BN66 - Time to fight back (Chapter 3)

[bombaycat]

DPA HMRC stuff back

Got a big wadge of tax return print outs. Not much of interest at first glance although there is a rather hilarious comment about the "T/P" (taxpayer - according to the glossary that they enclose) "appears to be" buying out a third party purchasing a house with a Mr XXX - this was my ex husband and I buying a house from a bloke (the third party) in 1990 - so funny the way it is referred to as if it is some kind of crime - presume it was something to do with MIRAS - can't remember - no reference to any of my other house moves, purchases/sales before or since - all very funny....

[BrilloPad]

Got a big wadge of tax return print outs. Not much of interest at first glance although there is a rather hilarious comment about the "T/P" (taxpayer - according to the glossary that they enclose) "appears to be" buying out a third party purchasing a house with a Mr XXX - this was my ex husband and I buying a house from a bloke (the third party) in 1990 - so funny the way it is referred to as if it is some kind of crime - presume it was something to do with MIRAS - can't remember - no reference to any of my other house moves, purchases/sales before or since - all very funny....

It amused you and annoyed HMRC. win/win.

[MajorGowen]

Tax Avoidence...

Afternoon Everyone,

It was good to see Roy Hattersley stating on Newsnight last night that the MP's expenses were "Tax Avoidence" and not "Tax Evasion". I believe that this has come at a good time for us as Labour cannot now spin our situation from "Tax Avoidence" to "Tax Evasion" as they had previously started to do.

As he stated last night, and as we have been banging on for ages now "Tax Avoidence" is legal, and that as we all know is what the scheme was all about. It seems to me that the MP's and HMRC got annoyed as some of us "little people" managed to gatecrash the "Tax Avoidence" world that they feel should only be open to the rich (and MP's).

MajorGowen...

[DonkeyRhubarb]

It seems to me that the MP's and HMRC got annoyed as some of us "little people" managed to gatecrash the "Tax Avoidence" world that they feel should only be open to the rich (and MP's).

I reckon you are spot on there.

I bet they never would have pulled the retrospective stunt if the scheme had only been used by property developers. The retrospection is aimed at US, and I'm sure the property developers are well miffed that they've ended up as collateral damage.

I also think HMRC/Govt knew that many of us would really suffer as a result of a retrospective tax. Companies and high rollers could ultimately shrug it off as a case of you win some, you lose some. Where would the "fun" be in having a pop at them?

Let's be in no doubt, this was a malicious and vindictive move by HMRC to inflict pain and suffering. The financial angle doesn't even stack up, since the revenue at risk through this scheme (£200M) is comparable, if not less, than dozens of other schemes which have simply been closed going forward.

However, I think HMRC's initial euphoria at securing this legislation might be starting to wear a bit thin now.

[BolshieBastard]

Got a reply from Timms via my MP. Basically says HMRC were aware of the scheme back in 2007 when 'it successfully settled enquiries with one of the original promoters of the scheme who accepted that the income should be taxed in the UK.. The revenue subsequently initiated enquiries into other user.............''

Now its probably the same response everyone else has had but I think Timms is being economical with the truth. Didnt this 'other' promoter of the scheme grass MontP up and only agreed that UK tax should be paid because he got a favourable deal off HMRC? That being the case, why didnt hMRC offer the same terms as they did to this 'other' promoter?

So, is their another follow up letter to the MP or is this just something I'd have to work on myself?

[DonkeyRhubarb]

Got a reply from Timms via my MP. Basically says HMRC were aware of the scheme back in 2007 when 'it successfully settled enquiries with one of the original promoters of the scheme who accepted that the income should be taxed in the UK.. The revenue subsequently initiated enquiries into other user.............''

Now its probably the same response everyone else has had but I think Timms is being economical with the truth. Didnt this 'other' promoter of the scheme grass MontP up and only agreed that UK tax should be paid because he got a favourable deal off HMRC? That being the case, why didnt hMRC offer the same terms as they did to this 'other' promoter?

So, is their another follow up letter to the MP or is this just something I'd have to work on myself?

Are you sure he said 2007? HMRC have known about it since 2001, and they settled with Suo Motu in March 2003.

Suo Motu approached HMRC for a deal. I have got a copy of this if anyone wants a look. The deal involved some concessions.

As you say, why didn't they offer this to any other promoters or users? Why keep it a secret?

If you haven't already sent the JCHR letter, you could send that:
http://forums.contractoruk.com/837340-post1.html

Alternatively, I am just about to post the "12 deadly questions". You could send these to your MP and say you won't accept any response from the Treasury which doesn't answer each one of these questions.

