BN66 - Time to fight back (Chapter 3)

[Toocan]

We all know that Parliament were conned about this but I haven't figured out how to prove it (yet).

How about a carefully worded Freedom of Information request. This could retrieve the information that Jane Kennedy based her statement/answer on. As I said, it would have to be carefully worded so that HMRC can't claim it would cost too much to collect the information.

This would have to go to the information commissioner rather than an MP.

The cuttings from HMRC's website can demonstrate that the scheme worked because they say in their manuals when schemes DON'T work. (I know that's not as perfect as it could be)

The breakdown of scheme users would be very helpful. I feel that HMRC's target were the property developers that put high amounts through (eg the earlier £60M case mentioned). They've decided to shoot us all with the same bullet. I doubt any of MTM's IR35 users had £60M going through (If you disagree, tell me how! )

Having looked at it all, HMRC have got their way in Parliament. The government would have to change the law to make any difference there. ALL of us would have to make a ella of noise before they'll do that.

This is a failed government. Next week they will change the Freedom of Information Act so that they don't have to publish MP's expenses - you know, all those amount spent on the latest TV's and goodnight kisses. That will be more retrospection (though of a different kind, I grant). Seems they are going to use retrospection for everything they want. The UK has no legal security anymore, we have no magna carta, no big companies are going to settle here now. Gordon has ruined the economy, reduced the value of property, even reduced the value of money. He’s an embarrassment to the UK.

There is apparently a bumper sticker in the US that reads, “January 20th – the end of an error”. I wonder when the UK’s error will end?

[DonkeyRhubarb]

I feel that HMRC's target were the property developers that put high amounts through (eg the earlier £60M case mentioned). They've decided to shoot us all with the same bullet. I doubt any of MTM's IR35 users had £60M going through (If you disagree, tell me how! )

I disagree (not with the £60M) but that their main target were the property developers.

If you read the debates, everything Jane Kennedy said pointed to us:
- an earlier scheme settled with HMRC; that was the SuoMotu contractor scheme
- 2000 users in 2007; that's got to be us, DeGraaf and Steed
- £200M of previous tax revenue at risk
- £50M per year

Some property developers may have individually been putting more through the scheme but it was the contractor schemes which were escalating.

[DonkeyRhubarb]

Question

Does anyone know if there are exceptions where you are allowed to write to an MP who is not your own local MP?

The main opponent of the legislation on the Finance Bill Committee was:

Mr. David Gauke (Conservative, South-West Hertfordshire)

Could I write to him (not as an MP) but in his capacity as a member of the Committee?

In the debate, among other things, he said the following:

How long have the Government, whether through HMRC or the Treasury, been aware of the arrangements? There is certainly evidence that HMRC has been aware of the arrangements for some years. That raises the question that I asked earlier. It is incumbent on the Government to act reasonably quickly. If they become aware of a scheme that they do not like but they sit on their hands and do nothing about it, and then some years later say, “Okay, we will introduce retrospective legislation,” that raises real concerns, because again there is a continued period of uncertainty. I would press the Government to move quickly if they saw something wrong, rather than sit on it for a long time and then seek to introduce retrospective legislation.

It is not acceptable that the Government permit something that they consider unacceptable to exist for some years, and then seek to introduce retrospective legislation to address it. That is what we see here.

I acknowledge that the number seems suddenly to have increased, but will the Financial Secretary clarify when HMRC first became aware that such schemes were being created?

[bombaycat]

Does anyone know if there are exceptions where you are allowed to write to an MP who is not your own local MP?

The main opponent of the legislation on the Finance Bill Committee was:

Mr. David Gauke (Conservative, South-West Hertfordshire)

[/I]

There must be someone on this thread in our group who lives there (I don't I'm afraid) but if you could draft the letter and send it through them that would work OK.

Anyone SW Herts ?

[Toocan]

Does anyone know if there are exceptions where you are allowed to write to an MP who is not your own local MP?

I think you could write to any MP – the fact that he is a member of a committee must make that a more common occurrence. In Scotland there are regional MSP’s as well as constituency MSP’s – any of them will take an interest in matters that affect you.

The evidence has became much clearer in my mind over the past week or so. I didn’t know that MTM’s scheme was a “Padmore” scheme when I signed up to it. I saw part of a barristers opinion that demonstrated that it was legal and the investigations I did had not uncovered any problems. At the time, even when scheme’s failed, HMRC “usually” settled for maybe 15% of tax due for failed schemes – which shows that despite claims they “have” to collect the tax, they do have discretion. At this stage, I’m frankly not interested in settling. The scheme did not fail – it was 100% legal. The government have broken their own laws.

It doesn’t matter that I didn’t know that it was a “Padmore” scheme, although it goes against what Jane Kennedy said in the committee that we/I did, because the scheme was legal.

HMRC knew of the scheme in the early 2000’s – certainly no later than 2002, and perhaps 2001. We know this from the tax returns that they called in. They knew the details of the scheme because MTM told them – they got copies of the trust documents from scheme members and I guess from MTM too. There is a loophole here though, because the trust documents are not all the same – and I don’t think HMRC have realised that. When the disclosure regime came in, HMRC got told about it again. They have no excuses.

HMRC should have known in 2001 or 2002 that it was a “Padmore” scheme (at least). But they did not mention this till 2008. Didn’t they know?

HMRC knew that their 1987 fix for ”Padmore” scheme’s did not work – we know they were told this because they have said as much in their published manuals. The censored pages of the manual may even state as much.

