Registering to Settle Question

[lowpaidworker]

Honestly, hopefully without somebody telling me I am stupid again, not exactly no.
It mentions changes to the loan charge in the letter, but I don't know exactly what the Loan Charge is?
It is charged on outstanding loans, but what is charged? a percentage? interest?
A clear to understand explanation would help, thank you.

In simple terms they take the loan balance and add this to your 2018/2019 tax return and restate it. So if you earnt 50k and had loans of 150k from previous years they go back and recalculate your tax based on 200k and send you a bill.

To complicate things a bit HMRC have offered to spread the outstanding loan balance over 3 tax years. So using the above this would mean for 2018/19 your earnings would be re-stated at 100k. (50k earnings plus 50k loan). Then for the next two tax years they add 50k to whatever you earnt and send you a tax bill.

Its worth reading through the link above mind you to get your own understanding as I am no tax advisor but just in the same messy boat.

[starstruck]

Honestly, hopefully without somebody telling me I am stupid again, not exactly no.
It mentions changes to the loan charge in the letter, but I don't know exactly what the Loan Charge is?
It is charged on outstanding loans, but what is charged? a percentage? interest?
A clear to understand explanation would help, thank you.

You really need some urgent advice. Get reading the loan charge threads on this forum as a matter of urgency and start calling some tax advisors! Settlement is likely to be much cheaper than the Loan Charge which will likely apply to your loans and you literally have only weeks to sort this out (2018/19 tax return deadline has been extended but I think only until September or thereabouts). You probably need to submit (amend?) your 2018/19 return with the loans on it and then they will be added to you taxable income in 2018/19 but there is so much to explain I don't even know where to start. Maybe watch the video on the home page here: 2019 Loan Charge Action Group (LCAG) - Loan Charge Action Group

[keeno65]

You make no mention of the Loan Charge in your posts. Are you aware of this? .

Honestly, hopefully without somebody telling me I am stupid again, not exactly no.
It mentions changes to the loan charge in the letter, but I don't know exactly what the Loan Charge is?
It is charged on outstanding loans, but what is charged? a percentage? interest?
A clear to understand explanation would help, thank you.

[starstruck]

My thoughts are I should just ignore and seek further advice from an advisor.

You make no mention of the Loan Charge in your posts. Are you aware of this? If you don't settle then the loan charge will likely apply to your loans (or at least HMRC will likely claim this).

[webberg]

It does not say there are any consequences by not responding?

My thoughts are I should just ignore and seek further advice from an advisor.

HMRC has many information sources and tracing information on individuals is something that they can do with some accuracy.

Bear in mind that these letters have been - to a degree - prepared by people skilled in using techniques - psychological and practical to achieve a given outcome.

Part of that technique is to present one path.

(A slightly different approach is used later in the process whereby the one path is lined with traps and all other paths lead to the seventh ring of hell).

If you ignore it, you do do not get the settlement terms laid out in November 2017.

HMRC will tell you - without any factual basis - that settlement terms will never be so good again and that if you chose to ignore them, expect problems.

[keeno65]

HMRC has made an assumption that all those who used a scheme would have registered to settle and in an effort to encourage that action they have sent out the template letters.

No conspiracy, no hidden agendas, just a template letter that may (or may not) mean that more people settle and HMRC avoids a long and messy and embarrassing litigation.

Your choice is to ignore the letter - in which case you need to find a means to settle on whatever basis you consider is correct - or to respond, follow the process and when you get the final value, consider if that is "better" than the litigation/your own view of correct position.

That final decision will be a very subjective one.

Thanks webberg, that indeed makes sense now, I did not ignore the letter received in January (the template letter) I asked for advice on it and was told pretty much the same that it was a "phishing" letter.

However now that I have received " your offer to settle " letter with detailed breakdown of loans received, tax owed and interest owed for 3 separate tax years , that is why I asked the question, I have only ever returned loan statements for one of the tax years so I don't know where they have got the figure from for the other 2 years. Like I said I have never registered to settle.

The letter says I have to respond by the 19th August:

1: I still want to settle some, or all, of my disguised remuneration scheme use now.
or
2: I do not want to settle any of my disguised remuneration scheme use now.

It does not say there are any consequences by not responding?

My thoughts are I should just ignore and seek further advice from an advisor.

[webberg]

HMRC has made an assumption that all those who used a scheme would have registered to settle and in an effort to encourage that action they have sent out the template letters.

No conspiracy, no hidden agendas, just a template letter that may (or may not) mean that more people settle and HMRC avoids a long and messy and embarrassing litigation.

Your choice is to ignore the letter - in which case you need to find a means to settle on whatever basis you consider is correct - or to respond, follow the process and when you get the final value, consider if that is "better" than the litigation/your own view of correct position.

That final decision will be a very subjective one.

[Paralytic]

<snip>

My question is, I never registered to settle?

<snip>

I have never registered to settle or offered to settle? Can anybody please explain this.

Without knowing what previous communication you've had with HMRC, I'm not sure how anyone here can tell you if you have or have not previously registered to settle.

Are you confident that you haven't? If so, contact HMRC and tell them that. But, if you've ignored this letter since January, then I doubt they'll be very willing to support your view without evidence.

[lowpaidworker]

That wasn't the question though was it? I have used a scheme and I know what it is all about, my question is that I have never registered to settle so why does the correspondence say thank you for registering to settle?

Why don't you call HMRC and ask

I guess you declared your loans last September as this was mandatory.. I think if you have not declared an interest in settling HMRC are maybe trying to give you a nudge would be my guess

[keeno65]

Ok, if that's the way you wish to play it...

First 3 questions apply.

I am out of here. Good luck with your settlement.

And that is the exact reason people are frightened to post on here who have concerns, because people like you start your reply with "Errm..."
You may as just well open with "Are you stupid?"
Keep your sarcasm mate, you don't help.

[Scruff]

Ok, if that's the way you wish to play it...

First 3 questions apply.

I am out of here. Good luck with your settlement.

[keeno65]

Erm...It is now August 2020?

What steps have you taken since January 2020, if any?

Is the letter on an official HMRC Letterhead?

Have you asked your Accountant?

Were you ever using a "scam" Scheme?

That wasn't the question though was it? I have used a scheme and I know what it is all about, my question is that I have never registered to settle so why does the correspondence say thank you for registering to settle?

[Scruff]

Erm...It is now August 2020?

What steps have you taken since January 2020, if any?

Is the letter on an official HMRC Letterhead?

Have you asked your Accountant?

Were you ever using a "scam" Scheme?

[keeno65]

I received a letter in January 2020 entitled "Changes to the loan charge following independent review-what this means to you"
The opening line says "Thank you for registering to settle your disguised remuneration tax affairs"
The rest of it is obviously a generic letter.

My question is, I never registered to settle?

Last week I received another letter "Disguised remuneration scheme use - your offer to settle"
It then goes on to tell me I owe circa £58k

I have never registered to settle or offered to settle? Can anybody please explain this.