BN66 - Time to fight back!!!

[Emigre]

Am wondering when we win the JR whether we can take them to court for stress/suffering etc caused by their illegal actions ;-)

Take a look at the attached article, today:

http://www.accountingweb.co.uk/cgi-b...%20%25B%20%25Y

[BolshieBastard]

Its important to remember how most people on the MP scheme arrived there. I got there through looking for an alternative approach as a result of the uncertainty arising from the poorly worded legislation called IR35. Nearly all of us were there once.

There is no need to be divisive or unsupportive of those in fear of Hector attacking their IR35 status. What we all want is good quality tax legislation that gives us reasonable reward for the added risks and above all, some certainty over our affairs. Yeah, ok, it would be great too if Hector could be just a little bit reasonable.

The Dragonfly decision may not be what the contractor community wants to hear, and sure we feel sorry about him having to pay the 100k, but it will add some more clarity to contractor's contractual situations.

I have great sympathy with the Dragonfly owner \ director. It is frightening to have to think where one would get nearly 100K from. I too, plumped for MP with the introduction of IR35.

However, the only clarity from the latest set back is that HMRC are now in a far stronger position regarding IR35 while ours has become significantly weaker. Previously HMRC had lost many IR35 investigations. Now, they have an HC ruling. To get that overturned means a trip to the HoL and if that went against Dragonfly, heaven help us.

Regarding insurance, yes I appreciate some pay premiums to be 'protected' from the effects of an IR35 loss. But, that was before the HC ruling. Will the ins co's pay out now seeing as there has been a material shift in the legal validity of the basic tennants we've used to successfully defend IR35 in the past?

Im very doubtful given the ins co's history of trying to wriggle out of paying up when they should do. In any event, expect to see significant rises in anti IR35 premiums and probably, more applications for such insurance being rejected by the ins cos who offer such protection.

A jaundiced view I know but, with IR35, S660 and MP's scheme being undermined by retrospective legislation, what do you expect?

[Ratican]

...It is frightening to have to think where one would get nearly 100K from.

Yeah! Tell me about it....

[toaster]

FX: Hand goes up

103,882 views now, thats 120 in the last hour

If you are a scheme member and have not yet registered or posted, make yourself known now, lets see how many of us there are

Maybe late in the day but a hand goes up here - I was in the scheme back in 2003 (I think) had a break and then have been back in it during the last 3 years (and still am).

I appreciate all the sense talked in this forum (and disregard the noise of various sorts). I am not a lawyer and this looks like a good time for clever lawyers to earn their fees.

FWIW I've not squirrel away the sizeable 5 figure sum (by my guesstimate) that HMRC would like to think I owe them and while I'm not about to take up canoeing off NE England, nor the excessive warming of my home and family that others have done of late, I'd find it pretty difficult to meet any demands should I be deemed liable.

As others have said - we now just have to take whatever sensible actions help our case and let those who have the right skills fight the battle. While I confess I really don't understand how the MP schemes have been constructed, and the paper trail is almost non-existent, I have found them to be professional when I have had dealings with all their staff and consequently have no reason right now to doubt the high level of trust I place in them.

Mr T

[Hawkwind]

Yeah! Tell me about it....

Make that £150k+ if MP lose

[WhatEver]

Finance Bill 2004 - Retrospective legislation

Hi

I've been reading with interest since the beginning so thx to all for the info so far. I believe we'll win given this is such an obviously underhand and illegal attempt to win their argument. The upside is they've essentially admitted they didn't have a leg to stand on in the first instance so they resorted to a government sponsored theft - in hindsight, we should've seen it coming given Nu-L's track record of incompetence and shoddy legislative . Fyi, I've sent a verbose letter to my MP explaining the whole situation and requesting what the Conservatives would do once back in office.

I know this subject has been touched on recently but here's some more detail/opinion.

Anyway, I was trawling around and found some interesting info w/rgds retrospective tax. My main point of interest is that the Finance Act 2004 tries to put in place an enabler for the govmt to enact such legislation back dated to the announcement - 2 Dec 2004. Whilst this did make law the arguments as whether even that would be legal are questionable….

