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BN66 - Time to fight back (Chapter 3)

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    Retrospective

    I was reading in the Metro this morning about new parliamentary order rushed through retrospectively to block MPs from having to disclose their expenses.
    http://www.guardian.co.uk/politics/2...nses-exemption
    "
    The changes will be retrospective and all pending requests for more information under the Freedom of Information Act will be blocked.
    "
    "
    The proposed changes were contained in a parliamentary order released at the same time as the government announced proposals to build a third Heathrow runway, compensate policyholders at Equitable Life and MPs debated the crisis in Gaza.
    "
    Hmmm...
    Sunt Lacrimae Rerum

    Comment


      Originally posted by DonkeyRhubarb View Post
      Just replying to my MP's request for a summary of the Government's duplicity in passing the legislation.

      What do you reckon?

      No-one would deny the Government's right to counter tax avoidance, yet the simple truth of the matter is that if they had acted to close this loophole when HMRC first became aware of it, then there would have been no need to resort to retrospection. Their claim that this only became a problem in 2007 is not supported by the facts. As far back as 2003, HMRC had already placed several hundred users, including myself, under enquiry.

      Reading the transcripts of the Finance Bill debates, it is clear that the Government were highly selective in their presentation of the facts. For example, at no time did they reveal that HMRC already had thousands of tax returns under enquiry going back as far as 5 years. Indeed, it is hard not to conclude that the Government deliberately hid the true extent of HMRC’s investigation into the scheme, in order to give the retrospective measure an air of legitimacy.
      Hi DR were has this quote come from. Is it your response to your MP?

      Are you sure the Government said it only became as problem in 2007, I thought they said it was a problem in 2004 when Dawn Primarola made her statement about "employment" tax avoidance.

      However you have raised an important issue to quote Alan Clarke about Government being "economical with the actualite" which I think we need to highlight.

      Comment


        Allegation

        I have decided to level a direct allegation against the Government.

        Comments & suggestions for improvement please.

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

        Dear MP,

        Thank you for your letter of 6th January 2009, and for taking the matter up with Stephen Timms. As you say, there is probably little more that can be achieved now prior to the Judicial proceedings.

        However, I wonder if you would be so kind as to forward a copy of this letter to the Government, so that these allegations are a matter of public record.

        Having studied the transcripts of the Treasury and Finance Committee debates, it is clear that the Government were highly selective in their presentation of the facts. For instance, at no time did they mention that:

        1. as early as 2003, HMRC already has several hundred users, including myself, under enquiry. The figures I have received from my scheme promoter for the number of users under enquiry, and remember this is only one out of several schemes in operation at the time, are as follows:

        2003 (tax year 01/02) – 200 users under enquiry
        2004 (02/03) – 350 users
        2005 (03/04) – 550 users

        2. by the time the legislation was drafted, HMRC had already placed several thousand tax returns under enquiry

        The Government claimed that this was only highlighted as a problem in 2007, yet HMRC had been actively investigating the scheme for 5 years, and had sat back and watched its use grow throughout this period.

        It is my contention that the Government deliberately conceiled the true extent of HMRC’s investigation from the Committees, in order to make the use of retrospection appear less contentious.

        Comment


          Originally posted by DonkeyRhubarb View Post
          Just replying to my MP's request for a summary of the Government's duplicity in passing the legislation.

          What do you reckon?

          No-one would deny the Government's right to counter tax avoidance, yet the simple truth of the matter is that if they had acted to close this loophole when HMRC first became aware of it, then there would have been no need to resort to retrospection. Their claim that this only became a problem in 2007 is not supported by the facts. As far back as 2003, HMRC had already placed several hundred users, including myself, under enquiry.

          Reading the transcripts of the Finance Bill debates, it is clear that the Government were highly selective in their presentation of the facts. For example, at no time did they reveal that HMRC already had thousands of tax returns under enquiry going back as far as 5 years. Indeed, it is hard not to conclude that the Government deliberately hid the true extent of HMRC’s investigation into the scheme, in order to give the retrospective measure an air of legitimacy.

          Perhaps you should also mention that this kind of scheme has been in the HMRC manual since 1997?
          As per your prior post http://forums.contractoruk.com/736908-post887.html...
          Originally posted by DonkeyRhubarb View Post
          http://www.tax.org.uk/showarticle.pl?id=7249

          Taxpayers have had no warning of this apparent need for clarification. Quite the reverse: the HMRC manual has referred to the sort of planning now being attacked since 1997.

          Comment


            PM, Financial Secretary, Chancellor & Others - response in full

            I have been sending letters out to various people such as those mentioned above. I have received responses only from one guy from CT & VAT (International "Specialist" based in London). I will post the 3 letters/emails I have received from him on behalf of the people I wrote to.
            Sunt Lacrimae Rerum

            Comment


              Originally posted by seadog View Post
              I am very cynical about the way in which banks etc put in obscure small print to catch you out. It always seems the samll print is in their favour.

