BN66 - Round 2 (Court of Appeal)

[MajorGowen]

Comment here...

Allow Comments to be Posted to the Section 58 FA 2008 Idea — HMG - Your Freedom

The above thread started by Emigre is still open for comments etc.

Just added the following:

The reason that people keep commenting is due to the unfair and unjust legislation that is Section 58 of the Finance Bill 2008.

Please understand that we are all law abiding citizens who strive for a better way of life for ourselves and our families. Prior to IR35 we were happy to operate through Limited Companies, and many of us returned to this way of working once this scheme was being investigated.

What we are asking is for this Government to stand by the knowledgeable, and forceful words David Gauke stated during the debate on Section 58. Mr Gauke was totally against the retrospective element of the Bill, and questioned why, if HMRC thought that the original legislation was adequate, the Bill was being implemented at all.

Having looked at many of the "ideas" on this website, this is one of the few that actually relate to something real. We are 3000 families - I have 5 in mine, who will be ruined by this legislation. That David Gauke fully understood the injustice at the time, but now is burying his head in the sand makes us all wonder what Politicians actually stand for??

Please allow the original thread to be reopened so we can correctly comment on what this means to all of us.

[screwthis]

[QUOTE=MajorGowen;1166310]

I agree that posting the same comment over and over again is not a good idea. I do think that all of us putting, say, 5 valid comments on this every day is a good idea, as maybe it will show them the strength of feeling, and remind them that there are real people behind this. If more of you out there logged in and posted it also wouldn't be left to the few to add comments, which just makes us look like trouble makers.

I, along with most people on here, stand to lose a great deal if we have to pay this, so why shouldn't I shout from the roof tops? This is a massive issue, and one that will be repeated on a large portion of the nation if it is allowed to stand.

So lets all add heartfelt comments on just how this will affect our families and ourselves, how it is making us feel, and what impact this has had on our lives since 2008 (ie HMRC bullying tactics, etc).


Where is the wrong in doing that ??

That is assuming they don't deny our civil liberties by keeping the thread closed...

The thing that concerns me is that before the election it was obvious that the then Labour govt. had it in for us (starting from the IR35 days).
At that time, we had the opposition supporting us at least in principle.
Now that they are looking like abandoning us we should still be careful not to overly alienate them. We started off by writing to them as the 'good guys' giving them the opportunity to overturn Labour's mistakes but we are rapidly tarring them with the same brush. Whilst that may be true, all this aggression, threats and bad publicity (e.g. "SHAME ON YOU David Guake" all over their site) is going to piss them off to such an extent that they will start to sympathise with Labour).
We have often asked the question why they are enforcing this given we expect that it may result in either a net loss to the Exchequer or at best (for them) monies will only be realised in the next administration. Many of you have suggested it is so that they appear tough against tax evaders.
I think sometimes people fight petty wars because of jealousy, insecurity, self-pity, anger etc.. I'm sure parking wardens and bailiffs derive a sense of pleasure and power from f**king people. The more we war with them the more they will look to f**k us because people get a buzz from winning. simple as that... "we win you lose". It may not be about money, or politics but just about winning and the more we oppose them and attack them the more it becomes a war (one which we had between Labour not the new govt.) Once you start a war people want to win even if they lose sight of why they are fighting it in the first place.

I think make them aware big time and NEVER let up but maybe calling them and their site a joke, spamming it etc. doesn't make us look noble.

[TheBarCapBoyz]

Crikey that's kind of scary.

Government storm troopers suppressing discussion of a legitimate point of concern.

And we thought this lot might be different

[SantaClaus]

Sometimes bad publicity is better than no publicity!

We could all quietly sit on the sidelines like good boys and girls, or we could kick up one hell of a stink.

I know what I would do.

[Emigre]

Gauke Letter Part 1

[QUOTE=screwthis;1166370]

The thing that concerns me is that before the election it was obvious that the then Labour govt. had it in for us (starting from the IR35 days).

I think make them aware big time and NEVER let up but maybe calling them and their site a joke, spamming it etc. doesn't make us look noble.

I agree with your sentiments. Yesterday I sent the following letter to David Gauke, copied to my local MP and to Zac Goldsmith. I think it gives David Gauke an opportunity to explain his apparent volte face.


Dear David

Section 58 FA 2008

I quote below a selection of comments made by you in Opposition to what was then Budget Notice 66 prior to it becoming S58 FA 2008. Extracts from Hansard.

The retrospective nature of the clause is deeply troubling.

The existing legislation appears to deal with the issue where the UK residents or domiciled individuals are partners in the relevant offshore funds, but it does not seem to work where the partners are trusts and the UK individuals are benefiting from the arrangement. The proposal essentially states that the amendments contained in the clause are to be treated as always having had effect. Either the law exists or it does not. It is troubling when the Government state that the law in the past is something because that is what they say it is now.

This is partly an issue of simple democracy. It raises issues about EU law and legitimate expectations.

