BN66 - Time to fight back (Chapter 3)

[BrilloPad]

Background, my friend has HR experience and has represented the government in many many cases on immigration and HR issues, I was discussing yesterday's ruling with him a bit today.

Quote:
9 to 12 months sounds about right.

At the permission stage, the judge usually does give an immediate decision. He will have formed a view on reading the papers, and it's not difficult to recognise when there is an arguable point of law - it's rather more difficult at the second stage to decide which side's arguments are correct!

With a case like yours, it is difficult to imagine the court having any truck with a "one day out of time" argument if there is real merit in the case. "One day out of time" is more often used as an excuse by the court where it doesn't think much of the underlying case either.

Who is the QC who is acting for you? [I provided info - thanks OldITGit]
Ah, yes - I know David. You're in good hands.

I am not so sure that this will end up in the ECtHR. Based on what I have seen, there is a real argument that the retrospective effect of the legislation is a breach of Article 1 of Protocol 1. If the domestic courts can be persuaded to say that, the chances are that the government will back down. The argument would be more difficult to run if HMRC had been consistently saying through a large part of this period of time that it regarded this type of scheme as prohibited by the existing legislation, but the stuff that you've sent shows few signs of that.

But there can be no doubt that most judges will have little real sympathy for the underlying schemes and those using them. If the descriptions of what they do is correct (ie allow UK workers to avoid paying UK tax), HMRC will be regarded as completely justified in trying to crush them wherever they are found. They just have to do so without giving the impression that, as a department, they couldn't run a bath (which is an impression that HMRC is very good at giving).

great post : thanks for posting that

[wildebeest]

Applause

I’m not a great one for contributing to forums (others have usually already said it better) but with yesterday’s decision appearing to mark a significant point in this sorry affair, I had to register in order to express my thanks and respect to you lot. You are the collective glue that has forged and bound this community and given us all a sense of purpose and hope.

I, like many, have written to my MP (conservative – “…..sympathy, sympathy but I do not condone tax avoidance blah blah blah”) and signed the petition and both tasks went some way to making me feel like I have a little control over my destiny but I like many, would probably not have done this had you not got off your bums and got organised. I’m sure were it not for this forum, we would all still be floundering in isolation awaiting the inevitable.

Whatever the final outcome, the mobilisation of effort, information and support has been quite remarkable.


If I could find a ‘hats off’ smilie, I’d paste it here

[Toocan]

Does anyone know if this result provides any pointers to how the JR will go? I'm looking on the bright side and thinking this was almost a mini JR. The Judge looked at the facts and decided there was definitely a case for HMRC to answer. If he didn't he would have refused it. Or will the JR be a different proposition altogether? Also, anyone any idea when it might be heard?

HMRC may be “playing this game” with s.58 to scare other scheme users – however if they decide to defend this case then they have a lot to lose.

If the Court finds that s.58 is not lawful then HMRC can NEVER use retrospective tax legislation again. That will remove a major feather from their bow.

I think s.58 will be found unlawful – it will effectively be struck out. That will set a precedent that not only can you arrange your affairs how you want (within the law), but that HMRC cannot go back and re-write the law after the fact.

Are they really willing to lose that threat for a few million? (they certainly won’t collect £200 million and they’ll collect nothing going forward because everyone has moved to other schemes that, curiously, HMRC appear to be ignoring)

The QC’s are not "thick" – but someone inside HMRC most certainly is.

[BrilloPad]

curiously, HMRC appear to be ignoring

Its a very good point. I have heard it said that the newer schemes are harder to attack. But nothing is unassailable.

Of course as sooner as they are attacked new schemes will be created. Its a never ending cat and mouse game.

[Richard Splash]

Very new to all this forum stuff but have been reading avidly for some time without registering. Thanks to all the intelligent contributors and posts, the support it has given me during these tense and pressing times has been imessurable...

My question: I have yet to recieve any form of closure notice yet several friends of mine have. So, If I haven't received a Closure Notice how can I possibly stand a chance of settling the score with HMRC...Not that I want to mind. Bunch of robbers.....

Sorry if this is the thousandth time this has been asked but would appreciate a response.

Much congrats to MP and the QC job well done and keep it going...

[ASB]

Its a very good point. I have heard it said that the newer schemes are harder to attack. But nothing is unassailable.

Of course as sooner as they are attacked new schemes will be created. Its a never ending cat and mouse game.

Of course, always has been. But the "inbuilt" retrospection to FA2004 (5?) may act as a barrier to take up of those schemes. [I am not trying to justify retrospection, though I think in terms of joining schemes post the announcement there is an arguable case for it; I would much prefer that the legislation was properly written in the first place and when it doesn't work as intended legislate against it and HMG simply accept that].

