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bigduckontax, Accountant
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I have a received a letter from HMRC Counter-Avoidance

Customer Question

Hi, I have a received a letter from HMRC Counter-Avoidance make enquiries into my Self Assessment return for 2013/14. During that year I worked through a scheme run by Aston Mae which would appear to have been a loan scheme. Aston Mae are preparing a response for me but I am anxious that they may not be operating in my best interests.
The complexity of the scheme made me nervous and, as my earnings were comparatively modest, gave me no real tax advantage so I switch to my own limited company.
Am I right to be anxious? Or is there any chance that the scheme is in compliance with tax law?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to assist you with your question. I am not surprised that the Counter Avoidance chaps are interested. Here is a comment from Contractor UK: 'I too have been contacted by Aston Mae and I am considering what to do. Most of your pay will come in the form of a "corporate loan", for which you will pay the going rate of interest (e.g. 4.5%) to the umbrella company. That is how you avoid paying tax or NI on the majority of your earnings. Of course, you will never repay the loan. The crux of the matter is how you will get away without ever repaying the loan without HMRC deciding that it wasn't a loan at all. This is achieved by some way that Aston Mae has of writing off the loan at the end of each year. I don't really know how they do that (they haven't told me exactly how it works. You have to wonder just how dodgy or kosher that really is. If HMRC successfully challenge it, we are screwed.' HMRC are clearly of the opinion that these 'loans' are in fact bogus and not loans at all, but income so are investigating. I must say that I for one don't blame them, it sounds very borderline to me. I think you are very wise to put your earnings through a service limited company. Remember the old adage that if it looks to be true it usually isn't! I do hope that I have been able to shed some light on the situation. Ashton Mae operate on paper from Geneva.
Customer: replied 1 year ago.
I am aware of all of this, hence my move from them. However, my questions relates more on how to deal with HMRC: come clean or hire an expert to negotiate with them?
Expert:  bigduckontax replied 1 year ago.
It all depends upon the amount of tax at risk. Using local professional advice will not come cheap, maybe as much as GBP 500 plus VAT, and in view of the clearly questionable situation I would suggest that it might not be economical.
I would come clean and explain what scheme you have used and see what HMRC's response is, but I suspect that they will try to classify the moneys as income.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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