HoC research paper...
http://www.parliament.uk/commons/lib...5/rp05-067.pdf

Interesting points from pg 14-20

Page 27…

B. Retrospection and human rights
In evidence to the Treasury Committee in December 2004, John Whiting at PwC
suggested that the Paymaster General’s statement on forthcoming avoidance legislation
“does have very interesting human rights implications”:

There is never any objection to the Government, the Minister, standing up and
saying, "As of today, we are going to block such and such", so let's get that clear,
that is known. The idea that you can stand up and say, or put a written statement
down and say, "Right, if something turns up in the future, we don't know what it is,
but we reserve the right to come back to today and basically change the way the
tax law operates', let's be clear, the system of tax we have in this country is that
you are taxed on the basis of what the law says. If, therefore, there is a possibility
of retrospectively altering your tax bill, then it does have very interesting human
rights implications and it has been mooted that this idea of retrospection could
now be vulnerable to human rights challenges if we go that far.76

Anne Redston at Ernst & Young discussed the issue at more length in written evidence
to the Committee:

This is a radical new departure for the UK, which has for centuries accepted that
tax cannot be levied unless parliament has passed specific legislation authorising
its collection. This principle was set out by Lord Simonds Scott v Russell (1945)
30 TC 375 at 424: "My Lords, there is a maxim of Income Tax law which, though
it may sometimes be over-stressed, yet ought not to be forgotten. It is that the
subject is not to be taxed unless the words of the taxing statute unambiguously
impose the tax upon him."

It is a principle with deep roots, deriving essentially from the Magna Carta. As
Simon Sharma puts it in his History of Britain: "The Magna Carta . . . spelled out
for the first time, and unequivocally . . . that the law was not simply the will or
whim of the king but was an independent power in its own right." The history of
democratic government in Britain has, as one of its fundamental themes, the
establishing of the right of citizens not to be taxed by government fiat, but by the
clear words of statute, following the introduction of specific legislation agreed by
parliament. The statement of the PMG suggests a departure from that
fundamental principle …

Article 1 of Protocol No 1 to the Human Rights Convention provides that: "Every
natural or legal person is entitled to the peaceful enjoyment of his possessions.
No one shall be deprived of his possessions except in the public interest and
subject to the conditions provided for by law and by the general principles of
international law. The preceding provisions shall not, however, in any way impair
the right of a State to enforce such laws as it deems necessary to control the use
of property in accordance with the general interest or to secure the payment of
taxes or other contributions or penalties."

Contracting states thus have a wide margin when collecting taxes (Svenska
Management Gruppen AB v Sweden, Application 11036/84, 45 DR211 [1985]),
but this is subject to an interference that they must achieve a "fair balance"
between the demands of the general interest of the community and the
requirements of the protection of the individual's fundamental rights and that
there must be a reasonable relationship of proportionality between the means
used and the aim pursued, see AGOSI v the United Kingdom, 1986, Series A no
108, p 17, para 48.

In the Sunday Times v UK [1979-80] 2 EHRR 245 at 271, para 49, the European
Court of Human Rights gave its opinion that: "A norm cannot be regarded as a
‘law’ unless it is formulated with sufficient precision to enable the citizen to
regulate his conduct: he must be able—if need be with appropriate advice—to
foresee, to a degree that is reasonable in the circumstances, the consequences
which a given action may entail. Those consequences need not be foreseeable
with absolute certainty: experience shows this to be unattainable. Again, whilst
certainty is highly desirable, it may bring in its train excessive rigidity and the law
must be able to keep pace with changing circumstances. Accordingly, many laws
are inevitably couched in terms which, to a greater or lesser extent, are vague
and whose interpretation and application are questions of practice."

If the principle of retrospection set out in the Paymaster General’s statement is
enacted, it is likely that it will be tested in the European Court of Human Rights, in
order to ascertain whether the citizen can "foresee, to a degree that is reasonable
in the circumstances, the consequences which a given action may entail". It
seems, on the bare words of [this] ... statement, that the new principle would fail
this test.77

Ms Redston concluded that “the proposed new powers are a fundamental departure from
the tax principles established over many centuries in Britain; they are unnecessary, as
the disclosure rules are proving successful, and they will place an intolerable burden of
uncertainty on ordinary taxpayers who will not know if or when the government will
decide that certain arrangements are unacceptable.”78

