BN66 - Time to fight back!!!

[malvolio]

I'm still intrigued by the reference to ECHR in realtion to offshore taxation. It was comprehensively thrown out by the Courts when IR35 was challenged under it, on the basis that it was entirely irrelevant, I still can't see how you think it now applies.

[smalldog]

Mal, if you look at the EU law it prohibits retrospective taxation for any of its member states under EHCR....

here is the governments fear of a case relating to a POTENTIAL retrospection in 2004 over a previous finance bill:

1.42 The concern which has been expressed about these provisions is that they amount to retrospective taxation, because taxpayers who undertook transactions up to 18 years ago will now be liable to a charge to income tax which was not contemplated when the transaction occurred, and that for this reason (or for some additional reason), the legislation may be in breach of Article 1 of Protocol No. 1 to the ECHR

hence the grounds for EHCR in this instance....

[ASB]

I'm still intrigued by the reference to ECHR in realtion to offshore taxation. It was comprehensively thrown out by the Courts when IR35 was challenged under it, on the basis that it was entirely irrelevant, I still can't see how you think it now applies.

I guess there are a number of reasons why it might. It is somewhat different to the IR35 JR. Some which might just work are that it is arbitrary taxation which is outlawed. The retrospective nature of it (and the penalties/interest)makes it an outlawed arbitrary punishment. A principle was recently established in a VAT case that notice is required for certain changes of interpretation. Also it is a bilateral treaty whic is being unilaterally reinterpreted. I am sure there are lods more reasons on which it might be challengable under ECHR.

I do doubt there is much chance of sucess though, but counsel would have a better opinion of that than you or I.

[smalldog]

and here is the killer section in the human rights act for the case against HMRC:

1.47 For an interference to be lawful under the second paragraph of Article 1 of Protocol No. 1, it must satisfy the qualitative requirements of accessibility and foreseeability:[36] the law which imposes the tax must be published, intelligible and generally available in a form which enables the individual to organise their affairs knowing with reasonable certainty the consequences of acting in different ways

the institute of chartered accountants has even said that HMRC has failed this one....retrospectivity removes this right hence it being a breach

oh and heres the link to this finance bill human rights debate from 2004....

http://www.publications.parliament.u...ts/93/9305.htm

[DonkeyRhubarb]

1 I know difficult to assess but how confident are MontP in getting a result via the JR? How will other companies be challenging this? Surely there cannot be multiple JRs on the same issue, so will they join forces?

I couldn't really tell how confident they were. They haven't mentioned other companies. I am still talking to PwC but they seem to be still trying to lobby parliament. MontP have not mentioned joining forces with anyone. However, others might enter the fray when the JR becomes public knowledge.

2 CTD - What is the best way to assess what your liability is for the amount to cover, I have previously posted 38%. As a precautionary measure will MontP be advising existing and past members what our liability would be?

I have had this question from a few people. In my case, I had a statement from HMRC a couple of years back telling me how much I'd owe at that time if they won, so it's easy for me to work out my liability just by adding on the interest since then.

I will have a word with MontP to see if they can come up with any rough formula for estimating the liability. Unfortunately, it's quite a complicated calculation so a "rule of thumb" estimate may not be good enough.

If you are already under enquiry then you could ask the Revenue for a statement, or wait until they send out the tax assessments in July/Aug.

If you are not under enquiry then I would not advise contacting them!

[smalldog]

if you havent had a letter from HMRC saying they are investigating your SA return within 12 months of filing then its a closed tax year and they cant come after you for anything.....

[malvolio]

and here is the killer section in the human rights act for the case against HMRC:

1.47 For an interference to be lawful under the second paragraph of Article 1 of Protocol No. 1, it must satisfy the qualitative requirements of accessibility and foreseeability:[36] the law which imposes the tax must be published, intelligible and generally available in a form which enables the individual to organise their affairs knowing with reasonable certainty the consequences of acting in different ways

the institute of chartered accountants has even said that HMRC has failed this one....retrospectivity removes this right hence it being a breach

oh and heres the link to this finance bill human rights debate from 2004....

http://www.publications.parliament.u...ts/93/9305.htm

OK, I unerstand where you're coming from. However, if you go back to HMG's contention that this is not retrospective but merely how the law always was and is now clearly explained, you could still struggle to make the case.

I also suspect that if you win the JR, you're heading for HoL and Europe for a final ruling because Hector will keep appealing until he gets the answer he wants.

[TheGadgetMan]

Hi Ive been on the boards for the past few days and thought it about time I joined in...

thanks to everyone for keeping me informed...without you guys I wouldnt have a clue about whats been going on...

background?...I was one of the first in the MTM Scheme back in 2001...stayed for 3 years and have been receiving all the standard threatening letters from HMRC ever since then...I remember someone saying back then that it could take between 5-7 years to resolve this...little did I believe that back then...but here we are in 2008...

anyway the events of last weeks vote in the HoC to tax people retrospectively was a total shock...the potential tax plus interest would pretty much wipe me out...

my question is, how confident are we really?...the arguments against charging tax retrospectively are pretty damning...smalldog's quotations that he has pulled from EU law are extremely clear...under EU law its hard to see how HMRC could win a court fight...and yet...and yet...and yet...

I feel like Ive been here before...I remember the IR35 JR...the judge totally slagged off HMRC - he brutally criticised them for the legislation and the way they were going about it...and yet he still found in their favour...

I have this horrible feeling that the same will happen here...a High Court judge will verbally lay into HMRC for introducing retrospective tax laws...he'll give a nod to the EU law...and then he'll find in favour of HMRC anyway...call me half glass empty...but thats how I feel...I would just love it to be proved wrong...

we'll win the moral victory...but HMRC will win the day cos its already received Royal Assent...

question here is...if you were HMRC, how would you counter Clause 1.47 that smalldog has pointed out above?...no wish to build HMRCs argument for them...but they will have to deal with this issue...how will they do it?...

smalldog...your statement about the SA investigations and the 12 month rule is not entirely right...HMRC came back to me and re-opened a year nearly 2 years after I submitted my tax return...talk about retrospective!!!

[normalbloke]

if you havent had a letter from HMRC saying they are investigating your SA return within 12 months of filing then its a closed tax year and they cant come after you for anything.....

They can if you haven't given enough info on your form. They are claiming putting 'Exemption claimed due to IOM Double Taxation treaty' is not enough info and they could not be expected to know the details. Of course the amount of description is somewhat arbitrary . So they have a right to re-open your return they claim. At least that is what is happening to those under investigation.

[smalldog]

Mal, dont disagree and I guess thats where the fun starts is it a purposeful misinterpretation or loophole. If it's a loophole on which clarity is required then dont see how it meets the "published, intelligible and generally available in a form which enables the individual to organise their affairs" rule. The inference in that case is that all loopholes must and should be ignored, and if you open up that pandoras box then how many other cases will be brought by HMRC against all and sundry

If its a wilful misinterpretation on the part of Montp but not on the part of the tax payer then who would be liable to pay, Mont or the scheme users? thats an interesting angle....and in which case do we as the scheme end users have a case against Montp....Lets not go down that road again for now..

If it were that straight forward HMRC wouldnt even bother fighting....I think HMRC not pressing the point and insisting we owe them money and rejecting our SA's from day one could be argued as not guiding in respect of "getting our affairs in order" regardless of the retrospection. But hey Im no barrister or coffee maker!