Montpelier (Trust and Corporate) Services Limited (Montpelier) was wound up by the high court in the public interest in 2020 but left a trail of issues for clients involved with tax avoidance schemes promoted by Montpelier. Over the years, Montpelier promoted a number of tax avoidance schemes, one of which targeted loans to directors which in turn triggered the Loan Charge.
HMRC pursuing the Loan Charge & tax avoidance schemes
In the UK, HMRC has estimated that 50,000 people have used a loan scheme and will be affected by the Loan Charge. I believe that to be vastly underestimated and is out by a factor of 4 or 5 or more.
In the Budget on 30 October 2024, the Government announced yet another independent review of the Loan Charge.
HMRC still has many Loan Charge cases outstanding and is about to start pursuing them with vigour once more now they have more staff to do so. One HMRC employee has now been assigned over 18,000 of these cases to pursue by 31 March 2025!
Merry Christmas from HMRC!
What does this mean for your clients?
For those clients that have used such tax avoidance schemes in the past, it’s clear that HMRC will continue to pursue them. With many scheme providers no longer in business, your clients may have been left high and dry.
What does this mean for advisors?
For any advisor, being closely involved in any tax investigation is a big drain on your time at the expense of other clients. You may never get fully paid for your time whether you advised your client against it at the time or not. Sometimes the outcome of an investigation can risk the whole client relationship and if it’s a complex investigation, it can be totally outside your comfort zone.
Help is at hand
Don’t worry, help is at hand. I have many years of experience in dealing with HMRC in these sorts of complex situations and clients that have been involved in almost every permutation of such schemes. Often the only unknown is what doesn’t HMRC know already!
I can identify what the options are and estimate the costs. Not just the tax, interest, and penalties but the professional costs and often more importantly dramatically reduce the emotional cost to both you and the client.
We can consider whether the loan should be repaid (or not), who to repay and how to extract the funds from the structure (again) but this time correctly. I can often achieve a better outcome for your client, and they will be happy the problem has been resolved and gone away.
If you want help and advice on clients that have been involved with tax schemes via third-party providers, contact me on 07979 313 010 or email me.