Reply to: IHT on EBT settlement

[EdgedOut]

I think I’m quite immune to people wanting me to pay them to not actually do anything, these days. All
those “we’ll sort it out for you, honest guv” schemes.

[cojak]

Dilbert where did you get to on IHT with HMRC? I'm in the same position as you, except I've not had the HMRC demand for IHT, (yet). I would be interested in the steps took and decisions you made. Thank you.

EdgedOut: please let the mods know if you have any Private Messages offering to help with this (other than Dilbert).

[EdgedOut]

Dilbert where did you get to on IHT with HMRC? I'm in the same position as you, except I've not had the HMRC demand for IHT, (yet). I would be interested in the steps you took and decisions you made. Thank you.

[handyandy]

Has any contractor scheme/group ever beaten HMRC? Can't recall ever hearing of a single successful outcome.

Lots of companies/individuals have done very well out of it all though, from the original scheme sellers to the ambulance chasers, advisors and lawyers. This is a gift that has certainly kept on giving and giving and giving...

Yes - I was in a scheme called Actinium Management Ltd. And had enquiries opened for a couple of years back in the mid 2000’s - HMRC never asked me for any info and said they were dealing with actinium (the scheme they used was based on dividends being paid through BVL companies whilst actinium themselves were an IOM company) directly. Actinium said they had supplied strictly what HMRC asked for and that they had requested documents from a sample of contractors. They felt there was little attack surface for HMRC as they had not gone to council asking for an opinion! Council had approached them!

After 15 years of prevarication (and a couple of odd letters from HMRC urging me to pay any LC liabilities they wrote to me 2 years ago to say that they had closed the enquiry and no change to my returns were required and no tax was due.

I can’t say this is usual or likely in other cases but it does happen.

HA

[balton9]

A few months ago Labour suggested they could relook at the Loan Charge. Getting rid of any IHT liabilities would surely be one of the quickest ways for them delivering on that suggestion, at least partially. They wouldn't even have to change any law just instruct HMRC (someone tell me I'm wrong on that? & yea I know not everyone is liable for IHT & I'm also not totally convinced of the validity of a charge on a pretend loan but as mentioned, who wants to challenge?).

Could swing even more votes Labours way. Maybe contractor weekly could do an update before the election?

https://www.contractorweekly.com/tax...ge-if-elected/

[woody1]

Surely there can't be many more ambulances to chase.

Although I see, from the thread at the top of this forum, there are still plenty of firms peddling the tax scams, presumably lining up the next wave of casualties.

[Fred Bloggs]

What a fascinating thread. The gravy train just keeps on rolling along. It seems.

[Iliketax]

Re IHT you'd be right about the income point IF the income tax charge arose on the same event as that which gives rise (in HMRC's view) to the IHT charge. But it doesn't. The IT charge arose, HMRC say, when the loan was received (although strictly following RFC it would have been when the funds were contributed to the Trust) but the IHT charge arises several years later under, again they say, under s72 IHTA - an 'exit charge' - when those loans are written off. So the exemption that prevents a charge to both IHT and IT on the same event doesn't apply.

I don't really know much about IHT and so, for what it worth:

1. I'm not convinced by the exit charge on the waiver of the loan being on its full face value. Immediately before the loan receivable is waived, what is it's market value of the receivable? The loan is likely to be unsecured, have not been repaid on its due date (if there was one), likely has no interest on it (or if it does, has never been paid), may not be adequately documented and may be difficult to enforce. It would be a question of fact, but I'd expect that it would be worth significantly less than the amount of the loan. So the disposition referred to in s72(2)(c) may be a significantly less than the headline amount. But it wouldn't be zero.

2. There's also the possibility that a disposition occcured when the loan was made, especially if it is not interest bearing and repayable a long way into the future. But typically the loans would have been made very close to the time that the money was paid to the trust. So when you look at s70, the chances are that the money lent hasn't been held for less than three months, meaning the rate is 0%.

3. Assuming it is a s86 trust, there could not be a charge between the loan being made and being waived as no payments are made and the trustees would not have made a disposition.

[dammit chloe]

What's actually happened with WTT, have they sold out to Floggit and Scarper Ltd or something?

[jamesbrown]

Perhaps they're waiting until all the other cases have been lost, before revealing their winning hand.

They always had a winning hand, it was just hiding in plain sight

[Saleos]

I reckon there’s a greater than 65% chance they don’t have a hand and have been bluffing all along.

some good news out of the sale of WTT Group. It appears to have been a share sale of HoldCo. So as well as the assets the purchaser acquired liabilities too. If they’re sensible they will have various warranties and indemnities in place against the vendor too. As a proper firm the acquirer will have PI and run off cover. To cover, for example, claims for professional negligence in advising clients to have loans written off despite that creating a stand alone income tax and IHT charge of which said clients weren’t warned. Or then telling those clients not to disclose it to HMRC. Or perhaps, for example, advising clients to pursue a doomed “resolution strategy” without warning that failure to pay or declare the LC would add at least 15% penalties. And risk HMRC pursuing tax on fees.

Time to send ambulance chasers after the ambulance chasers who are off in their getaway car?!

[woody1]

Perhaps they're waiting until all the other cases have been lost, before revealing their winning hand.

[Saleos]

A good question!

Re actual, real, cases, Lancashire UT
case listing shows as still May 2023 but that didn’t happen. Higgs was shown as 29-30 November 23. But the UT is of course bound by Hoey on the s684(7a) stuff (ie Tribunal has no jurisdiction on the PAYE stuff so either has to persuade CoA it was wrong in Hoey or the SC that it was wrong not to hear his onward appeal.

In the same 8 year window as Hoey made it as far as a permission application to the SC, Judicial Reveiws of APNs made it to the CoA & APN penalty cases to the UT.

WTT. Nada.

[woody1]

I was reading up on the other EBT/loan groups that have taken action.

Hoey et al had their case heard at the FTTT, UTTT and Court of Appeal, culminating in an (unsuccessful) appeal to the Supreme Court. Higgs et al have been to the FTTT, and last month had their appeal heard at the UTTT. Lancashire et al have also had their case heard at the FTTT and have an appeal to the UTTT pending.

They're probably all wasting their time (and money) but it begs an obvious question. Why haven't BIG GROUP had a single case heard when they've been going 8 years?

It certainly doesn't bode well for anyone who joins their "IHT" group.

[starstruck]

For the sake of BIG GROUP members, who've been paying in and holding out hope for 8 years, I hope this isn't a rerun of what the original scheme providers did...

Milk it for as long as possible
Don't spend money on litigation fighting HMRC
Walk off into the sunset, leaving the contractors in the lurch

It's possibly worse than "just" that. Based on the first post, by actively telling people to have their loans written off, it looks like they've created an additional charge (IHT) and by telling them to not pay the Loan Charge, they've added the spectre of penalties and interest on that; whilst the original underlying issue hasn't been resolved (I assume also incurring interest) and settlement opportunities missed. Anyone that joins a new Big "IHT" Group, is surely nuts.