Reply to: How are HMRC checking loan amounts?

[BrilloPad]

How many people really know or follow such things. Has to become major before people notice. Even with Loan Charge the struggle to get any visibility was tough.

There are 2 cases here. Prior to HMRC taking action and afterwards.

Regarding prior, one would hope people would do some sort of research and the message on CUK was very clear - at least from 2008 onwards. Of course the reality is people get an email/call and just go ahead. People are still using schemes now!

Regarding the aftermath, as you say its hard to get attention which is why NTRT was disbanded(though a few joined TAA). LCAG have done an incredible job - far better than my wildest dreams.

[NickLeeson2]

All these advisers no best but I don't know of anyone who has been given the all clear.

2 options:

1. Settle
2. Loan Charge

Known out come for each event? Nothing, no answer. No close out.

As far as I'm aware all takes and extra HMRC demands are paid up until 2018. Yet I still receive HMRC death threats (information). I will process this years self-assessment with profit share declared. Does this leave me liable for extra tax/ loan charge. I have no idea.

Who knows when the next generic brown letter will arrive with next to no information. It all seems a bit opportunist and uncontrolled.

But what do I know.

[dammit chloe]

Yes, I still can't believe the 2008 retro didn't put people off schemes.

I remember some loan promoters at the time saying DTA was a very special case and not to worry because it can't happen to loans.

I imagine there are still companies out there flogging this crap and signing up yet more mug punters.

How many people really know or follow such things. Has to become major before people notice. Even with Loan Charge the struggle to get any visibility was tough.

[BrilloPad]

Yes, I still can't believe the 2008 retro didn't put people off schemes.

Some went into further schemes to recoup their losses from DTA!

As you say, some are still involved. Astonishing? Maybe not given that HMRC go easy on the promoters. Well easy relative to the poor sods suckered into using their snake oil.

[stonehenge]

Indeed. Ironically loan schemes started while DTA was going on and only really got popular after the law was closed.

Of course, perhaps the ultimate lesson is never ever mess with HMRC. Unless you are rich - then it is fine.

Yes, I still can't believe the 2008 retro didn't put people off schemes.

I remember some loan promoters at the time saying DTA was a very special case and not to worry because it can't happen to loans.

I imagine there are still companies out there flogging this crap and signing up yet more mug punters.

[BrilloPad]

You could say the loan schemes should have learned from this. If you sit back and leave HMRC to their own devices, they'll retro your arse.

The time to push the matter was several years ago. It's a bit late now.

Indeed. Ironically loan schemes started while DTA was going on and only really got popular after the law was closed.

Of course, perhaps the ultimate lesson is never ever mess with HMRC. Unless you are rich - then it is fine.

[stonehenge]

Its not a level playing field. Look at DTA/Huitson. Gittins tried to push HMRC along at every opportunity. Still got criticized by Judge Parker at FTTT for not challenging enough!

I agree with you logically. I wish the courts did.

You could say the loan schemes should have learned from this. If you sit back and leave HMRC to their own devices, they'll retro your arse.

The time to push the matter was several years ago. It's a bit late now.

[BrilloPad]

You make it sound like the onus is on the taxpayer to bring matters to a head.

The taxpayer has appealed enquiries/assessments. Therefore, surely, the ball is in HMRC's court?

Its not a level playing field. Look at DTA/Huitson. Gittins tried to push HMRC along at every opportunity. Still got criticized by Judge Parker at FTTT for not challenging enough!

I agree with you logically. I wish the courts did.

[webberg]

I guess the problem for anyone not settling is they now have to fight on two fronts.

1) defend their use of the scheme (the underlying tax dispute)
2) contest the LC

I presume winning (1) doesn't make (2) fall away?

Can you contest (appeal) the LC at an FTT, or would that require a JR?

----------------------

I have to say, I don't envy anyone getting involved in this battle.

Correct. You need a strategy that can defend the scheme and the loan charge.

We think we have one. You may or may not believe that it works, but we have not seen any alternative being offered that comes close to it.

We think we can defeat 1 and 2 above.

I suspect (am certain) that HMRC will resist this by all means possible, but dealing with both points is now I think a minimum standard for any strategy.

[stonehenge]

I guess the problem for anyone not settling is they now have to fight on two fronts.

