Like HMRC we’re also aware of these and our 
view is the same as HMRC’s which is that these arrangements will not work. Taxpayers faced with Follower Notices and APNs relating to their past use of tax planning arrangements are advised not to sign up to them.
While promoters claim that these arrangements work it’s very clear that HMRC does not agree and will pursue settlement of tax planning arrangements that are now contrary to current legislation. Any arrangements to avoid the loan charge, which seek to deceive HMRC as to what is really happening are considered by HMRC to be fraudulent.
A number of previous cases, such as some film schemes using offshore companies, promoted as being compliant and legal have resulted in criminal convictions for the key people involved and extensive investigation of several hundred users. HMRC has made it clear it will investigate all of these arrangements and is likely to take similar action if it finds any that are seeking to deceive. At the very least, anyone who takes part in, what HMRC considers to be, an offensive arrangement is likely to face penalty sums, chargeable along with any tax and interest that will be due.
HMRC has strengthened its approach to challenging tax avoidance. Given HMRC’s focus most arrangements simply don’t work and people can end up paying more than they were trying to avoid, largely down to HMRC’s willingness to challenge arrangements through legal processes. Taxpayers may ultimately end up with a long-term requirement to deal with the cost, commercial and tax fallout from these transactions with no support from the promoter of the original arrangement. We are working with a significant number of clients, particularly contractors, who entered into trust based tax arrangements that are now caught by changes to UK tax legislation particularly using loans as the basis for payment.
We would encourage anyone considering Settlement to contact us as soon as possible so that we can get you registered with HMRC prior to the 31 May deadline. If the May deadline isn’t met it’s likely that the 2019 loan charge will be incurred before settlement can be finalised.
Payment of the loan charge is not the end of the matter for clients as HMRC will continue to pursue the underlying litigation against the scheme. A delay in reaching settlement will cost more as interest and Inheritance tax charges will continue to accrue.
HMRC are encouraging settlement and we are aware that their response times are deteriorating as their workload increases. However due to the volume of cases that Bedrock is dealing with we do have a specific point of contact at HMRC which is helping us keep the process efficient and streamlined for our clients. HMRC have advised us that if people register an interest to settle prior to 31 May 2018 and provide all necessary information by 30 September 2018, then they will guarantee that the resources will be available to reach settlement prior to the loan charge.
Inevitably HMRC are not responding as quickly as previously, however, we still anticipate most straightforward settlement cases should be completed within three months.
If you or your clients are considering settlement please do call us or encourage them to get in touch so we can make sure the key deadlines aren’t missed. Read more about how we can help with settlement cases here.
