BN66 - the road to Judicial Review

[travellingknob]

I don't think Montpelier would be ready to let this drop either.
There is a lot more at stake here, i.e. whether retrospection can be applied at will to any tax measure and possibly the existence of the tax planning industry.

Your expecting a lot of MP.
Your right there may be a lot at stake over retrospection but if MP win their case why would they care to take it any further. They are not a political entity and it only affects them in terms of how it affects their clients. I see no reason why they would want to pick up the fight for the entire industry.

[travellingknob]

Hi and welcome to the forum.

This is why we can't plan our next move until we get the judgement.

I may start drafting a template letter to send to Members of Parliament, but the detail will depend on the judgement.

I have a similar view on sending something to the newspapers to draw their attention to the case. I was thinking nothing more than a few lines and drawing attention to the side issue of how things are streamrollered through parliament with considerable misrepresentation from HMRC.
I would invite them to respond requesting a fuller synopsis if they are interested in pursuing the story (possibly targeting weekend editions) - obviously [link to/details of] the judgement would be included but it cant really be written until we see it !

[Toocan]

Nearly right Toocan. However, this particular Montpelier scheme didn't exist until after IR35 (March 1999) and wasn't fully developed/launched until somewhere around early 2001. You can read the whole development story here
http://www.judgments.im/content/J983.htm

It explains a lot.

Taf4, this scheme has been used prior to 1999 and was only extended by Montpelier to work for people who may (or may not) have been affected by IR35.

The judgement you quote does not give the whole story.

[travellingknob]

That quote got me thinking too.

It's early days yet, but if we win, surely we would be seeking compensation next?

To seek compensation you would have to demonstrate a real and measurable loss. I dont think having your SA return queried, a closure notice issued and subsequently amended/retracted after successful appeal really does it.

[Toocan]

The principle of this scheme was first used by property developers and was recommended to clients by the likes of KPMG & PwC who spotted the opportunity after it was highlighted in the HMRC manual after the Padmore case in 1987

No precise details of how many used it are available, clearly anyone who used it and did not have any enquiries raied in the early days prior to 2001 do not want to have their cases aired in public or risk having their tax affairs opened up again, but at the hearing HMRC admitted that the scheme had been used prior to 2001.

It was only after the massive increace in its use post IR35 that it cauught the attention of HMRC and TN63 makes it clear that in 2002 HMRC cannot find a reason to deny anyone claiming the exemption.

When they opened up hundreds of enquiries they tried to used three arguments that we were not entitled to the exemption. Archer Shee, Ramsey and the general anti avoidance legislation in S739.

It is clear from the testimony which Mr Singh gave on behalf of HMRC that these arguments did not work and the reality is that rather than risk a defeat in the courts by taking 4 test cases to the commissioners as Brannigan told us they would do in late 2007, HMRC tries to circumvent an embarassing defeat and in late 2007 as they admitted in the evidence from MacDowall and Davies (HMRC officals involved in the court case) they came up with the idea that in the 1987 legislation the word "partner" also meant "trustees".

But again rather than test out this very tenuous argumment in court which again had a very high risk of defeat they came up with the idea in late 2007 to "clarify" or as we suggest simply "change" the law restropectively.

The essence of our case is that if they had confidence in any of their arguments they would have used the tried and tested method of testing their argument in court but it was easier to mislead parlaiment than it was to convince a judge and so they opted for retrospective legislation.

Had they clairifed the law immediately they knew about it post the Padmore case or even in 2002 when they issued TN63 they may have acted in good faith, but to wait 7 years allow hundreds of people to assume teh scheme was OK (legitimate expectation) and then bypass the court system, mislead parlaiment and back date the legislation seems a clear breach of our human rights and an inditement of the behaviour of HMRC.

I am confident the Judge will take this view and give a judgement in our favour.

What is more, we are all aware of other schemes that HMRC have NOT challenged and yet they must be aware of them. It would appear they either approve of them, or are simply not doing their job.

