HMRC's top ten tips for contractors

[webberg]

https://www.gov.uk/government/public...r-loan-schemes

The above was published last week.

I recommend you read this and commend the fact that, 10 years after they should have done something, HMRC is trying (weakly) to be proactive.

However, I think you then need to be aware that the "Guidance" is in some places (in my opinion) incorrect and in other places is making threats that would be action only in the most severe of criminal cases.

I'm sure this will bring a lot of opinions. I have made mine available to Big Group for now and will post them here in a week or so. Or you can PM.

[Nocaster]

https://www.gov.uk/government/public...r-loan-schemes

The above was published last week.

I recommend you read this and commend the fact that, 10 years after they should have done something, HMRC is trying (weakly) to be proactive.

However, I think you then need to be aware that the "Guidance" is in some places (in my opinion) incorrect and in other places is making threats that would be action only in the most severe of criminal cases.

I'm sure this will bring a lot of opinions. I have made mine available to Big Group for now and will post them here in a week or so. Or you can PM.

read it. Is that horse I can hear in the distance, now that they're closing the stable door..

[DonkeyRhubarb]

The law of unintended consequences

I think HMRC may, rightly, fear that the schemes are about to get a second wind.

APNs have killed off the DOTAS reporting regime. From now on, schemes will not be disclosed. Everything will be opaque. Usage will be much harder for HMRC to detect.

The latest onslaught on contractors (T&S, divi tax, revised IR35) will be music to the ears of the scheme promoters.

If I was a ruthless, unconscionable bastard, I might start up a scheme myself. It's easy money, and virtually all the risk is on the users.

[WTFH]

Surely their top two tips should be:


1. Become a global business, we won't chase you for tax.
2. Become an MP, we won't chase you for tax.

[Fred Bloggs]

I think HMRC may, rightly, fear that the schemes are about to get a second wind.

APNs have killed off the DOTAS reporting regime. From now on, schemes will not be disclosed. Everything will be opaque. Usage will be much harder for HMRC to detect.

The latest onslaught on contractors (T&S, divi tax, revised IR35) will be music to the ears of the scheme promoters.

If I was a ruthless, unconscionable bastard, I might start up a scheme myself. It's easy money, and virtually all the risk is on the users.

The writing is on the wall for all to see. The schemes will not be killed off they will go underground. If a user declares a reasonable salary through PAYE, the chances of being caught as a scheme user will be almost zero.

[webberg]

An underground scheme once discovered (and they will be), will have the proverbial domestic appliance with taps and several yards of plumbing thrown at it. Penalties are a certainty.

where will the providers and their "QC opinions" be then?

Watching from afar.

[webberg]

If I was a ruthless, unconscionable bastard, I might start up a scheme myself. It's easy money, and virtually all the risk is on the users.

I'm told that HMRC consider the provider to fall within the POTAS disclosure rules. Not that it will make much difference to be honest.

[NotAllThere]

HMRC wins around 80% of avoidance cases that the taxpayer chooses to take to court

I want to know about the schemes within the 20% they lost...

[DonkeyRhubarb]

HMRC wins around 80% of avoidance cases that the taxpayer chooses to take to court

That statement is so loaded, I don't know where to start with it.

If only HMRC were as good at administering tax as they are at spin...

[webberg]

I want to know about the schemes within the 20% they lost...

The 80% is a lie and ergo, so is the 20%.

the win ratio is arrived at by combining results at all levels of the tribunals and Courts. If you strip the FTT and UT results then the ratio starts to return to 50/50.

There is little consistency and often comes down to how much personal sympathy the judge might have for the claimant.

There are a couple of cases where a con man ran an operation in which you could invest with him to buy expensive shotguns. When he "sold" them, he encouraged you to reinvest the proceeds in new guns. It was a Ponzi scheme. However for tax purposes, you made an investment, made a profit and that's taxable. the fact that you reinvested was a choice.

HMRC raised assessments even though victims never saw the cash. two investors went to Court to challenge the tax bills in two separate cases. The first guy lost on the grounds that he was a businessman who could/should have spotted the scam and was being greedy. The second guy looked doomed. However either he was in the same Lodge as the judge (a different judge) or he played the "poor innocent" very well and the judge held that HMRC should apply a discretion which meant no tax due.

So a bit like statistics, you can take your choice of which was correct and in the above case my suspicion is that the HMRC win is within the 80% value, but the loss is not as it was HMRC being told to apply a discretion.

Life is seldom fair.