BN66 - JR Judgement Day

[TaxDude]

While we await developments on BN66, here is a thought.

I've been contracting for more than 20 years. When I started there weren't many contractors - unlike today.

When I started, my accountant advised me to work as a self-employed individual. No company or anything: it worked OK.

A few years later, legislation was introduced so that Agencies weren't allowed to deal with self-employed people, they could only deal with limited companies.

I formed a limited company. A company is something that strikes me as suitable for medium to large businesses, but daft for a one-man band. What on earth is the point of all those documents that have to be filed at Companies House, all those board minutes etc?

Then IR35 came along. Attempting to treat me the same as an employee was downright wrong. I didn't think like an employee, work like an employee, have an employees benefits and I change clients every six to twelve months. I found Montpelier and joined their scheme.

What the Government needs to do is to recognize that there are thousands of independent contractors. We aren't employees of our clients and limited companies aren't designed for us but for other kinds of business.

Government ought to establish a tax schedule that is designed for independent contractors. A schedule that treats us as independent businesses, allowing us to set off our necessary expenses against tax, acknowledging that wives/husbands/partners do make a contribution to the business and recognizing that we are a major contributor to the nation's flexible workforce.

We should not be forced to jump through stupid hoops just because the Government or HMCR are too lazy to think the problem through properly, or because they think that we can be milked. They need to recognize that the Contractor sector has grown into a significant part of the economy and they are trying to force it into tax legislation that is appropriate for other structures. They should respect the Contractor sector, design a tax structure for us and allow us to get on with our work.

Looking beyond BN66, how about a campaign, writing to our MP's, to Alastair Darling, George Osborne & maybe even HMCR itself to sort out the tax position of independent contractors in a fair and reasonable way?

Absolutely agree - why are we allowing ourselves to be treated this way. Is it because we dont have a strong enough loby voice or union ! Would they treat dentists or doctors this way !

[bananarepublic]

I wonder if HMRC work like the rest of the debt management industry?

I doubt it!!

I can imagine that they are going to be quite tough on this one. I would be staggered if they made people bankrupt where they have tried to agree payment terms, e.g lump sum payment up front plus regular payments over a term. People with a house may have to accept an HMRC charge over it - they did this in the last recession.

After all, it is in HMRC's interest to squeeze as much tax out of us - making people bankrupt - especially when they have a chance of paying - isn't the best way of doing this as many wouldn't be able to work, especially those in finance.

However, if I had no liquid assets and/or no property and/or was not seen to be cooperative it wouldn't surprise me at all to see HMRC bankrupt people.

There are some very hard cases out there as people have found themselves in certain circumstances through no fault of their own which is why I think the judge got that bit wrong in his judgement. Not good to be in that situation, but useful as far as the appeal goes.

[bananarepublic]

"“The government is pleased with the decision of the High Court,” the official said. “Prior to introducing the legislation the government considered very carefully the issues relating to fairness and certainty, and the public interest, and took the view that in the circumstances the legislation was appropriate.”

Probably about the same amount of care they took taking account of the representations of IT contractors during the "consultation" period for IR35. The meeting finally took place but half way through the Inland Revenue representative interrupted it to announce that he had just received the final proposals.

It was this incident probably more than another that persuaded me to join "the scheme".

[Tax_shouldnt_be_taxing]

I doubt it!!

I can imagine that they are going to be quite tough on this one. I would be staggered if they made people bankrupt where they have tried to agree payment terms, e.g lump sum payment up front plus regular payments over a term. People with a house may have to accept an HMRC charge over it - they did this in the last recession.

After all, it is in HMRC's interest to squeeze as much tax out of us - making people bankrupt - especially when they have a chance of paying - isn't the best way of doing this as many wouldn't be able to work, especially those in finance.

However, if I had no liquid assets and/or no property and/or was not seen to be cooperative it wouldn't surprise me at all to see HMRC bankrupt people.

There are some very hard cases out there as people have found themselves in certain circumstances through no fault of their own which is why I think the judge got that bit wrong in his judgement. Not good to be in that situation, but useful as far as the appeal goes.

Quite right. And that's why an impact assessment would have been good. It's one things the Judge saying that HMRC will consider peoples circumstances, but there's a potentially huge swing in that. And without such an assessment, the reason why some people might not have been able to put the money aside for a hurricane day will never be known without appeal.

Anyways, wife now wants me to get off the PC as she thinks I'm having an online affair (possibly I am with CUK). So good hunting and catch up on the flip side.

