BN66 - Time to fight back!!!

[SantaClaus]

I don't think it would cost as much as £400,000 - maybe about a tenth of that.
We need a website to present our case initially.
We could use this site to collect payments to fund advertising.

My only concern is that it may be too late for this sort of action. Even if we can embarrass the government; what can they do about it now? Has it not gone through the parliamentary process already and received the approval (committee vote and royal ascent)? Is it not too late to reverse the decision?

If anybody hasn't yet read the Hansard record from THAT Finance Committee meeting - please have a good look: http://www.publications.parliament.uk/pa/cm/cmtoday/cmstand/output/pbc089/pb080522p-01.htm

Just had a look at Hansard. These two statements say it all really:

Mr. Gauke: The Minister says that in the opinion of HMRC, the clause merely clarifies the existing law, and that there has been no litigation. That is presumably because HMRC has not pursued litigation. If HMRC is so confident that the measure merely clarifies the law—I am not making a case one way or the other—why is it not bringing litigation against the users of the scheme? (because either a law is clear in the first place or its not )

Jane Kennedy: Because the opportunity arises to deal with the matter through legislation and to make it clear (but wouldnt that be new legislation Jane? Surely legislation should be black and white ) that, as HMRC already believes, the scheme does not work. The change that we are making has already had an impact on the number of notifications of the scheme. As I said, there is a risk to the Exchequer on the scale of millions of pounds.

I dont see how the revenue can win this argument. I want to book a seat now (hello Mr Brannigan ) so I can watch this episode of Fawlty Towers play out in the high court.

[DonkeyRhubarb]

DR, I know there is hope that the JR will do the right thing, but remember IR35, the JR gave hmrc a bollocking, but still it went thru.....

IR35 was completely different. There was nothing illegal about it. Unfortunately, you can't stop a democratically elected government introducing prospective legislation even if a significant minority disagree with it. If they had tried to apply it retrospectively then that would have been a different matter altogether.

Our argument now is that they have acted illegally by infringing our rights, and
taking them to court is the best way to deal with this. The time to draw public/press attention to this is when it gets to court and it becomes a civil liberties argument rather than a debate about wealthy individuals avoiding tax.

[Emigre]

DR, I know there is hope that the JR will do the right thing, but remember IR35, the JR gave hmrc a bollocking, but still it went thru.....

The JR was right, history has proven that. Just a shame that the cowards in Government won't admit publicly the cost to the taxpayer of all the lost IR35 cases. At just £100k each (assuming they paid defendants costs as well) the cost would run close to £200million. Doubtful whether tax recovered has reach £1m yet.

Some honesty from Government would be good. This is ground to shame them and to encourage them to think twice about another shoddy bit of legislation.

[DonkeyRhubarb]

Just had a look at Hansard. These two statements say it all really:

Mr. Gauke: The Minister says that in the opinion of HMRC, the clause merely clarifies the existing law, and that there has been no litigation. That is presumably because HMRC has not pursued litigation. If HMRC is so confident that the measure merely clarifies the law—I am not making a case one way or the other—why is it not bringing litigation against the users of the scheme? (because either a law is clear in the first place or its not )

Jane Kennedy: Because the opportunity arises to deal with the matter through legislation and to make it clear (but wouldnt that be new legislation Jane? Surely legislation should be black and white ) that, as HMRC already believes, the scheme does not work. The change that we are making has already had an impact on the number of notifications of the scheme. As I said, there is a risk to the Exchequer on the scale of millions of pounds.

I dont see how the revenue can win this argument. I want to book a seat now (hello Mr Brannigan ) so I can watch this episode of Fawlty Towers play out in the high court.

Exactly. I believe the point of law is on our side and that the courts will find that the government has acted illegally.

[Emigre]

Our argument now is that they have acted illegally by infringing our rights, and
taking them to court is the best way to deal with this. The time to draw public/press attention to this is when it gets to court and it becomes a civil liberties argument rather than a debate about wealthy individuals avoiding tax.

I agree but the problem is one of organising a disparate group of people into an effective unit that can act appropriately at the right time. That effort needs to happen now not once in Court or the real opportunity could be missed.

[ASB]

That retrospection

I think you'll struggle to get any real sympathy. In terms of the treaty abuse I beleive that these schemes only started being offered in 2003 - after the EBT change were made to make EBT loans to employees ineffective. So, in terms of retropsection this is as far back as it might have any impact.

In 2004 the "avoidance industry" was put on notice that any scheme which eventually fails will have it failure backdated to 2004. I certainly agree that it is distasteful, but it does seem to me that this gives a degree of certainty.

The period in question is therefore 1987-2003 for property developers, 2003-4 for treaty/loan based schemes.

I think it's going to be very difficult to find general sympathy and the only real hope would be the legal route. It's not impossible that loan based scheme users will win (see Sempra). The only other hope seems to be ECJ - under the general taxation principles - but does anybody have the time and resourses to get a case there?

[SantaClaus]

Exactly. I believe the point of law is on our side and that the courts will find that the government has acted illegally.

I think DonkeyRhubarb that while the govt. are under attack on other taxes such as the 10p tax and the "retrospective car tax", the media and Conservative party would be very interested in our case.

[SantaClaus]

In 2004 the "avoidance industry" was put on notice that any scheme which eventually fails will have it failure backdated to 2004. I certainly agree that it is distasteful, but it does seem to me that this gives a degree of certainty.

What form did this notice take, ASB? Was it legislation or just a statement that the Inland Revenue communicated?

If there is legislation that specifically rules that failed schemes can be backdated to 2004 then I would be worried. If it is just that the scheme is under formal enquiry as mentioned below the I wouldnt be bothered.

Time to start planning that trip to Panama

[DonkeyRhubarb]

I think you'll struggle to get any real sympathy. In terms of the treaty abuse I beleive that these schemes only started being offered in 2003 - after the EBT change were made to make EBT loans to employees ineffective. So, in terms of retropsection this is as far back as it might have any impact.

In 2004 the "avoidance industry" was put on notice that any scheme which eventually fails will have it failure backdated to 2004. I certainly agree that it is distasteful, but it does seem to me that this gives a degree of certainty.

The period in question is therefore 1987-2003 for property developers, 2003-4 for treaty/loan based schemes.

I think it's going to be very difficult to find general sympathy and the only real hope would be the legal route. It's not impossible that loan based scheme users will win (see Sempra). The only other hope seems to be ECJ - under the general taxation principles - but does anybody have the time and resourses to get a case there?

Your timelines are a little bit out.

The Montpelier (treaty) scheme started in April 2001. First SA returns (2001/2) were filed in January 2003. The scheme has been under formal enquiry by HMRC since June 2003 (5 years!).

[Emigre]

In 2004 the "avoidance industry" was put on notice that any scheme which eventually fails will have it failure backdated to 2004. I certainly agree that it is distasteful, but it does seem to me that this gives a degree of certainty.

I understand where you are coming from. The problem here is that HMRC have refused to test the scheme in Court based on the legislation and case law existing at the time and are seeking to circumvent the right and proper judicial process by retrospective changes. Thus there is NO certainty.