1) defend their use of the scheme (the underlying tax dispute)
2) contest the LC

I presume winning (1) doesn't make (2) fall away?

Can you contest (appeal) the LC at an FTT, or would that require a JR?

----------------------

I have to say, I don't envy anyone getting involved in this battle.

[webberg]

What if people can't afford ££££££ representation at a tribunal? You still think they should "push this along"?

The Tribunal process is designed to be accessible and as affordable as it can be. The principle is that lack of funds should not prevent justice happening and being seen to happen.

You do not need QC's at thousands of pounds an hour. You can represent yourself if you wish. You can make written submissions and do not need to appear.

In situations where other similar cases are moving forward a Judge may even direct that a single unrepresented case is stayed behind a better funded and represented one. (Clearly HMRC would prefer a single, unprepared and nervous taxpayer to be advanced but Judges are smart on this and will usually seek alternatives).

I would say that if somebody is unable to afford the very modest outlay required to get to Tribunal (more an investment in time and intelligence than money) and is not willing or able to join the litigation groups (yes, we have one, but there are others depending on the scheme) for financial reasons, then they should be looking to settle on long terms, right now.

Part of the problem here is an entirely unjustified fear that by opting for a Tribunal, a taxpayer makes themselves more "visible" to HMRC who will react with a targeted campaign of harassment and being difficult. This is untrue.

Unfortunately it's also an image that HMRC likes to present as it deters opposition in Tribunal.

There is a growing body of cases from the last two years in which Judges have been severely critical of HMRC's approach to FTT and the manner in which they have in some instances, deliberately discouraged people seeking their rights. This manifests itself in matters such as HMRC refusing to amend assessments prior to hearings even though the basis of them is blatantly flawed.

Whilst I accept that the prospect of a FTT hearing is scary, is it worse than the bankruptcy option or worse?

[stonehenge]

So yes, I am suggesting that taxpayers push this along.

What if people can't afford ££££££ representation at a tribunal? You still think they should "push this along"?

[webberg]

You make it sound like the onus is on the taxpayer to bring matters to a head.

The taxpayer has appealed enquiries/assessments. Therefore, surely, the ball is in HMRC's court?

If a taxpayer was so minded, they could pay the LC and then sit back and do nothing. I'm not saying that's the right thing to do but there's nothing stopping anyone from doing this.

You can sit back and await HMRC's pleasure.

Where is the advantage?

If you pay the loan charge requested then you may have paid more than required and interest continues to accrue on the potential payments due for the years the loans were paid.

So by sitting back and waiting you've paid the liability and have another racking up.

So yes, I am suggesting that taxpayers push this along.

The process is you submit a return: HMRC make an enquiry: HMRC decide that you owe more tax: you appeal to Tribunal: you are obliged to show why you are not taxable or owe less than HMRC claim.

The period between making and enquiry and the HMRC decision is not statute limited and can be a very long time (max on our books is 15 years). That's a potential 15 years of interest - around 60% of the tax. And growing.

[stonehenge]

You make it sound like the onus is on the taxpayer to bring matters to a head.

The taxpayer has appealed enquiries/assessments. Therefore, surely, the ball is in HMRC's court?

If a taxpayer was so minded, they could pay the LC and then sit back and do nothing. I'm not saying that's the right thing to do but there's nothing stopping anyone from doing this.

[webberg]

'First there is no "opting" for the loan charge.'

"Opting" may not have been the best word but it does come down to a choice. If you don't settle then you're choosing LC.

I disagree.

You can settle and all enquiries end.

If you do not, then you have to find a means to reach an agreement as to liability. This will be either some form of agreement directly with HMRC or an agreement imposed upon you and HMRC by a Judge, following litigation.

Either way you MUST find an agreement.

Into this equation comes the loan charge. This is an interim charge.

If all of the years you are settling/agreeing are "open", i.e. have a valid HMRC enquiry, then once the final position is agreed, the loan charge tax paid will be allocated against that liability. Any excess of loan charge over final liability in NOT refundable.

If some years you are settling/agreeing are closed, then in theory the loan charge will be reduced by the value of the open years leaving just the closed years subject to the loan charge.

So, you are NOT choosing the LC.

You are choosing to settle or fight and dealing with the interim step of the LC.