[a x]

I am not affected by BN66 but I wish to give my support to all those who are. I believe that the respective nature of the legislation is abhorrent in a civilised society. If the HMRC cannot structure legislation correctly in the first instance then they have no right to alter it at a later date to catch people restrospectively, who for many years followed the law! In my view the judge is wrong. I hope the appeal process supports my view.

[bananarepublic]

1) Had no returns under investigation prior to 2008 budget
2) Had returns that had been "accepted" by HMRC because they weren't queried in the 12 month window after the 31 Jan filing deadline
3) Preferably had a number of tax returns which satisfied 2)
4) Subsequently received a closure notice?

Yes, to all of the above.

So how do you feel when the judge said that

"Any prudent taxpayer who followed that* advice would not now be prejudiced by the retrospective effect of the legislation."

* the advice being that -

"HMRC ... advised taxpayers to pay on account the income tax which HMRC said was properly due"

And that the taxpayers circumstances were

"wholly different from those in Beyeler v Italy (2001) 33 EHRR 52, where the public authorities by their conduct over many years had led the applicant to believe that the state would not exercise a right that it enjoyed, and the later exercise of the right conferred a specific unjust enrichment on the state at the expense of the citizen."

I would contend that you were exactly in the same situation !!

It gets worse! Are you reading Mr BBC man?

[Tax_shouldnt_be_taxing]

1) Had no returns under investigation prior to 2008 budget
2) Had returns that had been "accepted" by HMRC because they weren't queried in the 12 month window after the 31 Jan filing deadline
3) Preferably had a number of tax returns which satisfied 2)
4) Subsequently received a closure notice?



So how do you feel when the judge said that

"Any prudent taxpayer who followed that* advice would not now be prejudiced by the retrospective effect of the legislation."

* the advice being that -

"HMRC ... advised taxpayers to pay on account the income tax which HMRC said was properly due"

And that the taxpayers circumstances were

"wholly different from those in Beyeler v Italy (2001) 33 EHRR 52, where the public authorities by their conduct over many years had led the applicant to believe that the state would not exercise a right that it enjoyed, and the later exercise of the right conferred a specific unjust enrichment on the state at the expense of the citizen."

I would contend that you were exactly in the same situation !!

And again why an impact asessment is valid. And what about someone who joined the scheme in 2007. And why retrospection needs more thought than this diatribe! "OK, honey, just turning it off now. S**t!"

[bananarepublic]

And what about someone who joined the scheme in 2007.

I think that is different. The proportionality argument is different for different people in different circumstances. The chap who was in the scheme for years, filed his returns properly but only got a tax demand after BN66 after his previous returns were "discovered" to be worthy of investigation is in a different situation to someone who joined in 2007, IMO.

The former could quite reasonably have spent all the "tax" owed as would be his right, but not sure of the latter (unless he was party like HMRC to Tax Bulletin 63 from 2002). [ hey but seeing that HMRC can operate with the benefit of hindsight, surely we should be given the benefit of the doubt also and be allowed to retrospectively have "known" about this bulletin in 2002 ]

[SantaClaus]

That is simply not true. The amount of tax that HMRC are proposing to charge you should be currently suspended pending an appeal on the closure notice. You can still demand a hearing in the tax courts. There is no point in HMRC being heavy handed on this - unless, that is, they want all 3,000 of us to demand a hearing.

We are on step one of the legal process - there is a whole staircase to go yet.

Please, stay clam.

This is a key point to remember.

If HMRC want to play games, we can all line up and demand our day in court.
As Toocan says, imagine 3000 people clogging up the courts system.

I imagine we would be allowed legal aid. Wonder how much that would cost the government? 200 million perhaps?

[OnYourBikeGB]

Anyone thinking deals/concessions/compassion/sympathy/a shoulder to cry on will be forthcoming from HMRC should read this. Especially the last 3 paragraphs with comment from HMRC.

http://www.contractoruk.com/news/004726.html

I'll leave you with one final thought before I go and have my steak and chips.

I say we stick together and tell them to **** off

TBH, I don't think there is a chance of compassion, at least not until they have squeezed so hard that they know there isn't a drop left. In the cold light of day, it's not over, but this is a warning that it is time to plan. I'm taking the view that I expect to lose my life savings +, either in a few months time or in a few years. It will be ring fenced and earning interest, but I won't be thinking of it as mine. That way if we lose, I will already have moved on, if we win, then I will have a celebration to look forward too. I have better things to do with my life that to live in fear of them.