Reply to: If a loan is a "loan" it cannot be taxable - true or false?

[DealorNoDeal]

Probably earlier. Don't know the person well enough to ask for more details.

It wouldn't surprise me if HMRC tried it on, possibly with a few "guinea pigs". They wouldn't have much to lose and, if they could get the 20 years to stick, they could deploy this more widely. It wouldn't even matter to them if it took until say 2023 to cement this because they'd still be able to go back to 2003.

I'd be surprised, though, if they started issuing 20-year discos en masse, which would attract a lot of attention.

[dammit chloe]

For 2009/10, they could use this if there has been a failure to disclose a notifiable scheme.
CH54000 - Compliance Handbook - HMRC internal manual - GOV.UK

For 2008/9, and earlier, it would have to be something else.

Probably earlier. Don't know the person well enough to ask for more details.

[DealorNoDeal]

I don't know the details as I haven't spoken directly to the person involved. However it concerned closed pre-2010 years and was after the SAM report.

For 2009/10, they could use this if there has been a failure to disclose a notifiable scheme.
CH54000 - Compliance Handbook - HMRC internal manual - GOV.UK

For 2008/9, and earlier, it would have to be something else.

[dammit chloe]

Invoking the 20-year limit is pretty serious, so I would be surprised if they would do that without giving any justification.

I don't know the details as I haven't spoken directly to the person involved. However it concerned closed pre-2010 years and was after the SAM report.

[DealorNoDeal]

I'm not sure at what point the evidence and justification is needed. All I know is they opened up the years in what sounds like a petulant act. Can they just open the years and then decide at some later point whether to progress or do they need to justify at the opening stage.

Invoking the 20-year limit is pretty serious, so I would be surprised if they would do that without giving any justification.

[webberg]

I'm not sure at what point the evidence and justification is needed. All I know is they opened up the years in what sounds like a petulant act. Can they just open the years and then decide at some later point whether to progress or do they need to justify at the opening stage.

There are limits to when HMRC can open enquiries and certain rights you have if they do.

Yes HMRC can decide to open an enquiry and then do little or nothing.

Equally you have the right to challenge that. You raise that challenge by asking a Tribunal to force HMRC to issue a Closure Notice.

If HMRC has not investigated to a point where they have made a decision and can issue a CN, then they can ask the Tribunal for time. Usually this us granted, but it is finite.

If the Tribunal considers that HMRC has had enough time then they can require a CN be issued within a given period.

There is a thought that if HMRC has opened an enquiry simply to "protect" the year, then again, you can go to Tribunal and ask the above questions.

Arguably a "protective" enquiry is beyond the scope of the law here but they are nonetheless used. Again, a Tribunal can be asked to set aside the enquiry on the grounds that it is protective and outside the statute. Be aware that this argument is likely to be resisted every step of the way, especially where there are "discovery" assessments.

[dammit chloe]

If HMRC invokes the 20-year window, to raise a disco, then it would be surprising if there weren't penalties. I would have thought the 20-year window and penalties go hand in hand.

It would be interesting to know what grounds HMRC cited to justify using 20 years with that person.

I'm not sure at what point the evidence and justification is needed. All I know is they opened up the years in what sounds like a petulant act. Can they just open the years and then decide at some later point whether to progress or do they need to justify at the opening stage.

[DealorNoDeal]

What about the tax though?

I understand anything that uses the 20 year limit ought to be a high bar bit not convinced it won't stop HMRC trying ( I know of one person who has had years opened in this range ).

If HMRC invokes the 20-year window, to raise a disco, then it would be surprising if there weren't penalties. I would have thought the 20-year window and penalties go hand in hand.

It would be interesting to know what grounds HMRC cited to justify using 20 years with that person.

[dammit chloe]

At the time you filed your SATR, you acted in good faith on professional advice that the "loans" did not need to be declared.

Since then, new information has come to light (eg. Rangers) and the landscape has changed dramatically, and you now concede that they probably constituted taxable income (remuneration).

It would be very hard for HMRC to justify penalties when there was clearly no deliberate behaviour involved.

What about the tax though?

I understand anything that uses the 20 year limit ought to be a high bar bit not convinced it won't stop HMRC trying ( I know of one person who has had years opened in this range ).

