO1 are considered closed?

Also, what if one settles now with CLSO2 - does that include IHT, or do loans still 'outstanding' with the trust mean that one gets hit with the Loan Charge anyway, regardless of settlement (just because they can, and because of their 'maximum revenue' mandate)?

[webberg]

We have not seen a penalty in a settlement calculation.

HMRC would like you to make a voluntary contribution towards the tax that would have been due on a closed year if they had actually bothered doing their job and opened an enquiry, but that can hardly be called a penalty - because it's voluntary. you do not have to include it.

[CDJ]

Does anyone know what type of penalties are involved in settlement i.e volutanry payment for closed years ? It hard enough having to pay tax due plus iht plus ni but penalty rates as well ?

Its unlikely you'll get a penalty charge for settling under CLSO 2 (unless you knowingly or negligently misrepresent your position and get found out down the line). What you will get charged for (over an above the tax due) is interest (although, as I understand it, this is only where HMRC have an open investigation for the year in question - where you make a voluntary declaration, this should be interest free).

Interest is charged at simple rates.. and the rate has been near enough 3% since 2008.. so to estimate interest on tax due as at January 2010 - 8 times 3 - circa 24%

Hope that helps

[Endofdays]

Apologies for typo in title

[Endofdays]

Does anyone know what type of penalties are involved in settlement i.e volutanry payment for closed years ? It hard enough having to pay tax due plus iht plus ni but penalty rates as well ?