Reply to: Cannot decide whether or not to settle

[LandRover]

Warning...

I think people should take more care in posting on open forums that HMRC have access to.

You can PM people like Webberg or contact Big Group (WTT) directly.

[webberg]

Starstruck, please read the post I made.

Our view is that in most cases the trust either does not exist for tax purposes or is at best a group of people who may or may not have had control of money but who were in any cases operating ultra vires.

Consequently the "type of trust" is irrelevant as we say that there is no trust as defined in trust or tax law.

HMRC disagree. They say that despite the evidence of the money never touching the trust or the "trustee" dealing with funds over which they had no authority, the legal documents should be respected, even if the income tax arguments are based on them being paper tigers.

It logically follows if the trusts are ultra vires then the loan purported to be made by the trust is equally ineffective. (Or to use Mel Stride's words, "defective").

Can I suggest that if you are a member of BG, then you ask these questions of us directly, not via a forum?

I'm happy to continue here but it's not very efficient.

[Finalwhistle]

I really hope LCAG manage to get Parliament to see the truth behind HMRC - pure evil and utter spite.

The LCAG is about people like you, me and everyone else who are involved doing something and taking action. It is not about sitting about going the LCAG will achieve something as they are only guiding us how to take action for ourselves.
I am proud to say that I have listened to LCAG, been to see my MP and brought her onboard. Any reasonable human being can see that the retrospective nature of the LC is a u justified and is bullying of the highest order. As a result letters are being sent to the chancellor an EDMs are being signed. The momentum is definitely building up...

All these big promoters trying to argue their cases are legal are not right and are painting everyone else with a same brush. I think it’s right these arrangements are outlawed, they are utter bull tulip, but ultimately that was not decided until 2017. So as per other tax avoidance arrangements such as IR35 there is a need to lay back a max 4 years. I’m happy with that... but seeing the impact on other people going back 20 years. It’s not right.

[starstruck]

Big Group and IHT.

It is unfair to say that we don't know the IHT answer.

We know what HMRC's answer is and we know that we disagree with it.

HMRC's view is that if money is said to have gone into a trust then prima facie a liability to IHT is possible. There may be some relief available in terms of the lifetime allowance but all other reliefs detailed in the IHT law is denied (without a reason being given).

For example, money placed into trust and withdrawn within 30 days (pretty much most trusts we see) can be exempt from trust charges. We have put this to HMRC who have said "no" without explaining why.

Our view is that in order to tax money claimed to be paid as a loan - as income - then there needs to be an entitlement to that money arising to the individual. That entitlement is the trigger for an IT liability. (Who owes the tax is a different question).

If therefore the individual is entitled to the money, then for the trust and trustee to have control of the funds, there must exist an instruction from the individual to the employer/payer to pay the trust. We have not seen one.

Further, if the trustee claims to dispose of money by way of loan when they were never entitled to the money is potentially ultra vires and as such could be ignored by a Court.

For these (and other) reasons we believe that in many cases, there is no IHT because there is no legal trust.

To prove that there is HMRC needs to argue that the documents are the only way of interpreting the payment flows. This is a literal interpretation of the situation as opposed to establishing the facts, which may be very different and which are used as the bedrock of the income tax case.

We have poined out to HMRC that they are arguing facts over documents for IT and the opposite for IHT and do they not see that this is impossible? They say they see no conflict.

So we do know what we think the IHT position is but HMRC refuse to engage in a discussion and we will perhaps find ourselves in Court.

It is of course part of HMRC strategy to drag every issue through a Court so that taxpayers run out of money or become so disillusioned or cynical about the situation that they give up.

So to clarify a bit, I sent in the trust deeds via email asking for an opinion on what type of trust it is and what HMRC might ask for with regards to IHT, to which I got no reply and I also then posted the trust deeds on the BG forum also asking for an opinion and I was told it was not a priority to look at trust deeds. I also asked on the forum if anyone could recommend someone who could read the trust deeds and nobody did. So I don't know where to turn to get an answer. Hence my statement that I have had no joy getting any answers on IHT - and the last people I am going to ask is HMRC!

The trust was closed in 2009 and I also emailed/uploaded to the BG forum the trust deed of termination. Scenario is as follows, loans in 2001-ish in foreign currency, loans depreciated over time to zero (let's say in 2007-ish). Loans written off by trust. Trust subsequently closed. I understand from various reading that there are two possible claims HMRC might make (a) that IHT is a based on a percentage of total loans from 2001 to present day, or (b) that IHT is based on 2001-2007 period (with interest on that amount from 2007, when loans were waived, to present day).

I don't know if the trust is an s86 or what that means, I understand that people like yourselves don't think any IHT is due. I just want to know what are HMRC going to ask for. I think someone from a ccy depreciating scheme posted on here some time ago and said HMRC went for (a) after settlement. It would seem to me that (b) is more reasonable. The difference in amounts between (a) and (b) is huge!

