BN66 - Time to fight back: Continued

[deckster]

Clause 55 therefore is a provision that clarifies this situation and enables taxpayers to avoid lengthy and fruitless litigation[/I]

It's late but am i missing something here, the quote from the link misses the word "fruitless". So now corrected, this implies they're admitting they'd have lost the court case - yes??

Not the way I read it...they're saying that taxpayers can avoid fruitless litigation, ie they think we would have lost anyway. Of course that's rubbish, but sadly even the government aren't stupid enough to admit that.

I try to remain positive, really I do, but I just don't see how it is relevant how underhand, duplicitous and dishonest HMRC have been. We all know they're a bunch of stinking weasels, but the only way the JR is going to succeed is if we show that legally they cannot do what they have done - morality and reasonableness doesn't come into it. All this talk may make us feel better but I really don't think it will have any bearing on the case at all.

[SantaClaus]

Not the way I read it...they're saying that taxpayers can avoid fruitless litigation, ie they think we would have lost anyway. Of course that's rubbish, but sadly even the government aren't stupid enough to admit that.

I try to remain positive, really I do, but I just don't see how it is relevant how underhand, duplicitous and dishonest HMRC have been. We all know they're a bunch of stinking weasels, but the only way the JR is going to succeed is if we show that legally they cannot do what they have done - morality and reasonableness doesn't come into it. All this talk may make us feel better but I really don't think it will have any bearing on the case at all.

I think this case is about the legality AND morality of what the govt. are doing, hence their infringement of Human Rights legislation.

[onyx]

Public / Media Support?

Thanks to everyone for the particularly informative posts this week. I'm lagging a couple of days on the debate about how our story might be perceived by the public if we received media attention so apologies in advance for this late post...

Well, I've had plenty of sympathy from fellow contractors but very little from permies I work with. However, when I mentioned that I planned on making a 10% donation to charity once I had confidence that the scheme had proved successful, that did cause them to change their tune somewhat. Overall, I'm not convinced that the media would paint a favorable picture for us as it would sell more papers to portray us as fat cats who think that the "credit crunch" is a new cereal from Kellogg's. Look at the recent coverage of the family of Afghan refugees living in a "mini mansion" in West London courtesy of their local council - outrageous? Yes. Their fault? No. I'm pretty sure we'd be vilified in a similar manner.

With regards to the property developers - although they are affected by BN66 on paper, are HMRC actually targeting them in practice or turning a blind one and just focussing on MP clients only? It would strike me that the change in retrospection of BN66 originally from 1987 to 2002 (I think I've got the dates right) infers that HMRC are primarily interested in MP clients.

I'm confident that this will have a happy ending for us all in the end but we just need to be patient and anticipate bully boy tactics from HMRC along the way... Either way, I'm not going out quietly

[BrilloPad]

I'm confident that this will have a happy ending for us all in the end but we just need to be patient and anticipate bully boy tactics from HMRC along the way... Either way, I'm not going out quietly

[DonkeyRhubarb]

but I just don't see how it is relevant how underhand, duplicitous and dishonest HMRC have been. We all know they're a bunch of stinking weasels, but the only way the JR is going to succeed is if we show that legally they cannot do what they have done - morality and reasonableness doesn't come into it. All this talk may make us feel better but I really don't think it will have any bearing on the case at all.

The government accepts that retrospective legislation is only resorted to in exceptional circumstances. In their words it has to be justifiable.

If, as they claim, they only became aware of the extent of it last year (2007), then it might be reasonable to consider retrospection. However, if it can be shown that HMRC have had hundreds of tax returns under enquiry as far back as 2003 then this argument disappears.

The number of returns under enquiry in 2003 (first year) was about 150. By the following year 2004, it had already jumped to 400+. How can they justify retrospection when they could have closed it down at any time since 2003?

You say it's not relevant that they lied but it is if that lie is one of their main arguments for applying retrospection.

Later in Jane Kennedy's letter she states:

The Government must be able to combat the most aggressive and abusive avoidance schemes on occasion with retrospective effect. Without this option, such schemes would be allowed to continue during often lengthy litigation.

This is not true. If the government had legislated more quickly, then the scheme would not have been allowed to continue.

[Emigre]

The government accepts that retrospective legislation is only resorted to in exceptional circumstances. In their words it has to be justifiable.

