Aml pbt 2011/12 hmrc

[webberg]

[I]

5. the 18% paid to AML (if that's what it is) is NOT tax deductible.
I thought as much ... HMRC 'tactics' to wind us up and provoke a response!

No it's not.

Expenses that are tax deductible against salary must be incurred "wholly, exclusively and necessarily" in the performance of the duties.

A tough hurdle and one that is very limited in practice.

Expenses that are tax deductible against profits must be incurred "wholly and exclusively" in the course of earning profits. That might be easier, but HMRC don't argue that the loans are profits.

Expenses that are tax deductible against "other income" have to be directly attributable to that income. Again a high hurdle but perhaps possible.

The costs of tax advice, tax mitigation, tax planning are NEVER allowed. Aside from various tax cases on the issue, tax is seen as a personal issue and it is almost inconceivable that the cost of a personal matter will ever be tax deductible against salary (not "necessary"), profits (not a business cost) or other income (not directly attributable).

None of this is new. This is solid tax law and has been for decades.

[webberg]

[I]
GET ADVICE AT A PERSONAL LEVEL

The problem with getting advice is that I do not have the full detail of the AML scheme. I have asked questions and requested copies of counsel advice / opinion etc. but AML are hiding behind legalities saying that for legal reasons these cannot be divulged but I was welcome to attend their offices to view them ... fobbing off if you ask me.
Are we legally entitled to see the full detail of the scheme so that we can appoint our own legal repesenative if neccessary? .. or conversely if I appoint a solicitor is he entitled to request them from AML? I would like an independent opinion of the AML scheme and the likelihood of it being successfully challenged so that this will inform whether to bite the bullet and pay up to avoid penalties or to continue the fight.

AML are correct in that making a QC opinion available risks losing legal privilege and if that happens, HMRC might be able to see it, which is like starting the cup final 2-0 down.

You are entitled to read the opinion and your representative is also (probably) able to read it. Any decent professional would not need a copy of it to extract the detail and key issues.

The best way of resolving this is to ask AML.

[webberg]

[I]

I've previously said that whilst I'm glad AML are still in there pitching, it's unclear who they are acting for and whether they see you as a client they are representing or a customer they are selling things to. Very different relationships.
AML are making the right 'noises' but who are they acting for: themselves, keeping HMRC 'sweet' (to keep them off their backs) or their clients. They are acknowledging queries but not really responding to them. I've had 3 responses recently sayimng that they haven't forgotten about me and will respond in due course ... but nothing yet. I appreciate that they must be run off their feet at present but their clients are being left in the dark. They are not being pursued for tax (as far as I am aware) nor being accused of doing anything illegal. Presumably they have accounted for their 'take' correctly so my concern is what is in it for them to continue to incur admin costs and future legal costs of defending the scheme apart from losing clients .. but who in their right mind would join the scheme in the current climate?
... so bottom line what have they to to gain or lose defending/not defending the scheme?

Again, you'd have to ask AML for their motives and make a judgement.

They probably have a strategy and whilst they may not be willing to make that public, you can ask questions to try and get to that.

If they defend the scheme successfully, they'll be the only show in town (at least until their scheme is copied) and stand to make a fortune as having a scheme that works. My bet is HMRC will change the law again in that event but there is a window of opportunity.

If they defend the scheme unsuccessfully then the next iteration they produce will have the "benefit" for new users of knowing AML will stand their corner.

If they start a defence and then give up before the denouement, they stand to lose credibility and clients. Don't forget that for as long as contractors use their scheme, they get paid.

I'm hoping therefore that their thought process is along the above lines.

Whichever of those strategies is right, AML are doing this for themselves.

If you want INDEPENDENT assessment, you need to look outside AML.

[webberg]

1. Appeal and request payment is postponed
2. Collect and organise whatever paperwork and emails you have to support your appeal
3. Throw nothing away

Not sure about contacting AML or where best to get professional help - anyone else care to comment?

Definitely contact AML and let them know.

Any decent professional adviser would be able to help.

Some have specialist knowledge and Big Group is one such