Reply to: Poll: settling or paying the LC/fighting?

[DealorNoDeal]

Sorry Webberg, I did read your response. What I meant is that by not settling (as I hadn't got all the info I needed at the time), I am going to have to pay the LC and from what I gather it's going to work out as nearly double the amount I would have paid under settlement (rough guess).

I don't want to add to your woes but strictly speaking, as you've missed the LC deadline (30 Sept) for reporting loans, you could be liable to penalties. HMRC may be prepared to be lenient given that you are not living in the UK and the fact that you did approach them before the deadline.

Disguised Remuneration | Tax Adviser

"Individuals who have received a loan and have an outstanding amount subject to the charge will need to report the loan to HMRC before 1 October 2019 – if they do not, they will receive a £300 fixed penalty and further daily penalties (of up to £60 per day, for up to 90 days)."

[regron]

No reason why you can't ask to apply for settlement now. Don't just concede to the loan charge.

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[Cookie123]

Reporting Loans

Did you read the above?

You will NOT pay double.

Sorry Webberg, I did read your response. What I meant is that by not settling (as I hadn't got all the info I needed at the time), I am going to have to pay the LC and from what I gather it's going to work out as nearly double the amount I would have paid under settlement (rough guess).

[webberg]

Thanks all. I reckon I am going to end up paying double with the LC. Grrrr!

Did you read the above?

You will NOT pay double.

[Cookie123]

Reporting Loans

Thanks all. I guess everyone's circumstances are different. I think I should have opted to settle but it's too late now. I feel a bit peeved though as being offshore I was only made aware of this a year ago and as most of my documentation didn't move with me, I have had a pig of a job trying to gather the info. I contacted HMRC via email last year but got no reply. I took a trip back to UK to try to dig out more info, but by then I'd missed the April deadline to settle. Couldn't do this earlier due to health reason. I just don't see how I could have settled without having the figures at hand at that time. I reckon I am going to end up paying double with the LC. Grrrr!

[DealorNoDeal]

...have since emigrated. What would you do in my position?

Depending on where you are in the world, HMRC may have limited scope for collecting debts.

For example, I know in some places, HMRC end up having to accept any reasonable repayment terms offered (few $ / month).

A local tax advisor might know where you stand.

[webberg]

May I ask another question please? If say I end up having to pay the LC (based on all the years - closed or open), then will this amount be taken into consideration or will I have to pay for the open years AGAIN via the settlement? If that's the case then I'll end up paying more than I've earned.

That's a can of worms.

The short answer is that the "income" (aka the loans) will be taxed only once.

Numerous statements from Jesse Norman down have said this.

Therefore a loan charge payment will be used to offset liability from earlier years'.

Whilst I am not convinced that the legislation achieves this, the intent of Parliament is clear and I think if a case on this did reach Tribunal, the "intent" would win the day.

What's more difficult is where the loan charge tax paid EXCEEDS the liability and interest from earlier years.

This may be an exceptional event of course limited to a few people but it's worth checking.

If loan charge tax EXCEEDS the final liability, it is NOT refundable.

Do some sums.

[Cookie123]

It might be easier to think about this situation as separate issues.

1. Settlement will include all years but those with no enquiry will not attract an interest charge.

2. Loan charge disclosure and assessment is based on ALL years and needs to be completed, unless you are settling and have made some steps in that direction.

3. Not settling does mean that disclosure for loan charge is required.

4. Not settling also means that you will need to defend your position in due course in Tribunal, perhaps on your own but more likely as part of a group.

5. Once the loan charge process is over, you and HMRC will need to agree the final liability - either via another settlement period (the present one being closed) or in terms imposed by a tribunal.

6. The final liability position is reached only by agreement or imposition of a Tribunal decision. Loan charge and/or APN is NOT settling.

Thank you Webberg. So I need to disclose all the previous years that I am aware of (this is going to have to be a bit of a guess as I don't have much paperwork for any previous years). May I ask another question please? If say I end up having to pay the LC (based on all the years - closed or open), then will this amount be taken into consideration or will I have to pay for the open years AGAIN via the settlement? If that's the case then I'll end up paying more than I've earned.

[webberg]

Ok, now I am totally confused.

I am seeing a lot of discussion about closed and open years.
I missed the deadline for reporting the LC.
I have 3 open years (apparently) as per a telephone conversion with HMRC in September.
These are years ending 2006, 2007, 2008.
Am I to report only on these years? (they're very words were, 'we are interested in 3 years')
Can HMRC open up any years prior to this if there has been no inquiry into them as yet?
It's a bit of a problem for me as most of my paperwork is gone as have since emigrated.
What would you do in my position?

It might be easier to think about this situation as separate issues.

1. Settlement will include all years but those with no enquiry will not attract an interest charge.

2. Loan charge disclosure and assessment is based on ALL years and needs to be completed, unless you are settling and have made some steps in that direction.

3. Not settling does mean that disclosure for loan charge is required.

4. Not settling also means that you will need to defend your position in due course in Tribunal, perhaps on your own but more likely as part of a group.

5. Once the loan charge process is over, you and HMRC will need to agree the final liability - either via another settlement period (the present one being closed) or in terms imposed by a tribunal.

6. The final liability position is reached only by agreement or imposition of a Tribunal decision. Loan charge and/or APN is NOT settling.

[Iter]

Open/closed years is only relevant to settlement. The LC is different, if you are declaring this ALL loans for all previous years should be calculated. Only exception to not declaring loans is if you have settled.

[Cookie123]

Confused with what I should have reported

Ok, now I am totally confused.

I am seeing a lot of discussion about closed and open years.
I missed the deadline for reporting the LC.
I have 3 open years (apparently) as per a telephone conversion with HMRC in September.
These are years ending 2006, 2007, 2008.
Am I to report only on these years? (they're very words were, 'we are interested in 3 years')
Can HMRC open up any years prior to this if there has been no inquiry into them as yet?
It's a bit of a problem for me as most of my paperwork is gone as have since emigrated.
What would you do in my position?

[CanPayButWouldRatherNot]

Excuse my ignorance but I am late to the game.

What does the term "closed years" mean? I thought there was no limitation to how far back they could go?

I have also seen some comments about HMRC have not "protected" their position? What does that mean also?

closed years mean .. lazy hmrc never sent any paperwork or chasers on your tax returns

[wozza]

Excuse my ignorance but I am late to the game.

What does the term "closed years" mean? I thought there was no limitation to how far back they could go?

I have also seen some comments about HMRC have not "protected" their position? What does that mean also?

[stonehenge]

Or can HMRC open enquires and force a settlement (which is more to pay vs loan charge amount)?

Depends on the tax years. Year 2014/15, and earlier, can't be opened because they are beyond the 4-year discovery window. Later years can still be opened.

[CKR]

Webberg,

Thanks for comments on this

If I don’t have open enquires and only just discovered the loans - will paying the loan charge be a full and final settlement ?
Or can HMRC open enquires and force a settlement (which is more to pay vs loan charge amount)?

If I have have a valid reason that no IHT is payable once loans are written off how will HMRC assess this after the loan charge is paid?