              Even if the risk of the bank going to the wall is small I would not take the risk of leaving to chance.
              I rang my lender Abbey and asked about this and they were adamant that the offset would be netted out against the mortgage, but they said that this wasn't the case with all lenders (although that might not be correct of course could just be them queering the pitch of their competitors).
              The Cat

              Comment


                Response 1

                Dear Mr Ratican
                Thank you for your e-mail of ** August to the Financial Secretary and your e mail of ** September to the Chancellor. I am replying as a member of the responsible team in HM Revenue and Customs.
                You are concerned about the retrospective nature of section 58 and the impact on your financial position.
                As the Financial Secretary indicated during the Parliamentary debate on the Finance Bill, section 58 counters a tax avoidance scheme that purported to thwart the object and purpose of the UK’s double taxation treaties, as well as retrospective legislation that had been introduced in 1987 to counter misuse of the UK’s double taxation treaties.
                The Government does not accept that the scheme achieved its purpose since the 1987 legislation clearly applied to it. However, during 2007 both the number of scheme users and the amounts of tax involved reached such a high level that the Government decided that a legislative response was appropriate. By retrospectively clarifying the 1987 legislation, section 58 removes any doubt that this type of avoidance scheme does not work and never has done.
                Retrospective legislation is very rare and the Government has confirmed that it will use it only for the worst cases of avoidance where it is appropriate to ensure fairness and certainty for all taxpayers. This is an exceptional case and the Government is satisfied that section 58 is fully compliant with the Human Rights Act.
                Where taxpayers have difficulty meeting their obligations, HMRC has established procedures and guidelines which can be found at http://www.hmrc.gov.uk/howtopay/prob-indiv-comp.htm. In addition, in a letter of 22 July from HMRC you were given details of two contact names and phone numbers with whom you can discuss in detail any concerns you may have about your particular circumstances.
                I hope that you will find this reply helpful.
                Yours sincerely
                Name Removed
                [FONT='Calibri','sans-serif']CT & VAT (100 Parliament St)[/FONT]
                Sunt Lacrimae Rerum

                Comment


                  2nd Response

                  Dear Mr Ratican

                  Thank you for your further email.

                  As the Financial Secretary stated in the debate in Public Bill Committee of the House of Commons on 22 May 2008 “The Government do not accept that the clause changes the meaning of the law. The law already applies to partnership profits, and we interpret that as including profits enjoyed through a trust.” UK law has always denied the benefit of relief under UK tax treaties where UK individuals make their investment through partnerships, which constitute, for the purposes of the treaty, enterprises of a treaty partner.

                  As noted previously, in 1987, the government introduced retrospective legislation that made clear that UK resident members of foreign partnerships could not use any of the UK’s treaties to avoid UK tax on their share of a foreign partnership’s income. By clarifying beyond doubt how that legislation applies, Section 58 of the Finance Act closes down a tax avoidance scheme that, through the use of wholly uncommercial and artificial structures involving foreign trusts and partnerships, attempted to thwart the object and purpose of the UK’s treaties and of the 1987 legislation. The action that Parliament took in 1987 was a clear signal of the seriousness with which Parliament viewed the misuse of treaties, and of the action it was likely to take should anyone deliberately seek to frustrate the intention of Parliamentary legislation in future.

                  During 2007 the rapid expansion of both the number of scheme users and the amounts of tax involved reached such a high level that the Government decided that a legislative response was appropriate. The debates in Parliament on the Finance Bill made clear that the factors you mention were actively considered before the legislation was approved and passed.

                  I cannot comment on how you should deal with your personal tax affairs. As set out in my earlier reply, where taxpayers have difficulty meeting their obligations, HMRC has established procedures and guidelines which can be found at http://www.hmrc.gov.uk/howtopay/prob-indiv-comp.htm. As noted previously, a letter of 22 July from HMRC provided details of two contacts with whom you can discuss in detail any concerns you may have about your particular circumstances.

                  Name Removed
                  CT & VAT (100 Parliament St)
                  Sunt Lacrimae Rerum

                  Comment


                    Response 3

                    Dear Mr Ratican
                    Thank you for your e mail dated ** November 2008 to the Chancellor and others. I have been asked to respond to your e mail and I am sorry for the delay in replying to this.

                    You have asked for information about the number of users of the tax avoidance scheme concerned. Unfortunately we do not hold information in the form you have requested and the data you ask for could not be obtained without a great deal of work, the cost of which would not be reasonable.

                    You ask why HMRC did not litigate some cases rather than making the changes that were made in the 2008 Finance Act. In my e mail of 6 October I tried to explain why the decision was made to clarify the law rather than litigate the issues. As I explained, during 2007 the rapid expansion of the scheme led the Government to the view that a legislative approach was appropriate.

                    The intentions of the Government in terms of changes to tax legislation are announced in the Pre-Budget Statement or in the Budget itself. This applies to the legislation introduced by Clause 55 and any other proposed measures. There was no mention of any revision to this legislation in the recent Pre-Budget Statement.

                    Finally you ask about the effects of the legislation on the users of this tax avoidance scheme. HM Revenue and Customs is obliged to collect tax legally due. The tax on scheme users as a result of S58 Finance Act 2008 (the final version of Clause 55) is legally due. Where taxpayers have difficulty meeting their obligations, HMRC has established procedures and guidelines which can be found at http://www.hmrc.gov.uk/howtopay/prob-indiv-comp.htm. In addition, in a letter of 22 July from HMRC you were given details of two contact names and phone numbers with whom you can discuss in detail any concerns you may have about your particular circumstances.

                    Because of the current economic conditions HMRC has introduced a new Business Payment Support Service for those having difficulty in paying tax lawfully due. This new service was announced by the Chancellor in his Pre Budget Report. If you seek information about this, please refer to the HMRC website at www.hmrc.gov.uk/pbr2008/business-payment.htm.

                    Thank you for taking the trouble to raise your concerns about this with us.

                    Yours sincerely

                    Name Removed
                    International Specialist
                    Sunt Lacrimae Rerum

                    Comment


                      Figures - Response 3

                      Originally posted by Ratican View Post
                      You have asked for information about the number of users of the tax avoidance scheme concerned. Unfortunately we do not hold information in the form you have requested and the data you ask for could not be obtained without a great deal of work, the cost of which would not be reasonable.
                      I think the only way to get this info is for some of us to ask our MPs to request it. Freedom of information request? Parliametary question?
                      Sunt Lacrimae Rerum

                      Comment

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