Indeed, one leading tax expert described it as unprecedented. The Minister smiles, but I would be grateful if she gave some examples. She may seek to give the example of the 1987 case, but distinctions can be drawn with that. The 1987 provision, with regard to section 62 of the Finance Act 1987, seeks to reverse the Padmore case, to which we have referred. It says that the measure is deemed to have an effect except in relation to any judicial decision made before the amending legislation was announced. That is an important carve-out. It benefited not only Mr. Padmore, but a number of other individuals who had entered into arrangements and waited for the conclusion of the judicial proceedings relating to Mr. Padmore. In doing so, they benefited from that carve-out.

There is the issue of timing, which we touched on in relation to the previous clause. I do not think that anyone would dispute that the provision is retrospective. It goes back at least to 1987, so that is 21 years. As I said earlier, there is the issue of HMRC and the Treasury not necessarily acting terribly quickly when becoming aware of the arrangements. The explanatory notes refer to the “new avoidance scheme”. This is not the first time in these proceedings that I have had to query the explanatory notes, but I am not sure that the expression “new avoidance scheme” is entirely justified. How long have the Government, whether through HMRC or the Treasury, been aware of the arrangements? There is certainly evidence that HMRC has been aware of the arrangements for some years. That raises the question that I asked earlier. It is incumbent on the Government to act reasonably quickly. If they become aware of a scheme that they do not like but they sit on their hands and do nothing about it, and then some years later say, “Okay, we will introduce retrospective legislation,” that raises real concerns, because again there is a continued period of uncertainty. I would press the Government to move quickly if they saw something wrong, rather than sit on it for a long time and then seek to introduce retrospective legislation.

It comes back to legitimate expectation. If the Government do not act on something, perhaps they have taken the view that they will not pursue it. That argument has become stronger in recent years, as the Government now benefit from a disclosure regime. Schemes that result in people making tax savings are disclosed to HMRC, which has the opportunity to review the situation and introduce legislation.

It might be worth returning to the Rees rules, which we discussed on Tuesday. My hon. Friend the Member for Fareham discussed them with the Economic Secretary,
and there was some disagreement over interpretation. However one looks as those rules, this provision does not comply with them. The rules set out three circumstances that apply with retrospective tax legislation. If anti-avoidance provisions are to be legislated, there should be a clear warning in the House of Commons, where feasible a draft law should be published as soon as possible—to give effect to the proposal—and the clause should be incorporated in the next available Finance Bill. I would be grateful if the Financial Secretary could enlighten us on the extent to which that process has been followed with these provisions. I am not sure that it has. The Government are not on particularly strong ground.

It is not acceptable that the Government permit something that they consider unacceptable to exist for some years, and then seek to introduce retrospective legislation to address it. That is what we see here. The comments from the professional bodies are universally critical. The Chartered Institute of Taxation described the retrospective nature as “extreme” and “unjustified”, the Law Society described it as “wrong in principle”, and the Institute of Chartered Accountants in England and Wales said that “it sends out a very damaging signal about the stability of the UK tax system”.

The Minister says that in the opinion of HMRC, the clause merely clarifies the existing law, and that there has been no litigation. That is presumably because HMRC has not pursued litigation. If HMRC is so confident that the measure merely clarifies the law—I am not making a case one way or the other—why is it not bringing litigation against the users of the scheme?

I do not think that the Minister has reassured Conservative Members at all. There is an essential contradiction in what she said. She said that HMRC is confident that the clause merely reasserts existing law, that it is not a change in law and that the schemes are in clear breach of the law, yet she suggests that some £200 million in back tax is at risk. If the law is as she says—I have no reason to doubt it—that sum is not at risk, because all that is required is for HMRC to litigate. It prompts the question why HMRC will not litigate. Why is it not prepared to take the matter to court?
It relates to the point made by my hon. Friend the Member for Cities of London and Westminster. The Government are saying, essentially, that they will pass new law if they think that the law is in some way flawed or there is an alternative interpretation of it that they do not like. Rather than allowing the courts to interpret that law, they will rewrite it retrospectively so that it says what they wanted it to say in the first place. Such an approach gives individuals and businesses no reassurance that the law is what they think it is, as it is written down and what has been passed by Parliament. The impression is that it is something that can be changed if not at a whim, at the discretion of the Government retrospectively.

We have a well-developed legal system that should work on the basis of laws being interpreted on the grounds of what they say, not what the Government want them to say—even if that is not what they said at the time.

A Government should pursue and litigate on the basis of the existing law. When they identify an abuse, they should issue a warning and announce that they will change the law at the first opportunity, and then do so. The Minister said that HMRC was first aware of the schemes in 2001, but they were not pursued widely because the warnings given by HMRC proved to be sufficient. None the less, there was an awareness at that time by HMRC of some ambiguity in the wording of the 1987 legislation.

