The Foskett Panel

Tax - Process for obtaining funds to meet certain tax due on a Panel Award

Taxation of Customer Awards
Process for obtaining funds to meet certain tax due on a Panel Award
Explanation of tax covered and not covered by LBG on Panel Awards
Funding for tax adviser fees relating to Panel Awards in the Re-Review
Tax due on Fixed Sum Awards
Additional considerations in respect of tax on Panel Awards for Customers who have been made bankrupt

  1. Set out below is the process through which a Customer will be compensated for the elements of tax that LBG will fund on a Panel Award. (If you received a Fixed Sum Award this is covered separately here.)
  2. If you have received a Panel Award you will receive a separate Tax Award in due course to increase the amount you have received to cover the tax assessed by the Panel as being payable by LBG.

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HMRC Guidance on UK tax treatment of Panel Awards

  1. The Panel have obtained guidance from HMRC on how different parts of the Panel Award should be treated for UK tax purposes. A copy of the HMRC Guidance and Addendum are below:
  2. The tax treatment and process described on this page assumes the Customer is a UK resident taxpayer. For a Customer resident or domiciled outside the UK, there may be implications both for UK tax and foreign taxation, and Customers are therefore required to disclose information about their current and historical residence and domicile for tax purposes as soon as possible.
  3. An explanation of which elements of the tax due will be funded and which will not be funded by LBG can be found here.

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The Panel’s Tax ‘Minded-to’ decision (‘Tax MTD’)

  1. For Customers who have received a Panel Award, the Panel will be issuing a separate Tax MTD, which will comprise our provisional conclusion on:
    1. the amount of the Tax Award; and
    2. the amount payable by LBG to settle the Tax Award, taking into account any interim payments made by LBG.
  2. The Tax MTD will include a clear explanation of the basis for it by reference to the HMRC Guidance. We will attach a spreadsheet with our calculations and state any assumptions. We will send the Customer and LBG our Tax MTD and will set a timetable for responses (see below for more detail of this Review stage).
  3. We expect the first Tax MTDs to be issued in Summer 2024.

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Customer/ Bank Tax MTD Review stage

  1. The Customer and LBG will each have the opportunity to review and challenge the Panel’s provisional Tax Award (as presented in the Tax MTD) to correct any errors or omissions or challenge any inappropriate assumptions. It is important that the Customer scrutinises the Panel’s calculations very carefully, not least because, if there is any mistake the Customer may end up having to pay more tax than was expected, leading to an unintended shortfall not covered by the Tax Award, which will not be recoverable from LBG.
  2. Funding is available to ensure Customers can obtain appropriate professional support for the purposes of reviewing the Panel’s Tax MTD (see guidance on professional funding available here).
  3. If both the Customer and LBG accept the Panel’s provisional decision and agree with the proposed Tax Award, then the Tax MTD will become our Tax Final Decision (‘Tax FD’). Ordinarily, but subject to our discretion:
    1. If the Customer accepts the decision but LBG raises objections, we will then give the Customer an opportunity to respond to LBG’s reasons. That response will be the final submission before we issue our Tax FD.
    2. If the Customer challenges the Tax MTD, but LBG accepts it, LBG will have the opportunity to respond to the Customer’s reasons.
    3. If both the Customer and LBG challenge the Tax MTD, we will then give the Customer the opportunity to comment on LBG’s submission and that again will be the final submission before the Panel issues the Tax FD.

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Panel’s Tax FD

  1. Once the Customer and LBG have each had the opportunity to challenge or respond to our Tax MTD, we will then review those submissions and produce our Tax FD, having taken all the arguments and information received to date into account. This decision will be ours and ours alone.
  2. The Tax Award set out in the Tax FD will be final and binding on both the Customer and LBG.

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Payment of Tax Award by LBG to the Customer

  1. Following the issue of the Tax FD LBG will pay the balancing amount due to the Customer (after taking into account any interim payments) to cover the final Tax Award as set out in the Tax FD.

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Payment of tax to HMRC by the Customer

  1. The Customer will be responsible for reflecting the Re-Review receipts in their self-assessment tax return and paying the correct amount of tax to HMRC by the relevant deadline(s).
  2. Note that the tax that the Customer is required to pay to HMRC in respect of the Re-Review receipts may not be the same as the amount calculated by the Panel in the Tax FD, but the Panel will make (favourable) assumptions about your other taxable income and allowances that will minimise the risk that the actual amount is higher than the Panel’s Tax Award. If the amount payable to HMRC is lower than the Tax Award, no refund to LBG is required.
  3. The reasonable costs of tax compliance advice related to completing (or amending) your tax return specifically to reflect the final Tax Award and its separate components as appropriate is covered by funding available for professional fees (see guidance on funding here).

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