Or, more likely, the loans could have been written off or the trust closed. The revenue are getting a touch out of control with the 20 year retrospective, which is about 11 years before the finance act came to prevent them. That is one of the reasons why there is an early day motion to have it discussed in the house of commons. In fact, at this very moment, it is being discussed at the house of commons!!
Hi
To my (basic) knowledge, the Loan Schemes are set up with the intention of never repaying them. I guess the original intention of these schemes was something different, however for the purpose of this, they were not intended to be repaid.
The question of "intention" I think is whether the intention was to avoid paying the correct amount of tax to HMRC with a view to increasing the take-home pay, or not (i.e. umbrella company or role insisted on using this struture, and took enough of a "slice" that made the take-home be the same as say, a limited company).
The difference is more than sematics. In the publication released on 26th, HMRC confirmed that DR used the existing time-limits i.e. 20 years for being"deliberate" in HMRC not receiving enough tax, 4 or 6 year for being "careless", 12 years if it is off-shore and careless.
The difference in 'avoiced' tax between 12 years and 20 years could be quite considerable.
Your final paragraph is spot on. This is the thin-edge of the wedge so to speak.
The loan charge is essentially testing the waters with a small subset of people. Within a few years, HMRC will be aggressively targeting tax planning with small salary, large dividends inside/outside IR35.
Hi Donald. Your final paragraph isn't necessarily correct-if the money was earned in a single year X years ago, it may attract less tax by adding as earned income this tax year. Whilst what was earned income X years ago remains the same, what is counted as earned income this tax year can be changed and be accounted for in multiple ways as well as being pensionable this tax year.
Hi,
The DR rules say they do not introduce new assessing time limits. https://assets.publishing.service.gov.uk/government/uploads/system/uploa...
"The DR provisions do not introduce any new assessing time limits so the time limits of 4 years (reasonable care), 6 years (careless), 12 years (offshore) or 20 years (deliberate) will apply in respect of the new charge which starts on 5 April 2019."
Has anybody been able to argue the case for the time limit to be considered as 6year (careless) or more likely 12 years (offshore) as opposed to "deliberate" (20years).
If the amount of the money the client took home resulting from being in the loan scheme was less than the amount of money they could have taken home had they used a limited company to full effect, then am I wrong in thinking that a case for HRMC applying the 12 years limit could be made.
My answers
The loan charge was discussed in Parliament today ... Before a leaky roof caused the session to be postponed.
https://www.bbc.co.uk/iplayer/episode/m0004brr/house-of-commons-04042019
(1hr 26 mins in)
Transcript:https://hansard.parliament.uk/Commons/2019-04-04/debates/606C0091-A272-4...
Or, more likely, the loans could have been written off or the trust closed. The revenue are getting a touch out of control with the 20 year retrospective, which is about 11 years before the finance act came to prevent them. That is one of the reasons why there is an early day motion to have it discussed in the house of commons. In fact, at this very moment, it is being discussed at the house of commons!!
Hi
To my (basic) knowledge, the Loan Schemes are set up with the intention of never repaying them. I guess the original intention of these schemes was something different, however for the purpose of this, they were not intended to be repaid.
The question of "intention" I think is whether the intention was to avoid paying the correct amount of tax to HMRC with a view to increasing the take-home pay, or not (i.e. umbrella company or role insisted on using this struture, and took enough of a "slice" that made the take-home be the same as say, a limited company).
The difference is more than sematics. In the publication released on 26th, HMRC confirmed that DR used the existing time-limits i.e. 20 years for being"deliberate" in HMRC not receiving enough tax, 4 or 6 year for being "careless", 12 years if it is off-shore and careless.
The difference in 'avoiced' tax between 12 years and 20 years could be quite considerable.
Your final paragraph is spot on. This is the thin-edge of the wedge so to speak.
The loan charge is essentially testing the waters with a small subset of people. Within a few years, HMRC will be aggressively targeting tax planning with small salary, large dividends inside/outside IR35.
Hi Donald. Your final paragraph isn't necessarily correct-if the money was earned in a single year X years ago, it may attract less tax by adding as earned income this tax year. Whilst what was earned income X years ago remains the same, what is counted as earned income this tax year can be changed and be accounted for in multiple ways as well as being pensionable this tax year.
Maybe the company/ trust has closed... Not so simple.
Hi,
The DR rules say they do not introduce new assessing time limits.
https://assets.publishing.service.gov.uk/government/uploads/system/uploa...
"The DR provisions do not introduce any new assessing time limits so the time limits of 4 years (reasonable care), 6 years (careless), 12 years (offshore) or 20 years (deliberate) will apply in respect of the new charge which starts on 5 April 2019."
Has anybody been able to argue the case for the time limit to be considered as 6year (careless) or more likely 12 years (offshore) as opposed to "deliberate" (20years).
If the amount of the money the client took home resulting from being in the loan scheme was less than the amount of money they could have taken home had they used a limited company to full effect, then am I wrong in thinking that a case for HRMC applying the 12 years limit could be made.
??