New guidance builds on the recommendations of The Morse Report, such that Voluntary Restitution Settlements already reached with HMRC can now be repaid.
The guidance has been published. The terms of the original settlement agreement have been checked. A refund is due.
Any taxpayer that previously reached a settlement with HMRC in respect of a tax avoidance arrangement and hasn’t checked the terms may wish to do so as they may be due money back.
Sometimes the expression Voluntary Restitution will be present in the settlement agreement or possibly communications with HMRC leading up to the agreement.
Another feature that opens up the possibility of money back is the absence of interest and penalties being charged.
Not all settlements will fit the claim parameters but a number will.
How to claim your refund
The guidance states that HMRC will set up a portal to start the claim process. It’s not ready yet!
Our experience of using HMRC digital portals in reaching settlements in the first place is not a happy one. Communications were often ignored, inconsistencies arise where multiple individuals are involved and on occasions HMRC simply could not add up.
This is not a process to be enjoyed when seeking money back and, at best, is to be endured with gritted teeth.
We have invested time to foster relationships with some HMRC Inspectors who can deal with these sort of matters on a bespoke and human level.
A taxpayer with straightforward affairs may wish to avail of the portal, although it could be a slow process. Anyone with slightly complicated circumstances should consider a more personal approach, which is often quicker. Quite a useful step when money is due back.
Things to think about
A refund will not be made if the settlement was not on a Voluntary Restitution footing, this is key.
Any Inheritance Tax (IHT) paid as part of the original settlement will not be repaid. This remains chargeable and is not within the scope of the Morse revisions. Further IHT may be due if loans were not written off as part of the original settlement.
There is a guillotine date to make the claim of 30 September 2021. Whilst it is not essential a claim is made immediately, who wants HMRC keeping more of their cash than they need to?
The exact terms of the reclaim process are quite complicated, they were drafted by HMRC’s solicitor’s office. However, provisions include the ability to reclaim settled sums that were paid by an individual who has subsequently passed away.
It is features such as these that re-emphasises our view that it is preferable to deal with HMRC on a human level and avoid the insensitivity of portals.
For a change, there is an interaction with HMRC that could be good news for some taxpayers.
Those who can benefit would be best advised to take advantage, it will not last!