HMRC Tax Bill and Property

[Hank123]

Hi

There is a possibility that I may be hit with a massive tax bill and I need to determine the laws and the rights / powers HMRC has regarding my personal property and pension fund.

As background information I had a tax structure in place where there was full disclosure to HMRC. For 7 years HMRC did nothing to challenge the structure and then in 2008 implemented retrospective tax legislation to close the loophole, with the effect that thousands of contractors were served back dated tax bills plus interest. The retrospective nature of the legislation is being challenged on many fronts, including Parliment and the ECHR.

Question 1:
I was married in the UK, no marriage contract was signed and our house is held jointly in the name of myself and my wife. What are the implications should the tax man demand payment? Do they have any powers over my wife's share of the property?

Question2:
Can HMRC seize my pension?

Many thanks for any input.

[wamstax]

Hi there I am afraid that you might be looking for the impossible in asking to have full details of HMRC's powers as it could depend in practice exactly how hell bent they were on taking everything that you gained from your embarking on the "tax avoidance" route.

Let us be quite candid if you decided to try and beat the system by engaging in practices that you "deep down" realised were too good to be true your were either a bit naïve or greedy. However I am not one for morals and do view that it is/was reasonable for everyone to arrange their tax affairs in a manner that ensures that they do not need to give HMRC the biggest slice possible of the cake. However I also can see the opposite view that if you decide to make your contribution below the norm then you have to take the risk that somebody somewhere may just come along later and take it back.

So to their powers and in the briefest possible summary - HMRC can make assessments in a number of instances to recover tax lost (in the sense that it was unpaid).

The most obvious is where within the enquiry window from the submission of any tax return they open a valid enquiry and during the course of the enquiry they establish that tax has been underpaid. They can then issue a closure notice detailing their findings and the consequences and subject to any appeals process they can then pursue for your goods and chattels that you have unless you pay up immediately. Interest would run on the unpaid tax from the date it would normally have been due/paid until the date of actual payment. In addition HMRC could seek a penalty (normally a lot less if you cooperate fully and disclose and assist them during the enquiry but up to a max of 100% of the tax lost) in respect of the unpaid tax if you had been careless or deliberately tried to "evade" the tax.

If for some reason they have not opened a tax enquiry for any year of assessment then if they discover that tax has been underpaid at any time in the past (and they have powers to ask you reasonable questions to determine if that is the case) then they can make assessments on the following basis.

Their powers to assess here depend on a couple of factors. Firstly they have to discover - and that doesn't mean anything more than come to the conclusion - after any enquiry has been closed or if no enquiry was raised, after the enquiry window period had elapsed, that information is available that shows that tax has been underpaid. If you have not been careless then they can make the assessments in that instance for up to 4 years back (i.e. for the year ended 5-04-2010 and later at this time and up to 5th April 2014). If you had been careless then (as long as it was not intentional or deliberate) then they could assess 6 years back. And of course if what you did was deliberate then they could assess you for up to 20 years back if you did those or other naughty things for that long


I also understand that the challenges against the retrospective legislation have been taken as far as they can and HMRC have been "victorious".

As regards the powers to seize property I would not see them being able to attach any of your wife's share of the property HOWEVER I am not an insolvency expert and you might be best advised to seek some comfort from such an expert. Similar consideration would have to be applied to your pension fund asset and you might find some guidance in the following links
http://www.hmrc.gov.uk/manuals/dmbmanual/DMBM685030.htm
http://www.hmrc.gov.uk/manuals/insmanual/ins1943.htm

[section 44]

full disclosure to HMRC

Re discovery assessments, what did the full disclosure involve?