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BN66 - Round 2 (Court of Appeal)

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    They were warned......

    Below are excerpts from Hansard dated April 2004 at the 2nd reading of the 2004 Finance Bill

    (HC Deb 20 April 2004 vol 420 cc186-267 186
    § [Relevant document: The Sixth Report from the Treasury Committee, Session 2003–04, on the 2004 Budget, HC 479.] )

    The person initially quoted is Conservative Mark Prisk MP (Hertford and Stortford). PS The Chancellor that Prisk refers to is, none other than, Gordon Brown.

    “……Conservative Members fully accept that seeking to evade legitimate tax liability is illegal and should be dealt with accordingly, but there is a world of difference between illegal tax evasion and tax avoidance or planning. Indeed, I understand that that was once the Labour party's view. Preparing for the debate, I came across a fascinating document, Labour's policy paper "Tackling Tax Abuses, Tackling Unemployment"—a snappy title. It was written when the Chancellor was still the shadow Chancellor. Under the heading, "How avoidance can be countered", it states: ‘The taxpayer is entitled to take advantage of the law to minimise his or her tax bill.’ It goes on ‘as a matter of principle’ —not a phrase that we hear often from Labour Ministers nowadays— ‘we believe that the citizen is entitled to know where he or she stands before the tax law.’ It concludes: ‘It is the complexity of the present system that has encouraged the growth of a flourishing avoidance industry.’”

    At the same session Mr Howard Flight (Arundel and South Downs) (Con) is quoted as saying

    “I am surprised that the Inland Revenue has not previously attacked artificial tax avoidance schemes, which have been widely marketed, well before they have become widely used, and I understand the Government's objectives in the Bill. However, I ask the Chief Secretary to make a commitment that the Government will now publish the prescribed Treasury regulations, mentioned in clause 290, which will define "notifiable arrangements". Without that, we cannot know whether, as the Treasury Committee warned, the arrangements will create undue compliance burdens for taxpayers and their advisers, or undue administrative burdens for the tax authorities. As the national head of Ernst and Young commented, his concerns are that UK businesses should not be put at a competitive disadvantage. I am sure that the Government share that objective.

    I also warn the Government of the dangers of confusing tax evasion and tax avoidance. In those European Union economies where that happens, the outcome has been to make tax evasion socially acceptable. Ultimately, there also needs to be a degree of consent on the part of those asked to pay the taxes levied on them. As the senior partner of Grant Thornton pointed out, many of the Government's problems in their attempts to tackle tax avoidance are of their own making. Moreover, to avoid the new rules imposing excessive and uneconomic burdens on business, they also need to draw a clear line between "offensive" tax avoidance schemes and normal corporate tax planning; otherwise, provisions could have the effect of requiring any transaction on employment or a financial instrument that could have been accomplished in a less tax-efficient manner to be reported. That would impose wasteful time and cost burdens both on business and on the Inland Revenue.”


    Also Michael Jacks (then Conservative MP for Fylde) & now head of the new Office of Tax Simplification announced today) is quoted as saying

    “…While the Government are seeking to deal with general tax avoidance, they ought on the other hand to encourage the retention of moneys in small business. However, with IR35, section 660A, and now other elements of the Finance Bill, they seem to be hammering hard on these small engine room businesses for the British economy. Why does that group seem to have been singled out for particular treatment, when a more considered review might have been the best way forward? Such people are the entrepreneurs of the future and the engine rooms of the service economy, yet they seem to be getting a bad deal in the Finance Bill…..”

    The then Paymaster General (Dawn Primarolo) said

    “The debate in Committee—on which I hope the right hon. Gentleman will serve—will enable all hon. Members to draw a clear distinction between legitimate tax planning, avoidance and evasion and allow us to discuss how we should respond to these challenges in fairness, treating all taxpayers on an equal basis.

    Both the right hon. Member for Fylde and the hon. Member for Arundel and South Downs asked about legal privilege and whether it was our intention to override it—it is not—and about the regulations that will provide for the disclosure. The regulations will be made available before we get to that part of the Standing Committee. There will be consultation on them, because it is our intention to try to make sure that this works, for exactly the reasons that everybody in this House would expect.”


    What is my point?

    1. Gordon Brown (then Chancellor) was/is a hypocrite when it comes to tax avoidance/planning
    2. Howard Flight warns about the consequences IR dragging their feet regarding tax avoidance schemes before they become widespread
    3. Howard Flight voices our same concerns about the (deliberate?) mixing up illegal tax evasion with legitimate tax avoidance / planning
    4. Establishing Michael Jack's (in the news today) credibility regarding his knowledge of IR35 & surrounding issues
    5. Dawn Primarolo's hollow words about giving the opportunity to discuss & agree tax planning "....allow us to discuss how we should respond to these challenges in fairness..." Hah! Plus her weasely words about legimitate expectation.
    Ninja

    'Salad is a dish best served cold'

    Comment


      Parkers Paradox

      Direct quote from Parker at the JR:
      "I do not believe that the outcome of any legal proceedings in respect of the arrangements would have been a foregone conclusion."

