BN66 - the road to Judicial Review

[SantaClaus]

Hi I've been an an occasional lurker on this board. I'm not caught by bn66 although could have been if I'd not got out a few years back and Im interested to see how it works out.The ir35amnesty deal was not as good as some of you seem to be making out and i'll probably kick myself for accepting it if you guys win. I was told it was comparable to outside IR35 but I'm not convinced. At the time I had other stuff happening so I went along just to get HMRC of our backs. I've still got the paperwork somewhere so I could dig out the detail if it would be any use although wouldnt want my name mentioned anywhere. I hope you give HMRC a good pounding next month.

DND

Please do tell more Mr DealOrNoDeal. Sounds like you have may hold the banker's keys and know whats in the box

[ir35amnesia]

Shedding Light

Hi Amnesia. Welcome.

So, please share with us the source of your confidence that MTM were aware of the Suo Motu deal. Were you one of them?

My understanding of the deal was as you stated in a previous post, effectively confidential. I don't know how the law helps or hinders on a break in confidentiality. If it was confidential, MTM could not have been expected to have known about it and therefore did not hide anything from Helen7.

I was shown some emails by a friend who sat next to someone who in MTM scheme. These emails dated early 2003 clearly demonstrated that MTM knew about the Suo Motu settlement but not necessarily about the details.
About the confidentiality - i was referring to the possible impact/effect upon the person supplying details of the settlement not about how it may affect the JR.
Plus i was only trying to throw some objective "light" on the debate.

[ir35amnesia]

Chums or chumps

Hi ir35amnesty sorry amnesia

perhaps you could shed some light on how your chums at HMRC could offer hunderds of favourable deals to scheme users even though it new from the dawn of time that the scheme was illegal due to padmore etc....

I await your response

Sorry - just an outsider looking in.

[PlaneSailing]

Money, mouth etc...

Mr/s Amnesia, welcome to the forum.

Any background you'd like to share with us?

Another post falling on deaf ears?

[bananarepublic]

Why should MTM be interested in whether another provider had done a deal?

How would they know whether or not the other scheme was structured in the same way?

Surely the duty of care MTM/Montpelier had to their clients was to follow the legal advice they had been given.

As point of fact I knew at the start of 2003 that another provider had settled, but stayed with MTM for another 2 1/2 years. For precisely the reason that MTM had not breached in my view any obligations they had to me.

My understanding is that nobody forced Suo Motu to settle. It was entirely voluntary. HMRC did not win a case. They didn't provide an argument. They used no existing legislation.

The deal was secret. I only knew that a deal had been done because I had an acquaintance who settled.

HMRC could have offered a general settlement. The fact that they didn't tells me that they had no legal arguments as to why the scheme didn't work.

Furthermore, I believe they have breached my "human rights" by not offering me the same deal as it means they have treated other taxpayers more favourably.

I see no reason for the settlement not being in the public domain - certainly it should be disclosed in the JR. It is highly incriminating evidence against HMRC.

[IR35 Avoider]

The idea that people were offered favourable deals is mostly wrong. The deal left people marginally better off (low single digit percentage points) than if the same income had passed through a PSC as IR35-caught. (And that's assuming no pension contributions in the alternative reality - so arguably it might have left some people worse off.) Those few percentage points arose as a result of a blanket formula being applied to all contractors, rather than HMRC having to work out a to-the-penny figure in negotiations with each contractor separately. The "discount", such as it was, was merely a tiny compensation for the saving in admin. effort to HMRC that resulted from a blanket agreement. In other words, I don't think HMRC think they got any less in net revenues (after admin costs) from agreeing the deal than they would have done from dealing with each individual separately in minute detail.

The idea that there was some sort of conspiracy or wrong-doing by HMRC with regard to this particular issue is wrong. They were applying absolutely generic procedures which are used in all kinds of tax disputes to resolve the issue and collect (approximately) the actual amount of tax owed.

HMRC had no reason to spend any time (or legal budget) contemplating whether the scheme worked, as the taxpayers had in effect come to them agreeing with their default position (one presumes with regard to all tax avoidance schemes) that the scheme didn't work. The only issue HMRC had to consider was how much tax they were owed and how most efficiently to collect it.

To sum up: the idea that people seem to be angling for, that HMRC admitted doubts by offering discounts, is doubly wrong. There were no significant non-routine discounts, and there was no reason for HMRC to apply their legal budget to the issue of whether the scheme worked, as the taxpayers came to them conceding that it didn't.

Having said all that, I hope you MTM contractors win. Retrospective legislation is outrageous.

