BN66 - Round 2 (Court of Appeal)

[DonkeyRhubarb]

I can categorically state that i knew nothing about HMRC referring to David Milne opinions until they were mentioned in Court. Neither was i consulted/asked or otherwise by HMRC.

Thanks for that, and I take back what I said.

It looks like HMRC may have been playing a bit fast and loose here.

Time to contact Pump Court Chambers and see if they are aware that David Milne's opinions, which were no doubt subject to confidentiality, have been possibly misused by HMRC.

[Alan Jones]

Alan,
The scheme was sold by many promoters apart from Montpelier, and not just to IT contractors.
Several of the Big 4 firms were recommending it.
Some may have copied Montpelier but most will have taken their own legal advice.
David Milne QC is an eminent silk but his is only one opinion.
Personally I believe HMRC would have little, if any, prospect of winning if they challenged the scheme in court under the law as it was prior to BN66.
DR

I think that the "property/land partnership" scheme had a better chance of success than the IR35 partnership scheme.

Mr Milne QC was quite categorical in his opinion that unless you had a IR35 proof contract (that also reflected what actually happened in practice) then the scheme was "doomed". You can work out why it was easier for HMRC to go down the retro route.

Milne QC also felt that it was unlikely that the DTA treaty relief/exemption would be accepted if tested in Court.

I have since come across a minor amendment to the treaty that was made in the 1990's that states treaty relief/exemption will be denied if the income in question was not subject to tax in the IOM at the standard rate. See Article 9b of the treaty which may/could be applicable to the scheme.

[DonkeyRhubarb]

You can work out why it was easier for HMRC to go down the retro route.

Yes, and if HMRC had their way they'd take this approach with anything they didn't like.

It would suit their work ethos down to the ground.

Sit on their fat arses for 7 years then get the Government to do their job for them.

Why bother with the hassle of going to court, which is hard work, when you can guarantee a result by changing the law backwards.

[Emigre]

I think that the "property/land partnership" scheme had a better chance of success than the IR35 partnership scheme.

Mr Milne QC was quite categorical in his opinion that unless you had a IR35 proof contract (that also reflected what actually happened in practice) then the scheme was "doomed". You can work out why it was easier for HMRC to go down the retro route.

Milne QC also felt that it was unlikely that the DTA treaty relief/exemption would be accepted if tested in Court.

I have since come across a minor amendment to the treaty that was made in the 1990's that states treaty relief/exemption will be denied if the income in question was not subject to tax in the IOM at the standard rate. See Article 9b of the treaty which may/could be applicable to the scheme.

Sorry Alan, your reference to Milne's comments relating to IR35 proof contracts make no sense. Under this scheme individuals are self-employed, not operating through PSCs at which IR35 was specifically targeted.

Its one thing for Singh/HMRC to waggle an Opinion around in Court. What did HMRC do to verify its authenticity? What use is an Opinion without the statement of circumstances on which the opinion is given? What evidence is there that the opinion was given on the relevant areas of a scheme that was identical to the MTM scheme? Was the scheme identical? Without this information I would suggest that the Milne opinion is itself unsubstantiated and therefore hearsay.

[DonkeyRhubarb]

Sorry Alan, your reference to Milne's comments relating to IR35 proof contracts make no sense. Under this scheme individuals are self-employed, not operating through PSCs at which IR35 was specifically targeted.

Its one thing for Singh/HMRC to waggle an Opinion around in Court. What did HMRC do to verify its authenticity? What use is an Opinion without the statement of circumstances on which the opinion is given? What evidence is there that the opinion was given on the relevant areas of a scheme that was identical to the MTM scheme? Was the scheme identical? Without this information I would suggest that the Milne opinion is itself unsubstantiated and therefore hearsay.

I am more curious to know whether HMRC obtained Milne's permission to use these opinions.

They didn't bother asking Jones who paid for them, so nothing would surprise me.

[normalbloke]

"Mr Milne QC was quite categorical in his opinion that unless you had a IR35 proof contract (that also reflected what actually happened in practice) then the scheme was "doomed". "

Didn't this also spawn some half baked website - bn66.co.uk - that purported to 'save' you from your tax bill under the MP scheme, if your end contract was actually 'caught' by IR35. The point being that the intermediary, in this case MontPelier or their UK agency, would be liable for the tax and NI . There was some brief mention of this in the original BN66 thread I think. This argument seems to contradict Milne's opinion.

Anyway, this is a bit of a sideshow to the real issue.

[Toocan]

Mr Milne QC was quite categorical in his opinion that unless you had a IR35 proof contract (that also reflected what actually happened in practice) then the scheme was "doomed". You can work out why it was easier for HMRC to go down the retro route.

Everyone in the scheme had an "IR35 proof contract" if only for the structure of the scheme. HMRC did not even begin to attempt to challenge this.

In addition, HMRC's (or perhaps HMT's) own evidence to the High Court admits that they believed the scheme worked all the way throght to 2008.

They were rubbing their hands when they made the Suo Motu deal.

Now consider - HMRC had the Milne QC opinions when you made your deal (circa 2003); they had whatever information they got from you - and yet they still believed that the scheme worked - so much so that they testified as much under oath at the High Court.

It's been admitted that s.58 was not a clarification - Parker also made this finding.
In effect, it's been admitted that Parliament was led up the garden path.
If HMRC did not NEED to retrospectively change the law then they would not have demanded s.58.

Be in no doubt, because HMRC are in no doubt, that if section 58 is found to be unenforceable then HMRC will not be trying to collect any tax on the trust income.

If you're going to post on here, then remember that you are posting to an audience who have been abused enough already. None of these people have done you any harm. Find another way to attack your former employer.

[OnYourBikeGB]

I am more curious to know whether HMRC obtained Milne's permission to use these opinions.

They didn't bother asking Jones who paid for them, so nothing would surprise me.

Well, if I recall correctly, AJ had it available for download on the ir35amnesty website, so he'd already put it in the public domain. He may not given to them, he just made it available. Interesting take on big bad MP as well knowing fine well that he was the one out selling the scheme. Did you ever tell anyone, Alan, that tax legislation could be retrospective? If they knew, did you? Was anyone ever told the opposite, that tax legislation cannot be retrospective? When the scheme was sold, do you believe that we were given the full facts by you when you were promoting it? Why did you pay for Milne when you were so certain the scheme worked?

All in all, it makes little difference. The judges will decide our short term fate, not Alan, not MP, not HMRC. We hope they come to the right decision. But let's quit the moral grandstanding Alan, eh?

[SantaClaus]

Interesting how the IR35Amnesty website doesn't exist any more!

There's a Wiki page that says it's registered in Bulgaria:

Ir35Amnesty.com - AboutUs Wiki Page

talk about dodgy, Alan!

[HMRC are above the law]

I have been talking to one of the people who was made redundant at Montpelier, and its clear the mood of the company changed completely after the offices were raided and Mr Gittins was arrested.

It came as no real surprise when they announced they were pulling out of tax avoidance to concentrate on less risky activities.

Montpelier may still keep their word to continue fighting but it would be dangerous to assume its business as usual because it most certainly is not. The workforce in the Isle of Man is half the size it was and those that are left don't feel much sense of security either.

I wish you all the very best of luck.