Users of EBT tax avoidance schemes only have two days left to decide whether to register an interest in settling outstanding tax enquiries and assessments with HMRC, or face litigation and a tribunal hearing. The EBT Settlement Opportunity (EBTSO) closes on Tuesday 31 March and along with it the chance to reach a settlement on beneficial terms.
Earlier this month, the Counter Avoidance Directorate within HMRC issued a final ‘nudge’ letter to EBT users and I have repeated an extract below:
‘After the deadline we will be reviewing all cases and preparing to litigate against anyone who has not registered their interest. HMRC wins around 80% of avoidance cases litigated at tribunal. Choosing to proceed to litigation involves extensive information requests, incurs substantial costs and could result in your business’ tax affairs, as well as the personal tax affairs of beneficiaries, being scrutinised in public. HMRC is accelerating cases to litigation, so you should expect an early request for any information we need, using appropriate powers.
Whilst registering your interest does not commit you to settling, it will give you the opportunity to settle on more favourable terms and provides greater certainty over your business’ tax affairs and those of beneficiaries. To retain beneficial terms you not only have to register by the 31 March, you must have settled by 31 July 2015 too.’
HMRC has already begun attempting to collect the disputed tax avoided by EBT users, by issuing Accelerated Payment Notices (APNs). I covered APNs in detail in this blog post.
As at 13 March 2015, HMRC had already issued 7,712 APNs with a value of £1.6bn and intends to issue 64,000 in total.
We are encouraging EBT users to keep all their options open and to:
- Register an interest in settling with HMRC before 31 March 2015, remembering that does not mean a commitment to settling.
- Determine what the best settlement deal from HMRC is.
- Talk to the EBT promoters to find out what the latest legal opinion is with regard to the scheme invested in.
- Find out if a tribunal hearing date has been set or sought.
Our EBT settlement service
We are representing a cross-section of clients who are exploring reaching a settlement with HMRC for a variety of reasons.
- Tired of their long running dispute with HMRC and simply want to get their enquiries and assessments settled and to move on with their lives.
- Looking to reach a settlement knowing that an APN is going to arrive at some point anyway.
- Concerned about the prohibitive costs of a tribunal hearing, or further legal challenges, defending their EBT scheme.
- Considering selling their companies and believe an outstanding disputed tax liability will prevent a successful sale.
- Settling because their personal circumstances have changed.
- Resigned to HMRC ultimately prevailing in any event.
Our EBT settlement service is all about trying to secure the best possible settlement from HMRC, with a time to pay arrangement if that is required. We charge a Stage 1 fee to enter into initial discussions with HMRC to get a ballpark settlement figure. If the EBT client is happy, we continue with negotiations and reach a final agreement with HMRC. We charge an additional Stage 2 fee to do this.
If, at the end of Stage 1, the client instructs us to withdraw from settlement negotiations having considered all of their options, we refund 50% of our Stage 1 fee.
For more information, please e mail me direct at email@example.com
Author: Guy Smith, Tax Investigations Manager on the ReSource Tax and VAT Consultancy Team