The report recommended a disclosure to HMRC with an estimated “best case” tax settlement between £2.8 million and £8.1 million.
Crowe identified that the remuneration plan was caught by the Managed Services Company (MSC) rules and advised the client to approach HMRC and make a voluntary disclosure offering to settle its employees’ historic tax liabilities.
The client accepted the advice to abandon the remuneration planning but was naturally keen to minimise the settlement amount. Crowe obtained HMRC’s agreement to only recover liabilities under normal time limits, and grant all available offsets under the MSC legislation, despite some claims being arguably time barred, which was critical to achieving a lower settlement.
HMRC’s Fraud Investigation Service (FIS) officers were persuaded to attend an in-person meeting with Crowe and the Finance Director and Managing Director of the group; this ensured HMRC’s satisfaction that the client had followed professional, albeit incorrect, advice, hence it was reasonable to apply normal time limits and no penalties.
A detailed calculation including all appropriate offsets was agreed with FIS after they had taken technical advice, and a final settlement of £1.1 million was achieved within eight months of the client’s first contact with Crowe.
Our client had completely overlooked an investment portfolio for many years on her annual tax returns. The account was set up by her parents for our client’s benefit, although our client had always considered the account to belong to her children. We liaised with the investment manager who confirmed our client was in fact the sole legal and beneficial owner.
We therefore recommended that our client register for the Voluntary Disclosure Opportunity and sought to restrict the disclosure period and penalties charged. HMRC accepted the disclosure quickly and our client was thrilled.