So if you have any experience of talking to HMRC about IHT and depreciating currencies and waived loans and closed trusts then I would hugely appreciate you letting me know; specifically what calculation HMRC used to make their IHT demand.

As an aside I am still amazed that the loan charge applies to these loans when the lender is gone. All this "you can repay it if you wish" business that Mel keeps spouting is infuriating. How can I repay (a) a loan that has no balance and (b) to an entity that doesn't exist! Anyway, that's for another day. Today I really just want to get a grip on IHT.

[webberg]

Big Group and IHT

Big Group and IHT.

It is unfair to say that we don't know the IHT answer.

We know what HMRC's answer is and we know that we disagree with it.

HMRC's view is that if money is said to have gone into a trust then prima facie a liability to IHT is possible. There may be some relief available in terms of the lifetime allowance but all other reliefs detailed in the IHT law is denied (without a reason being given).

For example, money placed into trust and withdrawn within 30 days (pretty much most trusts we see) can be exempt from trust charges. We have put this to HMRC who have said "no" without explaining why.

Our view is that in order to tax money claimed to be paid as a loan - as income - then there needs to be an entitlement to that money arising to the individual. That entitlement is the trigger for an IT liability. (Who owes the tax is a different question).

If therefore the individual is entitled to the money, then for the trust and trustee to have control of the funds, there must exist an instruction from the individual to the employer/payer to pay the trust. We have not seen one.

Further, if the trustee claims to dispose of money by way of loan when they were never entitled to the money is potentially ultra vires and as such could be ignored by a Court.

For these (and other) reasons we believe that in many cases, there is no IHT because there is no legal trust.

To prove that there is HMRC needs to argue that the documents are the only way of interpreting the payment flows. This is a literal interpretation of the situation as opposed to establishing the facts, which may be very different and which are used as the bedrock of the income tax case.

We have poined out to HMRC that they are arguing facts over documents for IT and the opposite for IHT and do they not see that this is impossible? They say they see no conflict.

So we do know what we think the IHT position is but HMRC refuse to engage in a discussion and we will perhaps find ourselves in Court.

It is of course part of HMRC strategy to drag every issue through a Court so that taxpayers run out of money or become so disillusioned or cynical about the situation that they give up.

[passerby]

No my loans are > 10 years old so I have sparse information on them. All years are closed i.e. no open enquiry.

HMRC know my salary from that time because they have the tax return data. So they should also have the BIK data and I thought would have been able to use that to calculate the loan amounts. But instead they took the lazy and harsh option of just multiplying my salary by a random 6x multiplier, and telling me that was the loan amount they were going to tax me on. Those loan amounts are more than I earned on the whole contract for each of my tax years!

so you did not supply any figures? not even estimates?

May be you can get hold of the contracts you signed at the time showing your daily rates, that will help your case.

[ChimpMaster]

How did this happen? did you supply loan figures and they ignored them and pluck new ones from thin air?

No my loans are > 10 years old so I have sparse information on them. All years are closed i.e. no open enquiry.

HMRC know my salary from that time because they have the tax return data. So they should also have the BIK data and I thought would have been able to use that to calculate the loan amounts. But instead they took the lazy and harsh option of just multiplying my salary by a random 6x multiplier, and telling me that was the loan amount they were going to tax me on. Those loan amounts are more than I earned on the whole contract for each of my tax years!

[passerby]

HMRC gave me a settlement figure of double what I was expecting, so they've lost any chance of me settling now. In fact, the loan amounts they estimated (guessed wildly I should say) were even more than I earned in total on the contract those years.

HMRC then mentioned that IHT was something they were unable to determine with the Trust I used. I suspect this is a standard letter they send to all of us, because really they know nothing about the Trusts and whether they are s86 or not.

The irony is that, in a further letter, HMRC then say that it is up to me to tell them when a trigger event occurs that could cause IHT to arise on the Trust loan. So, hang on, it's your tax rule, and you want me to decide when the rule applies to me? Quite clearly this is an abuse of their position - they don't have a clue, so they put the onus on us, as well as all the risk.

Well, technically I don't have a loan at the Trust any more any way, as it was paid off via a paper transaction many years ago. So there you have it, no clarity and no options.

I really hope LCAG manage to get Parliament to see the truth behind HMRC - pure evil and utter spite.

How did this happen? did you supply loan figures and they ignored them and pluck new ones from thin air?

[starstruck]

To be fair, if even HMRC struggle to give us an answer on IHT, what chance has anyone else go to decipher it?

Surely there must be someone in the UK who can look at a trust deed and give an opinion! Can anyone recommend somebody?!! I'm willing to pay for a professional opinion.