This is important because one of HMRC’s contentions is that users of the scheme should know that it was Parliament’s intention to ban such schemes. But given that they’d been told the fix did not work (years before), it demonstrates that they did not have much regard for what Parliament intended. Or even that they are putting words in Parliaments mouth.

The fact that HMRC gave no indication of the above demonstrates that while they may not have liked the tax planning, HMRC knew they could do nothing about it.

This is not about “tax avoidance”. It’s about a practice that HMRC/the government knew about and did nothing about. It’s about the government changing the rules after the fact. It’s a tax grab. Unless this becomes a political hot potato, I’m not sure that Parliament will do anything about it.

Given all of the above, we had a legitimate expectation that the tax planning would be effective. We were acting within the law, HMRC knew what we were doing and did not do anything to change the law. I really don’t see how the government can win at a Judicial Review.

However, others have had to go to Europe to get justice against the UK government, and we may also have to do that.

I think, and we are on political ground here, we must layout a simple case on paper that shows that HMRC are being unreasonable and unfair. If we can get a simple argument down on paper, then send it to everyone and their uncle then it would put HMRC under pressure to justify what they are doing. This has to focus on the “fair” argument – ie that we were following HMRC’s law and that they had many years of warning which they did not take. We must focus on the whole problem being HMRC at fault.

This is HMRC bullying hard working tax payers.

[Gizza]

Norla and Edge

Hi all

I have now received an Inland Revenue letter saying that "Edge Consulting" is under investigation. I was in an EBT scheme for a couple of years and was paid via loans. A couple of other guys got the letter yesterday too.

Done a couple of calculations on what I "might" have to pay and it's a frightening amount.

One thing in this article, that is a little "scarey" is that
http://www.contractorumbrella.com/bn66.html

In the article they say "In addition to the tax owed, a penalty of a similar value will also be payable PLUS interest on late payments. Proposals means interest would be charged at 8.5% per annum on any tax paid late. ".

Is the penalty really generally a "similar value" as that would take my total bill right up. Ok, if I have to pay the PAYE fair enough I guess, but for a penalty + interest to be coughed up into a scheme that was legal at the time, is taking the p***.

Norla - the managment company - assured us several times that they had been working with HMRC and it was deemed to be within the law. I am guessing this has now changed. I also know this effects 100's of contractors who use their scheme.

I guess you will have more interest in this thread - which is excellent - from now on!!!

[Toocan]

One thing in this article, that is a little "scarey" is that
http://www.contractorumbrella.com/bn66.html

In the article they say "In addition to the tax owed, a penalty of a similar value will also be payable PLUS interest on late payments. Proposals means interest would be charged at 8.5% per annum on any tax paid late. ".

Gizza,

The site you have reference above is inaccurate and reflects neither HMRC’s statements nor the actual effect of BN66. The information appears to have been twisted to make the service the author’s offer sound more attractive.

BN66 applies to schemes which use a trust/partnership setup to take advantage of the double taxation agreement. There is generally no essential loan element to these scheme’s (by which I mean that a loan does not form an essential part of the tax planning).

As far as we know, there have been no penalty’s for these scheme users at all.

EBT scheme’s are not covered by BN66. As far as I am aware UK based EBT schemes do not work, but offshore (E)BT scheme’s do. The government, for whatever reason, has not yet attacked the offshore loan scheme’s. It would be very easy for them to close them down – of course they’ll have to find them first.

[BolshieBastard]

I think you could write to any MP – the fact that he is a member of a committee must make that a more common occurrence.

You can write to any MP but if you do not live in his or her constituency, irrespective of whether an MP sits on a committee, that MP will merely forward your letter to your constituency MP.

It is parliamentary protocol that MP's do not correspond with another MP's constituents.

This of course refers to the House of Commons. I'd expect the same to apply to the scottish assembly though.

[Gizza]

Gizza,

The site you have reference above is inaccurate and reflects neither HMRC’s statements nor the actual effect of BN66. The information appears to have been twisted to make the service the author’s offer sound more attractive.

BN66 applies to schemes which use a trust/partnership setup to take advantage of the double taxation agreement. There is generally no essential loan element to these scheme’s (by which I mean that a loan does not form an essential part of the tax planning).

As far as we know, there have been no penalty’s for these scheme users at all.

EBT scheme’s are not covered by BN66. As far as I am aware UK based EBT schemes do not work, but offshore (E)BT scheme’s do. The government, for whatever reason, has not yet attacked the offshore loan scheme’s. It would be very easy for them to close them down – of course they’ll have to find them first.

Hi Toocan

Many thanks for your reply. I wonder why HMRC are investigating Edge Consultancy (IOM Company). A lot of the schemes users have been contacted previously to say an investigation had commenced.

I will probably post on a different thread, if this is caught by the same ruling.

Cheers and Good Luck!
Mark

[BrilloPad]

Gizza,

The site you have reference above is inaccurate and reflects neither HMRC’s statements nor the actual effect of BN66. The information appears to have been twisted to make the service the author’s offer sound more attractive.

BN66 applies to schemes which use a trust/partnership setup to take advantage of the double taxation agreement. There is generally no essential loan element to these scheme’s (by which I mean that a loan does not form an essential part of the tax planning).

As far as we know, there have been no penalty’s for these scheme users at all.

EBT scheme’s are not covered by BN66. As far as I am aware UK based EBT schemes do not work, but offshore (E)BT scheme’s do. The government, for whatever reason, has not yet attacked the offshore loan scheme’s. It would be very easy for them to close them down – of course they’ll have to find them first.

WHS + the following thread may be useful.

http://forums.contractoruk.com/busin...anagement.html

As you can see from the end they went to a closed forum.

BP