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Previously on "Settlement and loan write off"

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  • lowpaidworker
    replied
    Originally posted by GregRickshaw View Post
    No idea if this is true or not, though it's not always a terrible thing to have the debt in the debt collection agencies hands, certainly the ones I have dealt with in the past who collect on behalf of HMRC haven't seemed like some dreadful dark alternative.

    From reading the article it does appear HMRC were the aggressors not the DC's?
    possibly... but then the commitments made about not forcing people to sell main home or pay half their income …. then they don't need to worry. Gets them out of that little hole

    Leave a comment:


  • GregRickshaw
    replied
    Not sure about stalling

    Originally posted by lowpaidworker View Post
    I believe HMRC are stalling people who trying to settle or agree a TTP for the loan charge in order just offload to a debt collection agency
    No idea if this is true or not, though it's not always a terrible thing to have the debt in the debt collection agencies hands, certainly the ones I have dealt with in the past who collect on behalf of HMRC haven't seemed like some dreadful dark alternative.

    From reading the article it does appear HMRC were the aggressors not the DC's?

    Leave a comment:


  • eek
    replied
    Originally posted by lowpaidworker View Post
    I believe HMRC are stalling people who trying to settle or agree a TTP for the loan charge in order just offload to a debt collection agency
    Take that up with your MP, Debt collection agencies won't touch anything that is contentious or disputed.

    Leave a comment:


  • lowpaidworker
    replied
    Originally posted by GregRickshaw View Post
    HMRC have been using debt collection agencies for a long time, not sure how this is news.
    I believe HMRC are stalling people who trying to settle or agree a TTP for the loan charge in order just offload to a debt collection agency

    Leave a comment:


  • eek
    replied
    The article the tweet refers to is HMRC enforcers: ‘I’ve had to borrow from friends just to survive . . . I’m so stressed I can’t eat’ | News | The Times

    The article itself seems to merge various things (tax debts, letters from HMRC (not debt collectors, Council Tax) into a single article which makes it rather had to see what he is trying to do.

    Leave a comment:


  • GregRickshaw
    replied
    This is not new though?

    Originally posted by lowpaidworker View Post
    Just seen an interesting tweet. Cant link sorry..

    But gist of it is HMRC are transferring out owed tax debt to debt collectors. These debt collectors did not make statements in parliament about 50% disposable income and not forcing a sale of a home.

    So those trying to settle will need to hurry up and agree a TTP. HMRC are about to sell the debt and given they clearly don't have the staff or organization to sort ALL THESE TTPS out suggest we are about to see a wholesale transfer of a lot of loan charge debts into aggressive debt collection agencies hands. No wonder when you speak to anyone at HMRC (assuming you get through) they bounce you around. This is going to get very messy. Hope the APPG can see through these games.
    HMRC have been using debt collection agencies for a long time, not sure how this is news.

    Leave a comment:


  • lowpaidworker
    replied
    Just seen an interesting tweet. Cant link sorry..

    But gist of it is HMRC are transferring out owed tax debt to debt collectors. These debt collectors did not make statements in parliament about 50% disposable income and not forcing a sale of a home.

    So those trying to settle will need to hurry up and agree a TTP. HMRC are about to sell the debt and given they clearly don't have the staff or organization to sort ALL THESE TTPS out suggest we are about to see a wholesale transfer of a lot of loan charge debts into aggressive debt collection agencies hands. No wonder when you speak to anyone at HMRC (assuming you get through) they bounce you around. This is going to get very messy. Hope the APPG can see through these games.

    Leave a comment:


  • eek
    replied
    Originally posted by uppoocreek View Post
    Yes I think that is everyone’s question. When is 6 years 6 years and from what date/evet? It’s a mine field and a nightmare.
    It's not - it's 6 years from the date you are asked to repay the money - which may be a lot later than people are hoping it is. For instance the Felicitas / IQ members will have a clock that started not in 2013 or so when they were lent the money but one that starts in 2020 - when they were asked to repay it.

    Leave a comment:


  • uppoocreek
    replied
    Originally posted by Paralytic View Post
    6 years after which date? And how strong is that "belief"?
    Yes I think that is everyone’s question. When is 6 years 6 years and from what date/evet? It’s a mine field and a nightmare.

