BN66 - Time to fight back (Chapter 3)

[Toocan]

... found the statement on the overflow page interesting. HMRC will see this on the returns anyway so I don't think discussion here will jeopardise anything - but it seems that MP are arguing that S.58 doesn't actually apply to us anyway?

The amendment reads:

Without going into too much detail on an open forum, MP it would seem do not think that we fall into this category. This appears to be an entirely new avenue of attack - that even the new legislation doesn't apply. I certainly am not qualified to comment on whether this is a realistic line to take - but at the very least it's nice to know that there are other possibilities beyond the JR!

I think this is the current avenue of attack. If the JR is successful then there will be no retrospection and our tax planning will be effective. The Montpelier scheme was correct in law.

[nuffsaid]

hi folks .. just wondered whether anyone has some advice on the most tax efficient way of submitting a self assessment that has income split by MP and limited company. i.e 6 months MP income and 6 months LTD income.

this is for 2007-2008 ... I stopped using MP after the agency i was being paid through ceased doing business with 'offshore' companies .. just after BN66.

A friend of mine did the same and has entered his MP income as self employed income along site the ltd income. .. is that the best approach?

thanks in advance. ..

Any reason why you aren't letting MontP complete the full return?
I think doing the returns yourself would be the same as painting a target on your chest!

[Toocan]

If you look at the 3 clauses affecting the 3 types of entity (company, person or firm), they are inconsistent in terms of the liability to Income & Capital Gains.

While reading up on Padmore I found that the terms you used (company, person or firm) can have different means in different statues/treaty's. HMRC took Partnership to include everyone getting some of the cash, but the treaty (and the courts) did not.

[DonkeyRhubarb]

I think this is the current avenue of attack. If the JR is successful then there will be no retrospection and our tax planning will be effective. The Montpelier scheme was correct in law.

From what I have seen on a few 07/08 tax returns, Montpelier are attacking them on at least 3 fronts.

1) The legislation is contrary to human rights.

2) Section 58 FA 2008 has no application as it is my trustee who is the person legally entitled to the profits of the Isle of Man partnership not me. I am entitled to the profits of the trust by virtue of the terms governing the trust not the terms of the partnership.

3) The relevant clause of Section 58 only applies to Capital Gains, not Income:


(2)In section 59 of TCGA 1992 (partnerships), insert at the end—

(4) For the purposes of subsections (2) and (3) the members of a partnership include any person entitled to a share of capital gains of the partnership.

Basically, they seem to be finding holes all over the place.

[BrilloPad]

Any reason why you aren't letting MontP complete the full return?
I think doing the returns yourself would be the same as painting a target on your chest!

Very good question. One thing montp have commented on is that if anyone enters their tax return before end Jan then they are a total muppet! And of course one slip of the wording and you can find yourself totally stuffed. As you an see from the other discussion on this thread (great work DR ) the wording is critical. montp have been doing a great job : lets back them 100%.

BP

[Toocan]

From what I have seen on a few 07/08 tax returns, Montpelier are attacking them on at least 3 fronts.

1) The legislation is contrary to human rights.

2) Section 58 FA 2008 has no application as it is my trustee who is the person legally entitled to the profits of the Isle of Man partnership not me. I am entitled to the profits of the trust by virtue of the terms governing the trust not the terms of the partnership.

3) The relevant clause of Section 58 only applies to Capital Gains, not Income:


(2)In section 59 of TCGA 1992 (partnerships), insert at the end—

(4) For the purposes of subsections (2) and (3) the members of a partnership include any person entitled to a share of capital gains of the partnership.

Basically, they seem to be finding holes all over the place.

I think I see that, because it was a partnership of companies, none of which were UK resident. The only UK resident part was us.

HMRC know this is the basis for appeal - are they pushing the JR out till Budget 2009 to try something else?

[Toocan]

The situation prior to 12th March 2008 is dealt with by Section 58 (the retrospective bit).

The situation from 12th March 2008 onwards is addressed by Section 59, which is much more of a blanket measure.

The DTA scheme would fail Section 59.

...which begs the question: why didn't HMRC ask for Section 59 to be retrospective and have no Section 58 at all?

Why have they went about this in such a complex (and, it would appear, failed manner)?

Which scheme or who are they trying to exclude?

[Turfer]

From what I have seen on a few 07/08 tax returns, Montpelier are attacking them on at least 3 fronts.

1) The legislation is contrary to human rights.

2) Section 58 FA 2008 has no application as it is my trustee who is the person legally entitled to the profits of the Isle of Man partnership not me. I am entitled to the profits of the trust by virtue of the terms governing the trust not the terms of the partnership.

3) The relevant clause of Section 58 only applies to Capital Gains, not Income:


(2)In section 59 of TCGA 1992 (partnerships), insert at the end—

(4) For the purposes of subsections (2) and (3) the members of a partnership include any person entitled to a share of capital gains of the partnership.

Basically, they seem to be finding holes all over the place.

In answer to these points:

1) There are few here who would disagree

2) Steed Solutions started work on this argument on the 12 March 2008, but they only put it forward to HMRC after the legislation was passed. A brief spoiler is that HMRC's response 4-5 months ago was as follows:

As the life tenant in an interest in possession trust, your client is entitled to the income to which the trustees of that trust are entitled as partners of a partnership. As such, your client is entitled to the income of that partnership and since s58 puts it beyond doubt that those entitled to the income of a partnership are members of that partnership, it follows that s58 applies.

This is not an argument that has been accepted by Steed Solutions.

3) This is a red herring, HMRC aren't using the change to the TCGA to attack IT contractors they are using the change to section 858 of ITTOIA 2005, which clearly makes reference to income.

[Fog]

I think I see that, because it was a partnership of companies, none of which were UK resident. The only UK resident part was us.

HMRC know this is the basis for appeal - are they pushing the JR out till Budget 2009 to try something else?

I wasn't aware that HMRC had any control over the JR process including timings. Surely this would be totally illegal if they did??!! I thought the delay over JR date is purely administrative....?

[Ratican]

Excited, but

I'm holding my breath...................
How can we find out about a date for the JR? I have noticed that the press seem to be able to find out about dates a couple of weeks before hand...