When he appeared before the Committee its chairman John McFall, asked the
Chancellor “is this not retrospective legislation and do you think you can act in this way
and stay within the Human Rights Act?” The Chancellor replied:

Well, I think that is, in my view, not an acceptable way of proceeding. If it is
accepted that there is a loophole which has got to be closed, whether it is of a
specific nature or in a number of different areas, then it should be closed
immediately. If people are not going to act in a way that allows it to be closed
through the Finance Act legislation, we just said that we would insist that it would
be from the date of the Pre-Budget Report, and I think that is perfectly
reasonable. Once you accept that a scheme is wrong, that as a form of
avoidance it is unacceptable, then I think it is reasonable to close it on the day
you have announced that you want it to stop. We are confident, I may say, that
this does not conflict with the ECHR.

Chairman: And you do not think that you will be breaching the Human Rights
Act?

Mr Brown: Well, I think the basis of the European Convention on Human Rights
is that it gives a government the power on behalf of the tax-paying public to raise
taxes in a fair and proportionate way.79

For its part the Committee observed that the question could “only finally be tested as and
when the Government introduces any legislation on the basis of the announcement.”80

[TheGadgetMan]

Phew! There's some pretty damning stuff amongst that lot, in our favour...

<snip> how do you feel about betraying the basic tenets of the Magna Carta?...you must be real proud of yourself...

[SantaClaus]

I have great sympathy with the Dragonfly owner \ director. It is frightening to have to think where one would get nearly 100K from. I too, plumped for MP with the introduction of IR35.

However, the only clarity from the latest set back is that HMRC are now in a far stronger position regarding IR35 while ours has become significantly weaker. Previously HMRC had lost many IR35 investigations. Now, they have an HC ruling. To get that overturned means a trip to the HoL and if that went against Dragonfly, heaven help us.

....

A jaundiced view I know but, with IR35, S660 and MP's scheme being undermined by retrospective legislation, what do you expect?

There is a huge difference between Dragonfly's case and ours. In our case, HMRC are trying illegally to change a tax law retrospectively. Dragonfly lost the case under existing law. We have an almost irrefutable case based on black and white. Dragonfly had a case based on shades of woolly grey.

That is a very big difference and why I am so glad I never went the Ltd company route and exposed myself to IR35.

Maybe if <snip> really wants some money, he could try retrospectively applying IR35, to.., lets say.... the beginning of time?

[lijl1971]

Hi guys.

I too have been lurking for some time. I joined Montpelier mid 2007 and am yet to have my first tax return filed by them. Not surprisingly, I have been a little perplexed by the retrospective element.

Can I just say; I think Montpelier are great. Everything just works. All I have to do is submit time sheets and provide some info for tax returns. True there is not much difference in terms of take-home at the end of the day. The alternative is an administrative nightmare with the chance of being shafted by HMRC for IR35 or their next little piece of legislation to ensnare two-man limited companies.

Initially I thought of leaving them and going back to running a ltd. However, the more I have researched the issue, the more I realise what a bunch of piss takers HMRC are. After speaking to Montpelier some time ago, I learned the test cases being brought before the special tax commission (or whatever it's called) have been dropped by HMRC. This is all thanks to their new dragnet of retrospective penalty. I.e. they knew they didn't have a hope in hell of defending their stance because the laws were hopelessly flawed.

For me, this is a matter of principle now. I intend to stick by Montpelier. I hope for the sake of every single contractor that they win. There are some serious principles on the line here - not just for those who have made use their tax planning. In fact, I am also starting to think they have a fighting chance.

Anyway. I had to post to be able to subscribe to the thread, so there you have it...

[SantaClaus]

I was a bit bored, so I thought I would set some weekend tax law homework for <snip>

Thanks to "Whatever" for the wording in an excellent previous post. 500 lines written in your best handwriting. I will start you off with the first 4:

A subject is not to be taxed unless the words of the taxing statute unambiguously impose the tax upon him
A subject is not to be taxed unless the words of the taxing statute unambiguously impose the tax upon him
A subject is not to be taxed unless the words of the taxing statute unambiguously impose the tax upon him
A subject is not to be taxed unless the words of the taxing statute unambiguously impose the tax upon him...........

I expect to see these on my desk on Monday morning. Or you can post them to me with my closure notice if you like.

Next week, we will cover the Magna Carta.