[Toocan]

Looks like things are getting serious for HMRC.
As several have indicated on here, there may be a serious case/charges to be examined against HMRC, when we win this.
As we know HMRC are reading this - might I suggest an olive branch here?

Assuming we win, HMRC, if threatened with investigations etc, are much more likely to appeal as there would be more at stake for them, which will drag this on longer for all of us.

Even though I totally agree with other posters here that people should be brought to account, and I'm also thirsty for blood, but I'm wondering if it isn't in our best interests to offer the following to HMRC:
i.e. when we win, HMRC to drop any appeals, and we will walk away without pursuing any charges/investigations further - in others words end this now.

We wouldn't have our vengence but at least we could draw a line under it.

All this fighting talk, which I totally understand and feel, is just likely to back them into a corner, giving them no option other than to keep fighting and drag the fight out longer.
Give them a door to leave by and it would at least close this off for us right now.

Just a thought - don't flame me for it!

I'm not sure that HMRC have a choice in the matter. They are really after the power to change tax law retrospectively - that is what this case is about. They could only back off now if the politicians told them to.

[nick4notax]

I'm not sure that HMRC have a choice in the matter. They are really after the power to change tax law retrospectively - that is what this case is about. They could only back off now if the politicians told them to.

And, heavens forbid, they should ever get that. I'm all for chasing these corrupt b@stards through every court in the land. What they have done to us is unforgivable, and they need to pay with their pointless little careers.

[DonkeyRhubarb]

To seek compensation you would have to demonstrate a real and measurable loss. I dont think having your SA return queried, a closure notice issued and subsequently amended/retracted after successful appeal really does it.

I think our first port of call should he here:

http://www.cabinetoffice.gov.uk/medi...anguidance.pdf

The Parliamentary Commissioner for Administration (or Parliamentary Ombudsman) investigates complaints from members of the public of injustice arising from alleged maladministration.

Maladministration includes:

bias, neglect, inattention, delay, incompetence, ineptitude, perversity, turpitude, arbitrariness

Take your pick out of these really.

[SantaClaus]

I think our first port of call should he here:

http://www.cabinetoffice.gov.uk/medi...anguidance.pdf

The Parliamentary Commissioner for Administration (or Parliamentary Ombudsman) investigates complaints from members of the public of injustice arising from alleged maladministration.

Maladministration includes:

bias, neglect, inattention, delay, incompetence, ineptitude, perversity, turpitude, arbitrariness

Take your pick out of these really.

Let's see...

bias: check
inattention: check
delay: double check
incompetence: definitely a check
ineptitude: check
perversity: double check
turpitude: hang on...dictionary out.........check
arbitrariness: check

All present and correct.

[Richard Splash]

I have found out a bit more about this and I'd like to share this with you.

This was one of the key pieces of evidence at the JR. HMRC tried to dismiss it, saying it had been written by a junior member of staff. Even if this were the case, it must have been approved at a senior level because it was circulated to tax offices around the country.

The note was a bulletin issued in July 2002 advising tax offices about the scheme and telling them what to look out for in the 2001/2 tax returns.

It is highly significant for a number of reasons:

1. it describes exactly how the scheme works, and this was 6 months before they'd seen a single tax return
2. there is no mention of the Padmore 1987 legislation being applicable
3. it says they had considered how to challenge the scheme but hadn't been able to come up with anything
4. it says they were aware that several hundred trusts had been set up for the purposes of using the scheme, so they knew it was already widespread
5. they mention that the scheme was being used to circumvent IR35 and was therefore being targeted at a huge audience

It simply beggars belief that they issued this guidance to tax offices and then sat on it for almost 6 years before concocting retrospective legislation.

No matter how crazy and far fetched it sounds you can't help but think that they sat on it for 6 years because it was viewed as 'rainy day money.' HMRC would sit on it like a little fincial egg and when a recession hits or they are due for an re-election they simply hatch it and say to the good folk of England - what awfully clever people they are....