We have had a response out of the blue from HMRC saying they do not agree with our calculations on an old case that we had not heard for years and it seems to have come out of the blue.
Has there been any recent cases or updates etc on this?
Conall Ryan
Ford Simey
If you have not heard from HMRC “for years”, might any claim by it be statute-barred? HMRC is keen to put forward such a defence if a tax payer seeks a refund after several (4) years
Paul Saunders
See HMRC April 2017 newsletter
’Trusts and taxation of index linked loans
Arrangements whereby the trustees make loans linked to the Retail Price Index, or a similar index, to the surviving spouse were relatively common before the introduction of the transferable nil rate band in October 2007.
HMRC continue to challenge these arrangements because we believe that, where these loans have been repaid to the trustees, the uplift in value above the principal sum initially lent constitutes interest under section 369(1) Income Tax (Trading and Other Income ) Act 2005 on which income tax is payable.
As part of our challenge we have issued closure notices on a number of cases, but none have been appealed.
Going forward we will be writing to all taxpayers who we know have entered into these arrangements, inviting them to consider their position and settle the income tax payable with HMRC. In cases where the trustees elect not to settle, we will be issuing closure notices, against which there is the right of appeal. On receipt of an appeal, we will consider any additional information provided. In the absence of agreement, we intend to defend any resulting appeals before the tribunal.
Peter Hughes - Hughes & Company Solicitors