      Yet, he then goes on to state the BN66 is valid and that the provisions of the 1987 (2) legislation can be applied.

      "The whole matter was in any event put beyond dispute by section 58(3) of the 2008 Act".

      He also goes on at length that he believes Padmore can apply.

      Well which is it? Litigation may have failed yet he also says that Padmore can apply via BN66. How so? How could there be any chance that litigation could have failed if in his view Padmore applies through BN66?

      Either it worked or it didn't. Parker states that it working or failing is an open argument. In which case how can Padmore be applied? Clearly it cannot unless you use BN66 as the answer to change what the law could have meant before 2008.

      Comment


        As Daniel Hannon said...

        We know that you know. And we know that you know we know.

        Parker thinks the case could have gone either way before BN66.
        Hansard clearly shows that there are conficts in what was used to defend BN66.
        MP's voiced concerns about retrospection.
        ICAEW said it was wrong.
        Rees rules were tossed aside.
        Padmore was never mentioned by HMRC prior to BN66.
        TE Issue 63 says that the scheme might not be defeated through litigation.
        Nothing for 7 years by HMRC.
        The law was CHANGED.


        THEN the rabbit comes out of the hat. Some magic trick!

        Comment


          Originally posted by Tax_shouldnt_be_taxing View Post
          Direct quote from Parker at the JR:
          "I do not believe that the outcome of any legal proceedings in respect of the arrangements would have been a foregone conclusion."
          This issue is largely irrelevant going forward, since the Court of Appeal will only be considering whether the retrospective legislation itself is compatible with HR/EU law.

          There is no requirement for the CoA to consider the validity of the arrangement since, if s.58 was overturned, HMRC can still go back and challenge it through the normal Tax Courts.

          For this reason, I expect the hearing in November to be very different to the JR.

          Comment


            yourfreedom

            We are 1st and 2nd.

            Restoring civil liberties — HMG - Your Freedom

            Comment


              Originally posted by kbob View Post
              My BN66 liability is some what smaller than many here having only been in the scheme a couple of years. It is however enough to mean I have contingency plans in place. I now have no assets or interests left in the UK not a penny.

              Tax debts are civil. There are cross border agreements in place and HMRC have a team pursuing cross border enforcement. Leaving the UK is not a complete solution.

              However if you are based outside the EU you have three years to declare bankruptcy in the UK where it's much less onerous than many countries. There are specialist consultancies that can help UK expats bankrupt protecting offshore assets.

              Why all this talk of suicide and loosing everything? Make plans! There is at least a year to liquidate and emigrate. What is keeping you on that miserable grey island?

              - Regards kbob
              kbob,

              There are sharks out there - plenty of people trying to make money out of our misfortune. Anyone you would recommend?

              Comment


                Originally posted by DonkeyRhubarb View Post
                There is no requirement for the CoA to consider the validity of the arrangement since, if s.58 was overturned, HMRC can still go back and challenge it through the normal Tax Courts.
                And with TE63 in the public domain, as well as new paymasters getting comfortable in Westminster, do we think that HMRC would take it to the Tax Courts?

                If HMRC lose the CoA, retrospection becomes outlawed, or at the very least something only available to them in extreme circumstances, perhaps applied a la Padmore.

                HMRC's reliance on a change of law to make Padmore stick would become the stick with which they can be beaten over the head if it ever went to the Tax Courts. To lose in Court over S58 and then to try and apply the pre-existing law (which in their own words they did not change) should be kicked out before it got to Court. I think they might consider a change of Counsel before they could try and square both those angles.
                Join the No To Retro Tax Campaign Now
                "Tax evasion is easy: it involves breaking the law. By tax avoidance OECD means unacceptable avoidance ... This can be contrasted with acceptable tax planning. What is critical is transparency" - Donald Johnston, Secretary-General, OECD

                Comment


                  Originally posted by DonkeyRhubarb View Post
                  Looks like they have removed the original thread

                  Comment


                    Originally posted by screwthis View Post
                    Looks like they have removed the original thread
                    Sorry, it's no.6

                    Comment


                      Originally posted by screwthis View Post
                      Looks like they have removed the original thread
                      i don't think we can complain. They treated us badly in the first instance by freezing the thread, but I don't think it was really doing either us or them any good having both threads at the top.

                      We just want someone to get on and do something about it!
                      Join the No To Retro Tax Campaign Now
                      "Tax evasion is easy: it involves breaking the law. By tax avoidance OECD means unacceptable avoidance ... This can be contrasted with acceptable tax planning. What is critical is transparency" - Donald Johnston, Secretary-General, OECD

                      Comment

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