[Fred Bloggs]

At the time you filed your SATR, you acted in good faith on professional advice that the "loans" did not need to be declared.

Since then, new information has come to light (eg. Rangers) and the landscape has changed dramatically, and you now concede that they probably constituted taxable income (remuneration).

It would be very hard for HMRC to justify penalties when there was clearly no deliberate behaviour involved.

Unless they can prove negligence, though I imagine that is a higher bar?

[DealorNoDeal]

From the twittersphere

" if you argue that it was always earnings/income you will end up owing the tax along with penalties for having deliberately filed an incorrect tax return in the first place. If you disagree that's obv fine but don't say you weren't warned."

How do you counter that?

At the time you filed your SATR, you acted in good faith on professional advice that the "loans" did not need to be declared.

Since then, new information has come to light (eg. Rangers) and the landscape has changed dramatically, and you now concede that they probably constituted taxable income (remuneration).

It would be very hard for HMRC to justify penalties when there was clearly no deliberate behaviour involved.

[webberg]

From the twittersphere

" if you argue that it was always earnings/income you will end up owing the tax along with penalties for having deliberately filed an incorrect tax return in the first place. If you disagree that's obv fine but don't say you weren't warned."

How do you counter that?

To me it seems you are ignoring RFC rulings and arguing HMRC's case for them. What I find also hard to overlay is how the time that has passed since many of these transactions will affect matters when the view wasn't that that existed at the time.

I don't counter it on Twitter because as has already been pointed out a small character limit does not permit context or detail.

I would point out the following however.

Hoey went to Court and "admitted" that the loans were income citing as a reason the Rangers judgement.

I suggest that listening to the "expert" promoter or worse - abdicating responsibility for making a complete tax return - is a very long long way from "deliberate". Unwise - certainly. Careless - perhaps. Deliberate - no.

HMRC's case is that the money was income and the recipient is liable. Rangers says that the money was taxable and that the employer is liable. (I'm aware HMRC tend to say that is not the case, but they are wrong).

If it is the case that some advisers are wanting to put the judicial clock back to the 1970's so be it.

Unfortunately though it seems that we have a divide in the adviser community. That is unhelpful for clients, helpful for HMRC.

I therefore chose that this is the last post from me on the "loan = a loan" theme. I've made clear that it is not a view I share and whilst I regret that this may cause some clients and newcomers to this space to be forced to choose between two technical ideas based on different tax philosophies, it is what it is.

[BrilloPad]

Twitter doesn't really allow for much context. There are other tweets in the thread.

The examples you quote are beyond me but I think it all relates to actual PAYE income vs Loans rather than other forms of tax. He is on there should people wish to question. It's become a real mess of opinion and counter opinion when apparently HMRC has always been clear.

Indeed they have. They just pluck a number out of thin air with no reference to any law and expect it paid.

[dammit chloe]

Can you ask Phil for the context?

Without the context, it's difficult to understand where this comes from. For example, he says "A loan is NOT taxable" and that has no context. A loan can be taxable in lots of ways (e.g. s23A, s175, s188, s415, s455, s554Z2, s809EZA, s850C, etc).

Twitter doesn't really allow for much context. There are other tweets in the thread.

The examples you quote are beyond me but I think it all relates to actual PAYE income vs Loans rather than other forms of tax. He is on there should people wish to question. It's become a real mess of opinion and counter opinion when apparently HMRC has always been clear.

[Iliketax]

From the twittersphere

" if you argue that it was always earnings/income you will end up owing the tax along with penalties for having deliberately filed an incorrect tax return in the first place. If you disagree that's obv fine but don't say you weren't warned."

How do you counter that?

To me it seems you are ignoring RFC rulings and arguing HMRC's case for them. What I find also hard to overlay is how the time that has passed since many of these transactions will affect matters when the view wasn't that that existed at the time.

Can you ask Phil for the context?

Without the context, it's difficult to understand where this comes from. For example, he says "A loan is NOT taxable" and that has no context. A loan can be taxable in lots of ways (e.g. s23A, s175, s188, s415, s455, s554Z2, s809EZA, s850C, etc).