[silver_lining]

Poppycock....

In the context of whether MTM knew about Suo or anything else is irrelevant

What matters is that they believe it's legal and have put money where mouth, hence we are we are.... unlike Suo who bent over as well as providing the HMRC with the KY jelly

[bananarepublic]

The idea that people were offered favourable deals is mostly wrong. The deal left people marginally better off (low single digit percentage points) than if the same income had passed through a PSC as IR35-caught.

How do you know this - the deal was secret? That isn't the (second hand admitedly) information I have (more like comparable with IR35 not caught - remember that HMRC never challenged the employment status of the members), but as you say, it depended on individual circumstances.

I don't think there was any conspiracy. What is wrong is HMRC use this settlement as an example of how the scheme didn't work. When in fact a scheme provider voluntarily settled. They are being fundamentally dishonest.

And further to this - they could have offered the same settlement to us but chose not to. They never even admitted to any settlement other than in the (misleading) blurb which went with BN66.

[Tax_shouldnt_be_taxing]

Comments by IR35 Avoider

"HMRC had no reason to spend any time (or legal budget) contemplating whether the scheme worked, as the taxpayers had in effect come to them agreeing with their default position (one presumes with regard to all tax avoidance schemes) that the scheme didn't work. The only issue HMRC had to consider was how much tax they were owed and how most efficiently to collect it."

Well in the case of BN66, that seems to be turned on its head. Now imagine a situation where someone senior in HMRC considers that any of these schemes may have been precipitated by IR35. Cause & effect gives rise to the view that IR35 led to these schemes becoming more widespread. So in a way, IR35 is the Cause and schemes are the Affect. If one was running a business where a decision created a problem elsewhere then you'd seek to remediate it at the first opportunity. So given the "deal" done in 2002, and based on your view as quoted above it would seem a responsible course of action to either legislate or litigate there and then or to approach those using parallel schemes (already known about) and offer to settle. That way, there is no need for retrospection anything. But if you did nothing for nearly 7 years that resolved this "leak" one way or another, then it's on your watch that this got out of hand.

And in terms of a pragmatic approach of Root Cause Analysis (RCA), if you say something doesn't work, then it would be required that why it doesn't work is given to support this statement. If a police officer tells me I was speeding and hands out an SP30 notice, he won't do so without supporting it with the (why) legislative position. "Evening Sir, I caught you speeding, here's your fine". I know, I have an SP30. If that diligence had not been done then I would take it to court. But of course the police is not HMRC.

Oh, and I don't think the 6 stages of a "project" should apply as has been done in this case, namely:

1. Enthusiasm
2. Disillusionment
3. Panic
4. Search for guilty
5. Punishment of the innocent
6. Praise and honour for the non-participants

Currently we're at stage 5. Can't wait to find out the names of those in stage 6.

[SantaClaus]

The idea that people were offered favourable deals is mostly wrong. The deal left people marginally better off (low single digit percentage points) than if the same income had passed through a PSC as IR35-caught. (And that's assuming no pension contributions in the alternative reality - so arguably it might have left some people worse off.) Those few percentage points arose as a result of a blanket formula being applied to all contractors, rather than HMRC having to work out a to-the-penny figure in negotiations with each contractor separately. The "discount", such as it was, was merely a tiny compensation for the saving in admin. effort to HMRC that resulted from a blanket agreement. In other words, I don't think HMRC think they got any less in net revenues (after admin costs) from agreeing the deal than they would have done from dealing with each individual separately in minute detail.

The idea that there was some sort of conspiracy or wrong-doing by HMRC with regard to this particular issue is wrong. They were applying absolutely generic procedures which are used in all kinds of tax disputes to resolve the issue and collect (approximately) the actual amount of tax owed.

HMRC had no reason to spend any time (or legal budget) contemplating whether the scheme worked, as the taxpayers had in effect come to them agreeing with their default position (one presumes with regard to all tax avoidance schemes) that the scheme didn't work. The only issue HMRC had to consider was how much tax they were owed and how most efficiently to collect it.

To sum up: the idea that people seem to be angling for, that HMRC admitted doubts by offering discounts, is doubly wrong. There were no significant non-routine discounts, and there was no reason for HMRC to apply their legal budget to the issue of whether the scheme worked, as the taxpayers came to them conceding that it didn't.

Having said all that, I hope you MTM contractors win. Retrospective legislation is outrageous.

Interesting! That would mean that the guy who setup the IR35 Amnesty website (Alan Jones I believe?) has goaded people into accepting a settlement that was hardly beneficial to them, when they should have just waited for the Judicial Review.