    Leave a comment:


  • Wimbledon
    replied
    Originally posted by webberg View Post
    There seem to be a fair few posts around on the above.

    This may help.

    When agreeing a settlement with HMRC, you are presented with a choice to be made on the loans.

    A. If you wish to have them written off (usually within a short period of final agreement) then HMRC will include an IHT (or not, depending on the lender, circumstances, etc).

    B. If you choose not to have them written off within the post settlement window, then HMRC has the right to make a further IHT charge when they are written off or otherwise reduced in value.

    If you go for option A, then you will need to achieve that write off within the window in order to meet the terms. If you are outside that window then due to the nature of the IHT calculation in many cases (it's based on - approx. - 1% of the loan value per year from the first loan - so it increases over time) HMRC claim that more IHT may be due.

    There is NO CONNECTION between the agreed period post settlement for having the loan written off and whatever time to pay you may have agreed.

    Even if you have 10+ years to pay the settlement, if you have chosen Option A, you will need to have the loan written off within the 30/90 days after agreement or risk HMRC coming back for more alleged IHT.

    Do NOT wait for the end of the payment period.

    Some lenders/trusts will agree a write off, usually upon proof that you have settled. (This means that they are unlikely to be chased for tax due on the payments made).

    You will have to ask your lender (or whomever claims to own the loan now) for their agreement.

    Some will charge a fee of a few or quite a few hundred pounds.

    If you have gone for option B, then HMRC will claim that a subsequent write off of the loan may attract an IHT charge in the future. IHT has a self assessment system and the theory (and probably legal obligation) is that when such an event occurs, you are required to make a disclosure.

    The above is based on HMRC's interpretation of IHT rules. It is not an interpretation that I consider is correct. A debate in front of a Tribunal may eventually be required to determine the "correct" position.

    If you have settled and paid the IHT, then the outcome of that debate makes no difference to you. The settlement is agreed and paid and you cannot recover any of it.

    The most often encountered difficulty here is knowing who the lender was, who owns the loans now and how to contact them. This can be worked out with an hour's research in most instances, starting with the original loan agreement and then moving to corporate records in the UK or elsewhere. You will also find that most of the financial regulators in IOM, Guernsey, Jersey, etc are helpful and a call to them will pay dividends.

    A loan, once made, cannot disappear without some action from the lender (or of course repayment in money by the borrower which I'm assuming is quite rare). Therefore if the original lender was a company and that company has been dissolved, liquidated, struck off, then the assets will go to the shareholders. Those assets will include the loans.

    If the lender was a trust or the loans were moved to a trust, then whilst the trustee can resign they are usually obliged to appoint another trustee. (I think in some instances, the local financial authority may have to step in as trustee). The local financial regulator should be able to help you.

    Some advisers will have details of lenders and their contact details. If they are similar to us, we have those details because we have researched the scheme to establish a tax analysis. Often the person who is the current contact point is quite sensitive about their contact details being widely available. It is also usually the fact that we cannot share those details with those who are not our clients for fear of breaching all sorts of rules. We will not therefore publish details of schemes where we know a write off is possible - or where we know requests have been refused.

    Hope this helps.
    OK, so I am looking at my current settlement, IHT is included, about 25 % of amount. If I ask that they exclude IHT (I am worried the trusts do not exist/wont write it off) will i then need to negotiate a new settlement? on the IHT amount? what is the best way of going about this?

    Leave a comment:


  • Paralytic
    replied
    Originally posted by Rogets
    I believe that the loan would become statute barred after 6 years anyway. If no repayment had been made in that time.
    6 years after which date? And how strong is that "belief"?

    Leave a comment:


  • Iter
    replied
    Originally posted by uppoocreek View Post
    Again if you look at what Webberg says

    “ If you go for option A, then you will need to achieve that write off within the window in order to meet the terms. If you are outside that window then due to the nature of the IHT calculation in many cases (it's based on - approx. - 1% of the loan value per year from the first loan - so it increases over time) HMRC claim that more IHT may be due.”
    I think what webberg was saying with option a is the IHT is calculated within the settlement agreement based on the timing of when you are settling (from when the loans were first taken). In order to meet those terms you have to write off within a certain time.
    If you don’t get write off in that period, ie many years later then any additional IHT charge may arise to what has already been paid.