Make no mistake. HMRC will get the £200 million. They just won't get it from exisiting scheme users, they will get it from future scheme non users; those they firghten off.

Much is made, for example, of IR35 only bringing in a few million. Somewhat shy of the 600 odd million Timms et al stated in the RIA. Truth is though that nobody knows how much it brings in. Quaite a lot of folk simply accept it, pay themselves the money as salary and think "that gravy train was good while it lasted".

HMRC action is not so much about getting the pound of flesh, it's about discouraging people from risking going outside the box.

[TykeMerc]

Make no mistake. HMRC will get the £200 million. They just won't get it from exisiting scheme users, they will get it from future scheme non users; those they firghten off.

Much is made, for example, of IR35 only bringing in a few million. Somewhat shy of the 600 odd million Timms et al stated in the RIA. Truth is though that nobody knows how much it brings in. Quaite a lot of folk simply accept it, pay themselves the money as salary and think "that gravy train was good while it lasted".

HMRC action is not so much about getting the pound of flesh, it's about discouraging people from risking going outside the box.

That's very true, my tax planning has been a lot more conservative since IR35, I simply don't want the hassle, in that respect HMRC have a success.

[silver_lining]

But there can be no doubt that most judges will have little real sympathy for the underlying schemes and those using them. If the descriptions of what they do is correct (ie allow UK workers to avoid paying UK tax), HMRC will be regarded as completely justified in trying to crush them wherever they are found. They just have to do so without giving the impression that, as a department, they couldn't run a bath (which is an impression that HMRC is very good at giving).

I believe this raises some interesting questions, especially in the context of one question the judge asked, which was (loosely quoted) 'did the UK taxpayer really think they could avoid paying UK tax ...' put to the MP QC......

Now, to my mind every judge is loosely familiar with statute and hence knows, any individual is entitled to arrange their tax affairs to best serve their own interests as long within the law... as we and millions of others are doing today

Obviously MP QC responded accordingly... and that seemed to satisfy... but to my mind the question was bordering on rhetorical...why bother asking this most basic of questions?

It raises the old chestnut .... retro is bad, unfair in general; but specifically more so in this context as they sat on their fat spotty asses and did nothing for a whole dogs life....

I keep hearing rumblings of weighing this against the fact of 'wholly artificial' and 'surely they knew the risks'.... etc. and to me there lies the straw that could break the contractor camels back..... this one gives me sleepless nights...

without this little worry, I believe its all looks rosey....

[ASB]

That's very true, my tax planning has been a lot more conservative since IR35, I simply don't want the hassle, in that respect HMRC have a success.

If it's not too direct what have you done differently ?

My personal view is that I spent 25 years freelance. I have been through a number of different regimes. When you're as old as me you'll remember the investment income surchage, the deemed distribution rule and a couple of other things. All these were designed to ensure that the ultimate value of the funds you received as an owner/manager were pretty much the same as paying a salary.

A certain tory chancellor abolished a lot of these. Also introduced (CBW) the "smaller companies rate". It always struck me as perfect how I could engineer things to my benefit - and I did it in spades. Now the pendulum has changed.

I thought it odd that over the time I was freelancing that I could claim all my assorted expenses etc. A permanent employee couldn't it was simply choice for the permie. If we want a mobile workforce then the difference is wrong. But the difference is the wrong way. Everybody should be able to claim the costs of earning their income against that income.

I'm lucky that I have quite a lot of assets, and now I'm permie still a decent income. But most of my aseets have been effectively built up by not paying tax. Perhaps I should I have a moral prolem with that. I don't though, they weren't my rules. I just obeyed theirs.

[SantaClaus]

Very new to all this forum stuff but have been reading avidly for some time without registering. Thanks to all the intelligent contributors and posts, the support it has given me during these tense and pressing times has been imessurable...

My question: I have yet to recieve any form of closure notice yet several friends of mine have. So, If I haven't received a Closure Notice how can I possibly stand a chance of settling the score with HMRC...Not that I want to mind. Bunch of robbers.....

Sorry if this is the thousandth time this has been asked but would appreciate a response.

Much congrats to MP and the QC job well done and keep it going...

I think you should tell Montp if you havent already.
There is a 30 day limit to the time you can appeal against a closure notice.

Have you had an enquiry opened into your self assesment returns? If not, then HMRC may have missed their deadline to claim the money. But as in my case, the enquiry letter may have "alledgedly" got lost in the post.

If you havent done so already, request your file under the Data Protection Act (see my link below). Dont tell them why you want it. That way if HMRC turn round and say they did send a closure notice/enquiry letter, you will have proof whether they did or did not.