[DonkeyRhubarb]

The twelve deadly questions

If you send these to your MP to put to the treasury, make it clear that you will not accept any response from the Treasury which does not answer each one of these questions.

1. What was so rare/unusual/exceptional about this scheme, compared to all the other schemes which have been closed down over the years, that it was singled out for retrospective legislation when other schemes have been dealt with prospectively?
2. In what way is Section 58 proportionate if it results in ordinary working families losing their homes and people being forced into bankruptcy? Does the punishment really fit the “crime” in this case?
3. Where is the fairness in introducing a 7-year retrospective tax, when taxpayers were given no advance warning of it? Moreover, how is it fair to charge retrospective interest on a retrospective tax?
4. Why didn’t HMRC proceed with litigation on the basis of the 1987 legislation if, as the Treasury has repeatedly claimed, the 1987 legislation clearly applied to the scheme and it therefore never achieved its purpose?
5. Given that HMRC knew about the scheme in 2001, why didn’t the Government legislate in the finance acts of 2002, 2003 or even 2004. Why did they wait until 2008?
6. Why did HMRC never once mention the 1987 legislation or the Padmore case, in any of the correspondence they sent to promoters or users of the scheme between 2001 and 2007, if they believed it was applicable?
7. Why did HMRC settle with one scheme promoter in March 2003 and grant concessions to around 140 users, allowing them to gain a tax advantage if, in their view, the scheme was unlawful?
8. Why didn’t HMRC offer the same settlement terms to other scheme promoters? Why did they keep this “deal” a secret?
9. How does the Government reconcile their claim that the 1987 legislation clearly applied to the scheme with the unequivocal statement they issued accompanying Section 858 ITTOIA 2005? “It was intended, in the case of income tax, that the 1987 legislation should do no more than remove the exemption claimed in the Padmore case.”
10. Why didn’t the Government amend the 1987 legislation as soon as it became aware that some tax planners were suggesting it might be possible to develop the “Padmore” principle in other ways? According to HMRC’s own manuals, they were aware of this possibility from the early 1990s.
11. The Chancellor of the Exchequer, Alistair Darling, made a statement under Section 19(1)(a) of the Human Rights Act 1998 to the effect that in his view the provisions of the 2008 Finance Bill were compatible with Convention rights. On what basis and on the advice of whom did he form that opinion?
12. The Law Society described the retrospective nature of Clause 55 as “wrong in principle”. In the light of this, and severe criticism from other professional bodies, why wasn’t this measure referred to the Joint Committee on Human Rights?

[helen7]

Looks good DR, will send to my MP.

One question I would like to know is why scheme promotors such as Mopt are not being held liable for a percentage of the tax bill? Afterall, we know nothing of tax law and pay experts for their advice.

If I paid a builder for advice and as a result my house fell down, that builder would be liable for the cost of repairs.

If the law is changed such that scheme promotors can be held liable, I am pretty sure they would ALL stop promoting tax planning schemes - which seems to be what HMRC want.

I wonder how 'the rich' now avoid their tax?

[BolshieBastard]

Thanks DR.

I made a mistake in my previous post, it should have said 2001 not 2007!

When sending the next (12 q's letter) Im assuming that in effect you are asking the mP to ask the 12 q's to Timms?

[OnYourBikeGB]

Paranoid? Thats what they want me to think!

A thought crossed my mind earlier. Maybe it's been discussed already, but have we ever considered that it's in HMRC's interest for this case to draw out for years?

I was just thinking about it, we can't really land a killer blow for years, in the meantime the Revenue are demonstrating to those of us that seek to lower our tax burdens that they have retrospective powers and can make peoples lives misery. They must know that they are likely to lose this in the long run, but in the meantime they can make anyone thinking about use for example and EBT or some other scheme to think twice. They may think that losing a few million putting up their so far pretty pathetic defense is money well spent. After all, what have they got to lose? If (and hopefully when) they lose, they just make tax changes without the retrospective element. On the long shot that they win, then they'll establish precedent. They may think that losing is worthwhile for the deterrent value alone in the interim.

Maybe we're just pawns in a bigger game. It'll be interesting to hear their case come 3rd June. I'm hoping for our sakes its as weak as their arguments to date, but if it is, then I'll be even more suspicious than I am at the moment.

I'm saying this as a positive thing from our perspective. I can't see how they can win. It might be different if they had had four or five prior cases and were refining their arguments, but this is their first bite of the cherry, and the one they are most likely to lose.

I know, let's all pay up just to f#ck them off! (ok, maybe not)