Reply to: HMRC settlement & writing off loans from Fernleigh / Ronsard/Rathowen

[Jumper]

That is terrible and typical. I am sure they were just happy to sit back and watch the interest add up and they compensate you with a £75 payment.

I am sure it is at least a relief to reach the milestone however and you can start to put that element behind you.

I hope you write-off is a little quicker than HMRC were!

Would you believe, nearly 2.5 years ago......despite me chasing i,t not the other way round.... I even got an apology from HMRC and an offer of compensation.....albeit a derisory £75..... after they effectively forced me into cashing a pension in early to get a lump sum to satisfy their demand for payment within 30 days ..... and then 2 years later...I am about to finally pay over that sum. If I'd left it where it was I would have almost had enough to pay them outright now from an increased 25% tax free amount....... Just crap...but as you say I'm on the right road.

what a nightmare.

[hobbes21]

You are at least on the right road Hobbes, that is the main thing. When did you initiate settlement with HMRC for settlement only just being reached now?

Would you believe, nearly 2.5 years ago......despite me chasing i,t not the other way round.... I even got an apology from HMRC and an offer of compensation.....albeit a derisory £75..... after they effectively forced me into cashing a pension in early to get a lump sum to satisfy their demand for payment within 30 days ..... and then 2 years later...I am about to finally pay over that sum. If I'd left it where it was I would have almost had enough to pay them outright now from an increased 25% tax free amount....... Just crap...but as you say I'm on the right road.

what a nightmare.

[Jumper]

You are at least on the right road Hobbes, that is the main thing. When did you initiate settlement with HMRC for settlement only just being reached now?

Well, I've done the deed, signed up with HMRC for the settlement agreement so the 90 day clock is ticking. I've advised Montpelier through their outlook address but they have not replied to anything since last October. So I've also asked GW pursue the loan write off through the liquidators angle.

Big cheque to HMRC and then monthly payments for the next 7 years....... hopefully there's a light ....albeit an expensive one at the end of the tunnel.

Anyone else had any other experiences?

[hobbes21]

Nice one Rob. Great news.

Well, I've done the deed, signed up with HMRC for the settlement agreement so the 90 day clock is ticking. I've advised Montpelier through their outlook address but they have not replied to anything since last October. So I've also asked GW pursue the loan write off through the liquidators angle.

Big cheque to HMRC and then monthly payments for the next 7 years....... hopefully there's a light ....albeit an expensive one at the end of the tunnel.

Anyone else had any other experiences?

[piebaps]

Nice one Rob. Great news.

[hobbes21]

Well hallelujah, after suggesting to them they just add the name Fernleigh to the names already on the agreement I've just received confirmation that they will now change the name to include Fernleigh. It had to be "passed up the chain of command".....

So is it possible but it took about 5 emails and negative responses to my increasingly frustrated incredulity that it "wasn't possible"....

Happy to share privately what I said with anyone suffering in similar circumstances.

[hobbes21]

I have subsequently found an email from Montpellier in 2019 when I first told them I wanted to settle, sent therm the agreement and they responded that Fernleigh trust instructed Rathowen to make the loan on their behalf. It's still with Fernleigh now...so I sent the email to HMRC and just asked them to reflect what is fact in their statement.

I'm waiting to hear back

[hobbes21]

Good info thanks....yes I wish retrospectively I'd had a longer spoon or avoided supping at all. It was an emergency situation after being out of the country for a long time and a consultancy I landed a contract with urged me to use them. I only supped for 2 years and then managed to get a permanent job as I got cold feet. Its been festering in the nuclear pile in the corner ever since.

Anyway thanks for taking the time with the long post...very much appreciated.

Cheers

Rob

[piebaps]

There's an old saying Rob about supping with the devil and needing a long spoon. You're discovering some of the possible flaws in the Montpelier schemes.

Firstly, the money which went into the scheme could be treated as your earnings and thus taxed and NICed in the usual way.

Secondly, notwithstanding that the taxman says its earnings, the legal paper trail shows that an entity (usually a trust) made you a loan. If a civil court rules that the money is a proper loan, then the lender could be entitled to ask for repayment.

Finally, if there wasn't enough offence caused already, if a loan is written off, it could trigger an inheritance tax charge.

HMRC appear to be saying that if you get the loan written off as part of your settlement, there won't be an IHT charge. This is a fair approach (if I'm understanding correctly).

Your problem is that whatever trust made you the first loan isn't necessarily the same as the trust which currently owns the loan. HMRC we know have been active in obtaining information on Isle of Man schemes (see here for example https://www.judgments.im/content/J1800.htm) so you can assume that they know exactly who or what made the loan. They'll have included that name in their agreement.

Gordon I suspect is now telling you that the entity which made the loan is no longer the lender. Whoever or whatever it was has since changed. He can't write off a Fernleigh loan if Fernleigh transferred the loan to something else. HMRC on the other hand appear to be saying that they don't give a tulip who the lender is as long as the loan goes.

I'm sure there must be a form of "weasel words" which keep everyone happy. Perhaps some advice may be needed.

[hobbes21]

I'm aware that there may be an IHT event, but I'm struggling to find out what it actually equates to. response from HMRC when asked..."HMRC can't say what they will do"

If the loan has been treated as income by HMRC and all tax and NI requirements satisfied then what is there to inherit and thus be taxeb whether by IHT or anything else. Tax on taxed, non profit generated income?

Why this is not clear is beyond me.

I had a long winded explanation from HMRC yesterday which may as well have been written by Sir Humphrey....it explained nothing and said nothing.

[regron]

Can't help with your specific query, but are you aware of the possible IHT charges which may arise once the loans are released?

[hobbes21]

So, I've agreed a settlement with HMRC but discovered on receiving the paperwork the names of the scheme associated with the loans were marked Ronsard / Rathowen. I passed this to Gordon who confirmed it should read Fernleigh.... In order to get the loans released by the issue of a settlement agreement from HMRC it needs to match. I fed this back to HMRC who are refusing to change it. After quite a few exchanges with them the last one actually had this line ;

"the scheme name on the document is merely to categorise the scheme which was used and it was not to capture which specific truest had been used to facilitate the scheme. Settlement is not dependent on which entity might legally hold the loans at the current time"

So I pointed out that if it's "merely to categorise the scheme".....why can't they amend it to include the name Fernleigh which would allow the trustees (hopefully now Gordon) to release the loan given HMRC will have been satisfied from a tax and NI perspective.

Anyone had anything like this ?

It's crazy makes no difference to them but causes me massive problems

[piebaps]

Great stuff Rob. Keep us posted.

[hobbes21]

I've spoken to Gordon. What a relief, challenges ahead but it feels like finally someone who knows what they're talking about and is trying to do the right thing.

Thanks to everyone that's responded just to point out the number is

+44 1624 664949.... The other one above is a doctor's surgery...hehe.

Cheers
Rob

[piebaps]

Ring.01624 664949

Gordon was appointed by the Court at the behest of the IOM Regulator and isn't a Montpelier appointment.