If, as they claim, they only became aware of the extent of it last year (2007), then it might be reasonable to consider retrospection. However, if it can be shown that HMRC have had hundreds of tax returns under enquiry as far back as 2003 then this argument disappears.

The number of returns under enquiry in 2003 (first year) was about 150. By the following year 2004, it had already jumped to 400+. How can they justify retrospection when they could have closed it down at any time since 2003?

You say it's not relevant that they lied but it is if that lie is one of their main arguments for applying retrospection.

Later in Jane Kennedy's letter she states:

The Government must be able to combat the most aggressive and abusive avoidance schemes on occasion with retrospective effect. Without this option, such schemes would be allowed to continue during often lengthy litigation.

This is not true. If the government had legislated more quickly, then the scheme would not have been allowed to continue.

You can be on my team. I heard there might be a litigation support contract available in The Strand shortly

[normalbloke]

Sorry to labour this point but I think the timelines could be one of the main chinks in HMRC's case.

If the main justification for making the legislation retrospective was that it's "unprecedented scale" was only "revealed" by the "disclosure regime" in 2007, and that it "enables taxpayers to avoid lengthy litigation", then this argument is fundamentally flawed.

HMRC have known about the growing use of the scheme since 2003. They have had hundreds of returns under investigation for 5 years. They had no trouble spotting DTA claims prior to the disclosure regime because very few people escaped their net. My guess is that they must have had at least 1000 people under enquiry by 2007. How many extra users could they have possibly discovered through the disclosure regime? This is blatantly just a smokescreen to cover up for their failure to take action sooner.

It was easy for Jane Kennedy to make these unsubstantiated claims to the Committee and the institute of taxation but HMRC won't be able to do this in court (without lying) because the facts simply don't support this.

What other possible justification is there for making it retrospective when they could have stopped it 5 years ago?

PS. is it worth writing to the CIOT and pointing out how they have been misled by Jane Kennedy?

I can see no harm in writing to both CIOT and the Treasury. If the information is available under the Freedom of Information Act, then further prevarication or non-reply can only add more grist to our mill.

What I'm slightly unclear about is the actual format of the JR and how evidence is presented and heard? Is it the same as a 'normal' court ie 2 barristers slugging it out, or has it a more structured pattern - written evidence to the Judge, then clarifications etc etc?

[DonkeyRhubarb]

Draft letter to CIOT

Comments please.

===============

Dear Mr Goulding,

Finance Bill 2008: Clause 55 and retrospection

I am writing with reference to the FAX you received from Jane Kennedy on 8th July 2008, published on the CIOT website, because I believe you have been misinformed.

May I draw your attention to the following statement made by Jane Kennedy:

“Last year HMRC’s disclosure regime revealed that the latest version of the scheme was being used on an unprecedented scale.”

The scheme to which she refers first began operating in 2001. In 2003, HMRC opened enquiries on around 150 users, including myself. The following year 2004, the number of users under enquiry had grown to in excess of 400. Whilst it is true that take up of the scheme continued to increase, it peaked long before 2007. Many people like myself left the scheme as soon as our self-assessments were placed under enquiry and HMRC began threatening litigation.

The scheme was fully disclosed to HMRC in September 2004 in accordance with the new disclosure rules for tax avoidance schemes. How can HMRC claim that they only became aware of the scale of the problem in 2007, when they already had around 1000 users under enquiry by then? I and hundreds of others received countless letters from HMRC every year between 2003 and 2007 stating their intention to litigate.

I trust you will agree that it seems very strange that one of the Government’s main arguments for applying retrospection is that they only just became aware of it when in fact HMRC have been actively investigating it since 2003. They had ample opportunity to close the loophole in successive budgets before it got out of hand but instead chose to take no action for 5 years.

I do not expect the CIOT to act on this, and am merely writing to set the record straight.

Yours sincerely,

[Douglas]

Whilst it is true that take up of the scheme continued to increase, it peaked long before 2007.

Are you sure it peaked before 2007 ? A lot of folk here signed up in 2007.

D

[Emigre]

Comments please.

Kennedy's response to CIOT was extremely dismissive and disrespectful. Your draft achieves two objectives, firstly to "put the record straight" but secondly to initiate a relationship with an expert in the field. Goulding may be prepared to take things further if he knows someone personally impacted. The attached link is a bio on Jane Kennedy.http://www.defra.gov.uk/corporate/ministers/kennedy.htm
She is clearly not an expert.
Your draft gets my vote.