New to All This, received Letter from HMRC

[cojak]

The scheme was set up by a local accountant.

The letter from HMRC came out of the blue.

Speak to webberg or Phil. They may well be able to point you in the right direction. You definitely need to get serious help on this.

[Scottie99]

I would have thought you could have taken the £1m cash as Capital Gains with Entrepreneurs Relief also, but I'm no expert. Without wishing to cause alarm, on the face of it, it sounds very much like you're going to both be caught by the 2019 Loan Charge, which means you both being taxed on your £500k as if it was income in 2018/19. Assuming you have no other income this year, that's going to be a tax bill off £200k+ each.

You definitely need to get some advice, to be clear Big Group membership is not the way to go here, that is for more mass marketed schemes. Your solution seems to have been tailor made and I think you need specific, individual advice. I don't understand why your advisor is talking about the Loan Charge being dividends, maybe there's been some misunderstanding between you, either that or he seems to not understand the Loan Charge.

EDIT - I wonder how HMRC found out about your EBT, or is this actually a mass marketed scheme afterall?

The scheme was set up by a local accountant.

The letter from HMRC came out of the blue.

[GreenMirror]

EDIT - I wonder how HMRC found out about your EBT, or is this actually a mass marketed scheme afterall?

It was probably on the tax return - whether mass marketed or not.

[starstruck]

I would have thought you could have taken the £1m cash as Capital Gains with Entrepreneurs Relief also, but I'm no expert. Without wishing to cause alarm, on the face of it, it sounds very much like you're going to both be caught by the 2019 Loan Charge, which means you both being taxed on your £500k as if it was income in 2018/19. Assuming you have no other income this year, that's going to be a tax bill off £200k+ each.

You definitely need to get some advice, to be clear Big Group membership is not the way to go here, that is for more mass marketed schemes. Your solution seems to have been tailor made and I think you need specific, individual advice. I don't understand why your advisor is talking about the Loan Charge being dividends, maybe there's been some misunderstanding between you, either that or he seems to not understand the Loan Charge.

EDIT - I wonder how HMRC found out about your EBT, or is this actually a mass marketed scheme afterall?

[Scottie99]

Out of interest, what did you pay in fees?

Surely your accountant should've recommended entrepreneurs relief at 10% (assuming it was available back in 2009?) ?

Makes me think your accountant was financially incentivised to push you to the EBT

He charged £15000 for setting up trust.

The business was sold for £295k and entrepreneurs relief was applied to sale proceeds. The £1m was profits accrued over the years.

[KiyonH]

Phil or webberg on this forum can help - they are both trustworthy

100% agree with this!

[WalterWhite]

Please forgive if I am posting in the wrong place.

I have just received a letter from HMRC asking for details of our EBT.

I sold my business in 2009 and had cash assets of £1,000,000. A local accountant advised I could extract the cash using an EBT. We ( my wife and I) took 2 payments of £500k, last one early 2010. My company was dissolved early 2012.

On receiving letter, I spoke to accountant who set up scheme. He initially said as my company was dead, HMRC would have to revive the country so they could then charge tax due, first to the company and then ultimately us.

He advised waiting on HMRC hitting us with April 2019 charge as asking to settle would involve paying Income Tax and PAYE whereas we could pay 32% dividend tax as Directors with no interest due if we waited. He also said asking for Time To Pay would mean giving HMRC a full list of our assets.

Does all that make sense? Has anyone any advice on this.

Out of interest, what did you pay in fees?

Surely your accountant should've recommended entrepreneurs relief at 10% (assuming it was available back in 2009?) ?

Makes me think your accountant was financially incentivised to push you to the EBT

[starstruck]

He advised waiting on HMRC hitting us with April 2019 charge as asking to settle would involve paying Income Tax and PAYE whereas we could pay 32% dividend tax as Directors with no interest due if we waited. He also said asking for Time To Pay would mean giving HMRC a full list of our assets.

That all sounds completely incorrect to me. The Loan Charge is income tax NOT dividend tax, take all your loans and tax them in 2018/19 at that is your amount due. Read this - https://forums.contractoruk.com/hmrc...ers-guide.html

[Aki1]

Can anyone recommend where to go for independent advice.

I am based in Glasgow. I have googled “specialists in EBTs” but nothing is coming up locally

Phil or webberg on this forum can help - they are both trustworthy

[Scottie99]

I would advise you getting independent tax advice, and also make sure that you get all of the advice from your accountant in writing.

Can anyone recommend where to go for independent advice.

I am based in Glasgow. I have googled “specialists in EBTs” but nothing is coming up locally

[cojak]

Please forgive if I am posting in the wrong place.

I have just received a letter from HMRC asking for details of our EBT.

I sold my business in 2009 and had cash assets of £1,000,000. A local accountant advised I could extract the cash using an EBT. We ( my wife and I) took 2 payments of £500k, last one early 2010. My company was dissolved early 2012.

On receiving letter, I spoke to accountant who set up scheme. He initially said as my company was dead, HMRC would have to revive the country so they could then charge tax due, first to the company and then ultimately us.

He advised waiting on HMRC hitting us with April 2019 charge as asking to settle would involve paying Income Tax and PAYE whereas we could pay 32% dividend tax as Directors with no interest due if we waited. He also said asking for Time To Pay would mean giving HMRC a full list of our assets.

Does all that make sense? Has anyone any advice on this.

I would advise you getting independent tax advice, and also make sure that you get all of the advice from your accountant in writing.

[Scottie99]

Please forgive if I am posting in the wrong place.

I have just received a letter from HMRC asking for details of our EBT.

I sold my business in 2009 and had cash assets of £1,000,000. A local accountant advised I could extract the cash using an EBT. We ( my wife and I) took 2 payments of £500k, last one early 2010. My company was dissolved early 2012.

On receiving letter, I spoke to accountant who set up scheme. He initially said as my company was dead, HMRC would have to revive the country so they could then charge tax due, first to the company and then ultimately us.

He advised waiting on HMRC hitting us with April 2019 charge as asking to settle would involve paying Income Tax and PAYE whereas we could pay 32% dividend tax as Directors with no interest due if we waited. He also said asking for Time To Pay would mean giving HMRC a full list of our assets.

Does all that make sense? Has anyone any advice on this.