BN66 - Time to fight back!!!

[Likely]

Have you (yes you ) stepped away from Tax Avoidance Schemes after Budget Note 66 ? I have and am now monitoring forums for developments.

There are many contractors reporting that are being investigated. But none have posted an outcome - i.e if HMRC or the contractor themselves have won a case.

[DonkeyRhubarb]

Have you (yes you ) stepped away from Tax Avoidance Schemes after Budget Note 66 ? I have and am now monitoring forums for developments.

There are many contractors reporting that are being investigated. But none have posted an outcome - i.e if HMRC or the contractor themselves have won a case.

I stopped using the Montpelier scheme 4 years ago, shortly after I was put under investigation. Budget Note 66 seems to be specifically aimed at Montpelier, and will not apply to other arrangements.

As far as I can tell, most of the 1500+ contractors in the Montpelier scheme are under investigation. HMRC has not brought a single case to court, presumably because they were not confident of winning. Hence the reason why they are "clarifying" the law.

If BN66 gets passed and everyone in the scheme has to pay back the tax + interest penalties, then the adverse publicity this will generate within the Contractor community will more than likely put most people off using tax avoidance schemes altogether. In other words, it's a double whammy for HM Treasury which is presumably why they have taken such a drastic step to attack the scheme.

These schemes were always risky but now that the Government appear to be moving the goal posts, the risk/reward trade-off doesn't look so attractive.

[Likely]

I've chickened out of my provider. They only serve few contractors , they claim which they think makes them safe(er) from investigartions. I agree the risk of investigating is smaller than Montpelier , but..... they look unprofessional/dodgy ( you deal with that type of people in this area) and they have not signed up to the Tax Avoidance Disclosure rules. This is helping them stay low , but if challenged someday that is going to be another black mark... They are not quite explaining to clients how exactly their scheme works , except the usual - "It was validated by Tax Advisors".

[ChimpMaster]

I've chickened out of my provider. They only serve few contractors , they claim which they think makes them safe(er) from investigartions. I agree the risk of investigating is smaller than Montpelier , but..... they look unprofessional/dodgy ( you deal with that type of people in this area) and they have not signed up to the Tax Avoidance Disclosure rules. This is helping them stay low , but if challenged someday that is going to be another black mark... They are not quite explaining to clients how exactly their scheme works , except the usual - "It was validated by Tax Advisors".

How can they avoid the Tax Avoidance Disclosure?

[DonkeyRhubarb]

How can they avoid the Tax Avoidance Disclosure?

You only have to disclose Avoidance schemes not Evasion schemes

Perhaps they've found a loophole in the definition of what constitutes a "Tax Avoidance Scheme" so they can avoid disclosing it.

[Likely]

How can they avoid the Tax Avoidance Disclosure?

Their scheme is based on 2 companies. One off-shore ( Honk Kong based ) which owns a UK Limited. Money get loaned to contractors from the HK based company(or from some offshore Trust arrangement ). As far as I see it , this-type of arrangement minimizes Tax , hence it is Tax Avoidance so in my opinion it should be disclosed.. However on my question if they have Disclosure number he replied some-nonsense. His answer basically meant - yes I know of the disclosure rules bet we don't follow.... ( I think they do it to stay below radars )

On another note -I have not been able to understand how they ( scheme providers ) divert funds offshore. I have read a Double Taxation Treaty. I also remember reading somewhere on the HMRC site that " even though an off-shore company owns a UK limited , still the revenue generated by the UK limited from operations in the UK will be subject to UK taxes ( corp taxes ) even though the offshore company owns the UK one". I think scheme providers go around this on the basis that international companies are taxed based on where the management ( HQ ) is located. Hence they purport the management resides offshore.. ( Does any one have a link to law about this ? )

I would presume the scheme provider fills annual returns to HMRC. These returns will show that funds were sent off shore because the 100 % Shareholder is an Off-shore company. So if the HMRC encounters such tax return , they will be alarmed anyway..... ( without the provider registering to the Disclosure Rules. )

[BrilloPad]

I think you are mistaken Mal, although I am sure (as usual) you will insist you are right - I have notes someplace on a treasury committee meeting which says that they don't understand why HMRC didn't do anything about the loophole sooner... I will post a link when I am out of holiday mode - tuesday probably

http://www.publications.parliament.u...sy/430/430.pdf

page 70 (of the pdf)

beat you to it!!!!!

[DonkeyRhubarb]

I'm waiting to see how the Government responds to this and whether they tell the truth. They have been investigating the MTM scheme for over 5 years, and it sounds like they've turned a blind eye to property developers using this loophole for even longer.

(Hector, if you are reading this, we will be on the lookout for any porky pies!)

We are concerned by the suggestion that the Government has known about this abuse for some time and yet has failed to act. We recommend that the Government set out, in its response to this Report, when it
was first alerted to the abuse, why action was not taken earlier and why it considers a 21–year period of retrospection appropriate.

[BrilloPad]

Looks like HMRC will have to take the hit and move on- what a bunch of muppets.

[naijamanuk]

Looks like HMRC will have to take the hit and move on- what a bunch of muppets.

Why do you say this?

Does BN66 prevent anyone joining a DTT scheme now??