[Dmac]

Could I ask what trust this is? It sounds like yours might be the same as mine (based on the comment re: paid off via paper transaction), I have the trust deeds for my earlier years but no idea how to identify if it is s86 or not (in fact I been so long trying to get IHT clarity that I've even forgotten what the implications of s86 or not are!). Have tried getting advice - I am in BG and have engaged Phil@DSW. But I have had no joy getting any answers on IHT from either.

To be fair, if even HMRC struggle to give us an answer on IHT, what chance has anyone else go to decipher it?

[starstruck]

HMRC gave me a settlement figure of double what I was expecting, so they've lost any chance of me settling now. In fact, the loan amounts they estimated (guessed wildly I should say) were even more than I earned in total on the contract those years.

HMRC then mentioned that IHT was something they were unable to determine with the Trust I used. I suspect this is a standard letter they send to all of us, because really they know nothing about the Trusts and whether they are s86 or not.

The irony is that, in a further letter, HMRC then say that it is up to me to tell them when a trigger event occurs that could cause IHT to arise on the Trust loan. So, hang on, it's your tax rule, and you want me to decide when the rule applies to me? Quite clearly this is an abuse of their position - they don't have a clue, so they put the onus on us, as well as all the risk.

Well, technically I don't have a loan at the Trust any more any way, as it was paid off via a paper transaction many years ago. So there you have it, no clarity and no options.

I really hope LCAG manage to get Parliament to see the truth behind HMRC - pure evil and utter spite.

Could I ask what trust this is? It sounds like yours might be the same as mine (based on the comment re: paid off via paper transaction), I have the trust deeds for my earlier years but no idea how to identify if it is s86 or not (in fact I been so long trying to get IHT clarity that I've even forgotten what the implications of s86 or not are!). Have tried getting advice - I am in BG and have engaged Phil@DSW. But I have had no joy getting any answers on IHT from either.

[ChimpMaster]

HMRC gave me a settlement figure of double what I was expecting, so they've lost any chance of me settling now. In fact, the loan amounts they estimated (guessed wildly I should say) were even more than I earned in total on the contract those years.

HMRC then mentioned that IHT was something they were unable to determine with the Trust I used. I suspect this is a standard letter they send to all of us, because really they know nothing about the Trusts and whether they are s86 or not.

The irony is that, in a further letter, HMRC then say that it is up to me to tell them when a trigger event occurs that could cause IHT to arise on the Trust loan. So, hang on, it's your tax rule, and you want me to decide when the rule applies to me? Quite clearly this is an abuse of their position - they don't have a clue, so they put the onus on us, as well as all the risk.

Well, technically I don't have a loan at the Trust any more any way, as it was paid off via a paper transaction many years ago. So there you have it, no clarity and no options.

I really hope LCAG manage to get Parliament to see the truth behind HMRC - pure evil and utter spite.

[dammit chloe]

I've had it. Been in BG. Never received an answer on Redstone and IHT, largely because I think no one knows what's actually happening.

I think that's probably true. There are so many variables in this mess which is what happens when you unpick events going back 20 years. HMRC have written to some people admitting they don't know the IHT status of particular schemes and associated loans. So if they don't know how can anyone.

I haven't been in BG but probably will join. I know that, in general, WTT know about most schemes but don't have an "analysis" for all of them. IE they haven't found a way of using the law to exempt or minimise them.

I'm no tax advisor but I have said I am not going to write off loans and will leave any IHT battle for another day.

[MoreCandles]

As I understand it, if you say that you are planning to get your loans written off your details are given to the Inheritance Tax Dept who then want their share. If you don't then IHT doesn't get triggered. Yet. Who knows what is down the line. Also note that not all write-offs trigger IHT, it depends on the type of trust.

Get some good tax advice. For this stuff I would recommend WTT. I think they know these schemes best.

I've had it. Been in BG. Never received an answer on Redstone and IHT, largely because I think no one knows what's actually happening.

[dammit chloe]

Just going round in circles over this. Have had independent advice. Still can't decide.

Received my settlement figures from HMRC. Could afford to pay. Tempted to pay to draw a line under this whole mess. The psychological relief would be worth it. Can't keep going on with the uncertainty.

But IHT raises a question mark. I don't know what box to tick - do I say I intend to have the loans written off in 30 days or not? And what if I tick yes but then I can't get the loans written off - do I then have to inform HMRC? My trust was Redstone and I can't even find the loan agreement, I have only my bank statements.

As I understand it, if you say that you are planning to get your loans written off your details are given to the Inheritance Tax Dept who then want their share. If you don't then IHT doesn't get triggered. Yet. Who knows what is down the line. Also note that not all write-offs trigger IHT, it depends on the type of trust.

Get some good tax advice. For this stuff I would recommend WTT. I think they know these schemes best.