Notwithstanding the fact that the schemes were not being pursued, why were such measures not introduced under the Finance Act 2001 or subsequent Acts? There has been plenty of them. Given that there were two Finance Acts in 2005, there have probably been about eight. The matter causes great concern, and the Government’s approach should be to pursue it rigorously and to litigate if there is some doubt about the law. In the meantime, warnings should be given and legislation should be made. The Government have not done that. They have sat on the matter, have come back subsequently some years later and taken action when the scheme started to develop, having been aware of the ambiguity under the 1987 legislation.

Indeed, I am more inclined to interpret the proposal to make it retrospective as an admission that the 1987 Act does not do what the Government said it does. That is not based on a legal analysis but, if they were so confident that the 1987 legislation prohibits the behaviour that we are talking about, why on earth have they not litigated on the matter?

For those reasons I am more convinced than ever that the retrospective nature of the clause is unacceptable.

Please go to PART 2

[Emigre]

Gauke Letter Part 2

Continued from Part 1

On 24 June 2010 you responded to a Parliamentary question by Zac Goldsmith (Con – Richmond). Extract from Hansard.

Zac Goldsmith: To ask the Chancellor of the Exchequer (1) what his policy is on continuing the provisions of Section 58 of the Finance Act 2008 in respect of UK residents and foreign partnerships; and if he will make a statement; [3745]
(2) whether he plans to introduce proposals to repeal legislative provisions that ensure UK residents retrospectively pay UK tax on their profits from foreign partnerships; and if he will make a statement. [3810]
Mr Gauke: UK residents are taxable on their worldwide income wherever it arises—including situations where it arises by way of foreign partnerships. Section 58 of Finance Act 2008 was enacted to help put that beyond doubt. The Government are, in general, opposed to retrospective legislation. However, the retrospective element of section 58 is currently the subject of judicial review by the courts and the Government's view is that it is best dealt with there

Further, I am aware of a written response made to a number of MPs on behalf of their constituents made also during June 2010 where the same words have been used. Previous responses from MPs had indicated that the nation’s economic position is also a consideration.

No one affected by S58 FA2008 disagrees with your comment that resolution is best dealt with through the Courts. However, the very belief that recourse is best addressed through the Administrative Court (by way of Judicial Review) is in itself a continuance of what we believe to be a suppression of our Human Rights. All we want is a fair hearing in the RIGHT court, the Tax court. Repeal of the retrospective clauses in S58 FA 2008 would allow proper process to be restored. I believe that you are a lawyer and, as such, would I hope fully understand this differentiation.

The views that you espoused in Opposition are principles. Principles, and the maintenance of them, are the means by which the integrity of individual MPs and Governments are valued. There is no place in a civilised society for principles of this nature to be so compromised and the state of the nation’s finances to be quoted as the reason for so doing. I would argue that repeal of the relevant passages of the legislation would be fiscal neutral in the short term and fiscal positive in the longer term on the basis of sending a clear message of certainty to would-be inward investors to the UK.

I draw your attention to the fact that more comments have been received for this cause on the Civil Liberties part of Nick Clegg’s Your Freedom site than any other.

Restoring civil liberties — HMG - Your Freedom

I encourage you to read them. The majority of comments are from ordinary people, many of whom will be forced into bankruptcy and state dependency by the continuing existence of the retrospective elements of S58 FA 2008.

These events span a little over 2 years. Please explain to me why the views and principles that you expressed so eloquently and forcefully in 2008 no longer apply. Please also explain what effort has been expended to determine the estimated financial impact on the Exchequer from retention of the retrospective clauses of S58 FA 2008.

Thank you for your time.

Yours sincerely

[Morlock]

[QUOTE=OnYourBikeGB;1166264]

I understand what you're saying, but I doubt very much if this was anything more that a little PR stunt by the Government. They won't do anything about ours or anyone else's concerns. It's a website knocked together on a shoestring, that got them a few headlines. As far as they are concerned, its already served its purpose. We might be a pain in the side, but that website will disappear soon, with a platitude about it having served it's purpose.

Exactly. Just like Tony Blair's "Big Conversation".
Same s**t, different a***holes.

[Morlock]

I agree with your sentiments. Yesterday I sent the following letter to David Gauke, copied to my local MP and to Zac Goldsmith. I think it gives David Gauke an opportunity to explain his apparent volte face.

Emigre, that's a brilliant letter but sadly I think you won't get a reply. MPs are not obliged to respond to letters from people who are not their own constituents.

[FredBasset]

Emigre, that's a brilliant letter but sadly I think you won't get a reply. MPs are not obliged to respond to letters from people who are not their own constituents.

I agree, however a suitable rewording could be addressed to our own MP's.

Emigre would you mind me doing this and sending to my MP?

Regards
Fred

[Emigre]

Emigre, that's a brilliant letter but sadly I think you won't get a reply. MPs are not obliged to respond to letters from people who are not their own constituents.

Morlock, I copied it to my own MP, as well as Zac Goldsmith, so I hope they can see their way to short cut a little bit of protocol. If I sent it to my local MP to forward etc it would take another x weeks. The point is that they are two sets of comments by the Exchequer Secretary that do not sit easily with each other. My MP could not possibly answer any part of it. Why waste his time?