My client was in a disguised remuneration scheme in 2004 - 2006. He received interet free loans. However, neither of us have any information going back that far and another Accountant did the Tax Returns. Since 2006 the company that employed my client in this way has closed down. He has received a letter from the Revenue saying they 'believe' he was in one of these schemes and should settle. But how can we settle with no information? Any ideas on what info HMRC will have. Considering it is so long ago and my client can not be expected to keep information for 14 years, should we just wait and see what HMRC can come up with if anything. As the scheme was shut down years ago I can't see how they could get anything from the scheme administrators
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If he doesn't do anything, he will have a loan liable to the 2019 loan interest charge. If he settles, he won't have so it is in his interest to settle.
Surely he has some idea of the loans he received? Could you not get copy tax returns from HMRC? Hoping the problem goes away isn't the answer.
I've had a similar query with a client in the past. In my case it seemed HMRC had no real info on the client whatsoever; what they had done in an attempt to estimate her "loan" was take the total amount of money held by every client of the umbrella company and divide it by the number of people operating through the umbrella company(!), thus producing a figure what had nothing whatsoever to do with my client's income level during the year in question...
I adopted the line of arguing to HMRC that the client was in practice an employee of the company she had been contracted through and that as such any tax that wasn't properly declared was the responsibility of the loan company, not the client. I made this argument over a year ago and have heard nothing from HMRC since.
Is his bigger financial problem that the trustees may demand repayment of the loans and he doesn’t know the repayment terms?
Which sounds like the loan (an asset of the trust) has been written off in favour of your client, so no 2019 loan charge but possibly taxable at the point of write off?
Indeed. Sounds as if the remuneration was about as "disguised" as a sheep in wolf's clothing.
Agree - if adopt the argument that it was a repayable loan that was w/o when the company shut. You’re then left with undisclosed income whenever that was; you’ll want to work the numbers to see whether to follow this line or not.
Check out https://www.gov.uk/government/publications/disguised-remuneration-detail...
There was probably was small salary a “loan” made to your client. HMRC will at the very least have P60’s for the years that your client was involved in the scheme.
Assume that they have information from correspondence from other participants and possibly the scheme administrators and the trustees.
Is there an open Enquiry? Do HMRC have grounds to make a discovery assessment? What are the implications of the 2019 loan charge?
When HMRC raise an assessment they only have to show that it is reasonable. Your client has to prove that it is not.
Explain the options that are available to your client and the consequences. Allowing HMRC to control the situation is lightly to be one of the more expensive options.