    There is only one IHT charge though I believe which was my point.

    On a recent settlement, there was no mention in the discussions/ agreement terms about write off or IHT charges. It was only ever mentioned in the cls02 registration xls as a tick box I think, but that’s meaningless? Looked like it was created by a ten year old

    Leave a comment:


  • uppoocreek
    replied
    Originally posted by Iter View Post
    I thought the IHT was charged after the loan is written off? Also you mentioned above “will be charged 1% of the outstanding balance PLUS the IHT”. Aren’t these actually the same thing, are you confusing the two?
    Again if you look at what Webberg says

    “ If you go for option A, then you will need to achieve that write off within the window in order to meet the terms. If you are outside that window then due to the nature of the IHT calculation in many cases (it's based on - approx. - 1% of the loan value per year from the first loan - so it increases over time) HMRC claim that more IHT may be due.”

    Leave a comment:


  • Iter
    replied
    Originally posted by uppoocreek View Post
    I would think key sentence from Webberg is

    “ There is NO CONNECTION between the agreed period post settlement for having the loan written off and whatever time to pay you may have agreed.

    Even if you have 10+ years to pay the settlement, if you have chosen Option A, you will need to have the loan written off within the 30/90 days after agreement or risk HMRC coming back for more alleged IHT.”

    So get it written off ASAP after you have your settlement letter otherwise for each year since your FIRST loan you will be charged 1% of the outstanding balance PLUS the IHT.


    If you had monthly payments as loans for 6 months 2014 and you had say £50k in total settled in Sept 2020 and had 30 days to write off loan, which is now passed then you will be due 6 years IHT At 1% per year cumulative. so calculation would be

    2014 - £50k = 1% IHT = £500 = Total IHT £500
    2015 - £50500 = 1% IHT = £505 = Total IHT £1005
    2016 - £51005 = 1% IHT = £510.05 = Total IHT £1515.05

    So you can see by the time you get to 2020 (now) you could have a IHT bill of over 4 grand!

    Of course if my assumptions are wrong and someone else knows different please put me right.
    I thought the IHT was charged after the loan is written off? Also you mentioned above “will be charged 1% of the outstanding balance PLUS the IHT”. Aren’t these actually the same thing, are you confusing the two?

    Leave a comment:


  • uppoocreek
    replied
    Originally posted by jbeer View Post
    So the loan people are going to be willing to write off the loan or not willing. If they are not willing then they may come calling for repayment. But surely if they are willing then they are not likely to ask for repayment ?. So what's to be gained by asking for write off (as this will also open up the IHT issue) ?
    Also, if they do plan calling in the loans why have they not acted before now (the longer they leave it , harder to track people down, people will no longer be here etc)

    Be interested to know your thoughts on this
    I would think key sentence from Webberg is

    “ There is NO CONNECTION between the agreed period post settlement for having the loan written off and whatever time to pay you may have agreed.

    Even if you have 10+ years to pay the settlement, if you have chosen Option A, you will need to have the loan written off within the 30/90 days after agreement or risk HMRC coming back for more alleged IHT.”

    So get it written off ASAP after you have your settlement letter otherwise for each year since your FIRST loan you will be charged 1% of the outstanding balance PLUS the IHT.


    If you had monthly payments as loans for 6 months 2014 and you had say £50k in total settled in Sept 2020 and had 30 days to write off loan, which is now passed then you will be due 6 years IHT At 1% per year cumulative. so calculation would be

    2014 - £50k = 1% IHT = £500 = Total IHT £500
    2015 - £50500 = 1% IHT = £505 = Total IHT £1005
    2016 - £51005 = 1% IHT = £510.05 = Total IHT £1515.05

    So you can see by the time you get to 2020 (now) you could have a IHT bill of over 4 grand!

    Of course if my assumptions are wrong and someone else knows different please put me right.

    Leave a comment:

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